Eternal Day One

Maintaining speed and customer obsession in large organizations

In my last year at Amazon, I participated in an interesting experiment. To combat bureaucracy and move quickly on behalf of customers, Jeff Bezos created Two Pizza Teams.

Put simply, a Two Pizza Team is a self-sufficient team focused on a clear problem statement that is small enough to feed with two pizzas. We saw quickly that these teams could invent more quickly on behalf of customers versus large, matrixed, cross-functional teams. I later introduced this concept with a lot of success when I joined a large airline to drive digital innovation.

In their first iteration at Amazon, each Two Pizza Team had a “Fitness Function,” a semi-complex formula distilling critical inputs to a single output plottable on a chart. I’d send my charts, along with a written report, to Jeff every week.

Being an experiment, these teams evolved over time to a concept called Single Threaded leaders and teams, aimed at driving laser focus and rapid progress on specific customer problems. The goal was unchanged: Move quickly on behalf of customers.

Bezos used a variety of mechanisms like this to keep Amazon in the entrepreneurial, customer-obsessed mindset of what he called “Day One” --and stave off “Day Two.”

“Day One” is a mindset that includes customer obsession, long-term thinking and “being constantly curious, nimble, and experimental.” (Reference: Elements of Amazon’s Day 1 Culture | AWS Executive Insights)

“Day Two,” in Bezos’s words, is “stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.” (Jeff Bezos' 2016 Letter to Amazon Shareholders)

Many of us have experienced how organizations can drift toward Day Two. Teams bog down in interdependencies. Silo’s impede collaboration. Decisions take longer. Well-intended processes become bureaucratic. Costs creep up. Teams drift from the customer.

The best organizations work endlessly to maintain the speed and customer focus of Day One. For those interested, Amazon’s approach is best captured in Working Backwards: Insights, Stories, and Secrets from Inside Amazon.

There are a variety of mechanisms we can use at the team and enterprise level to stay in “Day One.” I share here what I have learned as well as some resources I’ve found very valuable.

Push Decisions Close to the Customer

As organizations get bigger, they add layers, increasing the distance from customer to leader. When decision-making is concentrated at the top, information travels through many layers, which can delay and hinder action.

UPS founder Jim Casey observed: “You’re getting filtered information from your executives but you get it unfiltered from your customers or the people who work in your front line.”

One way to combat this is to push decision rights as close to the customer as possible. This can be bound in some reasonable way to manage enterprise risk and account for context that teams close to the edge may not have. This was part of the goal of Two Pizza Teams.

Some organizations use a decentralized approach to move quickly and push decisions close to the customer, be it Berkshire Hathaway, Teledyne, Capital Cities or German retailer Aldi. William Thorndike’s classic book The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success captures companies and leaders who succeeded through a decentralized approach. Highly recommend this classic.

Netflix approaches this by fostering a culture of freedom and responsibility. They ask managers to focus on “context not control” so that teams have the information needed to make decisions quickly. They designate decision-makers to avoid decision-making by committee.

“We don’t emulate…top-down models, because we believe we are fastest and most innovative when employees throughout the company make and own decisions,” says Hastings. “At Netflix, we strive to develop good decision-making muscles everywhere in our company — and?we pride ourselves on how few decisions senior management makes.”

For a great exploration of Netflix’s evolving culture, check out Powerful: Building a Culture of Freedom and Responsibility by former Chief People Officer Patty McCord and No Rules Rules by former CEO Reed Hastings.

Reduce Layers, Traverse Them Easily

Another solution to the layer challenge is flatter structure. Amazon CEO Andy Jassy recently announced that the company had added too many layers and will address this by flattening their structure. Nvidia CEO Jensen Huang has taken flat reporting structures beyond most organizations. He has more than 50 direct reports.

Another solution is to regularly connect with people close to the customer. Y Combinator founder Paul Graham recently wrote about this in a post on Founder Mode.

Wrote Graham: “Whatever founder mode consists of, it's pretty clear that it's going to break the principle that the CEO should engage with the company only via his or her direct reports. ‘Skip-level’ meetings will become the norm instead of a practice so unusual that there's a name for it. And once you abandon that constraint there are a huge number of permutations to choose from.”

In lean philosophy, there is a similar philosophy known as “Gemba.” It means, roughly: “the real place” or “where the work is done.” Gemba is a powerful practice.

I worked at one organization where the executive team did “Gemba walks” every week, essentially visiting a different team each week and learning how the work is being done. The idea is to stay connected to the “real place” and understand the truth close to the customer.

Embrace Two Way Doors

Most decisions should be made quickly. To sustain rapid decision and action, Amazon embraced Two Way Door decision-making. This approach places speed of action and learning over perfect decisions, where being wrong is low cost and reversible.

The opposite of this is One Way Door decisions, which are very hard to undue and carry high risk. A One Way Door decision might include acquiring a company, shutting down a business or implementing a new ERP system. They require more time and careful analysis. These are a fraction of all decisions.

However, some organizations treat too many decisions like One Way Door decisions. They take too long. They do excessive analysis. They use large meetings as decision-making mechanisms. They lack clarity on decision rights. This slows decision-making velocity with little improvement in outcomes.

Says Bezos: “Speed matters in business. Most decisions can be made with around 70 percent of the information that you wish you had.”

Simplify Communication

Many large organizations want to strengthen their signal to noise ratios. Data manifests in emails, meetings and power point presentations, among other things. At its worst, an organization can become rich in data and poor in actionable insights.

It doesn’t have to be this way.

At Amazon, the day Jeff banned power point was a momentous and joyful day for me. It meant no longer spending hours creating lavish power point slides. It meant no longer sitting in lengthy meetings where presenters walked through a linear progression of slides curated to support their position.

Instead, we wrote 6-page word narratives, a task that requires more careful thought, something that continues at Amazon to this day. Jeff created a writing culture with a focus on fact and insight density. These documents were not presented. They were read.

I remember writing my first six-pager at Amazon and bringing copies to an S-team meeting (Jeff’s directs). There was no ceremony or presentation. We sat uncomfortably for 20 or so minutes in silence while Jeff and the S-team read the document, actively writing comments on their copy. Then we began a discussion.

In my experience, concise clear writing is a business superpower. (Bezos himself is a fantastic writer. Invent and Wander: The Collected Writings of Jeff Bezos is a great introduction.) For anyone interested in improving written communication, I highly recommend two classics: The Elements of Style by William Strunk and E.B. White and On Writing Well: The Classic Guide to Writing Nonfiction by William Zinsser. You won’t regret time reading these brief and practical books.

In the end, organizations exist to serve customers. Bezos uses “Day One,” to describe a fast-moving, entrepreneurial state focused on moving quickly on behalf of customers.

We can all stay as close as possible to “Day One” by continually evolving organization structure, ways of working and information flow to best serve customers. We can sustain Day One culture by:

·????? Pushing Decisions Close to the Customer

·????? Embracing Two Way Doors

·????? Reducing Layers, Traversing Them Easily

·????? Simplifying Communication