The Everything Store: Jeff Bezos and the Age of Amazon (book summary)

Jeff Bezos’s Traits and Leadership Style

• High IQ & problem solving / analytical ability
• Fountain of new ideas. One technique for doing so is shifting ‘point-of-view’ to look at things in new ways.
• Boldness. Grandiose long-term goals.
• Clear and consistent on goals.
• Ruthless prioritization.
• Unwavering attention to- and knowledge of every detail of the business; micro-manager
• Fiercely competitive with a chess grand master’s view of the competitive landscape
• Demanding. Prone to Steve Jobs-ian acerbic outbursts when efforts don’t meet his rigorous standards
• Listens with full-attention, never giving the sense he is hurried or distracted
• Boundless determination, perseverance, and persistence. Works non-stop. “Work smart, hard, and long,” including on evenings & weekends.
• Commitment to learning
• Introspective and methodical about everything in his life
• Limited loyalty to and empathy for associates, including his direct reports. No one has long term job security, independent of prior contributions.
• Risk seeking by placing big bets. Relentlessly advocates for taking risks outside of Amazon’s core business.
• Constantly studies and questions the management of the business
• Exploit the status quo for any possible advantage. For example, filing business method patents despite acknowledging that such patents should not be allowed.
• One does not work with Jeff Bezos; one works for him.
• Held a Saturday morning executive book club
• Rapid decision making, particularly on reversible decisions
• Immediacy. Demand for quick results
• Bezos focuses on hiring talent people. Associates do not feel he directly invests in their professional or personal growth. Stingy with praise. Nonetheless, employees are loyal because of how much they are able to accomplish.
• Extremely calm (outwardly) under pressure – “ice water runs through his veins”
• Eliminated recurring one-on-one meetings with employees, favoring small group problem-solving and decision making meetings
• Charming and capable of great humor in public
• Unconcerned with building consensus and promoting civility
• Compartmentalizes extremely effectively
• Has extremely high potential new hires (one at a time) shadow him before assigning them to their leadership role
• Subscribes to Christensen’s Innovator’s Dilemma: Companies succeeded when they “set up autonomous organizations charged with building new and independent businesses around the disruptive technology.”
• Parsimonious with complements, offering rare, but deeply gracious and unexpected expressions of appreciation
• In fact, many of the more infamous episodes inside Amazon began with unsolicited e-mails from customers that Bezos forwarded to the relevant executives or employees, adding only a question mark at the top of the message. To the recipients of these e-mails, that notation has the effect of a ticking time bomb. The question mark e-mails, often called escalations, are Bezos’s way to ensure that potential problems are addressed and that the customer’s voice is always heard inside Amazon.

Amazon’s 14 Leadership Principles

• customer obsession [*]
• ownership (mentality) [*]
• Invent & simplify [*]
• Are right, a lot
• Learn and be curious
• Hire and develop the best [*]
• Insist on the highest standards
• Think big
• Bias for action [*]
• Frugality [*]
• Earn trust
• Dive deep
• Have backbone: Disagree and commit
• Deliver results

(* = 6 original values; for more detail, see https://www.amazon.jobs/en/principles)

Amazon Business Strategy & Processes

• Compulsive dedication to pleasing customers. Wake up worried and terrified everyday about losing customers. Start from the customer and work backward.
• Oriented toward long term free cash flow and market share rather than short-term profitability
• Commitment to being the low-cost provider. Extreme frugality. “Everyday low prices.”
• Main operating mode = “Get big fast” with occasional shifts into “Get Our House in Order” via discipline, efficiency, and eliminating waste.
• Innovation to build a virtuous feedback loop / weave a rope of small advantages: (a) free shipping (b) customer reviews (c) personalization of the shopping experience (d) affiliate marketing (e) superior selection, particularly in product categories with high-variety that store well and ship easily (f) ongoing category expansion (g) product ranking (h) one click ordering (i) immediate delivery (j) search inside books (k) Kindle (l) fulfillment center efficiency (m) drive inefficiencies out of the supply chain
• Extremely secretive about prospective business strategy, holding to well-established, very abstract talking points
• PowerPoint decks or slide presentations are never used in meetings. Instead, employees are required to write six-page narratives laying out their points in prose, because Bezos believes doing so fosters critical thinking. Each meeting begins with everyone silently reading the document, and discussion commences afterward. For new feature or product proposals, the narrative must take the form of a customer-oriented mock press release. Every document includes at the top of the page a list of a few rules, called tenets, the principles for each group that guide the hard decisions and allow them all to move fast, without constant supervision.
• Non-monetary awards to reinforce values: (1) The “Just Do It” award, a pair of size 21 sneakers, to support Bias for Action for employees who do something notable outside of their primary job responsibilities on their own initiative. (2) award for employees who identify bureaucratic, wasteful activities
• Negative working capital model whereby cash at time of sale funds operations
• Daily exec meetings during peak times (ex: holiday season) to review critical company and customer issues
• Gradatim Ferociter, which translates to “Step by Step, Ferociously.” The phrase accurately captures Amazon’s guiding philosophy as well. Steady progress toward seemingly impossible goals will win the day.
• Bias toward decentralization and independent decision making. “[Explicit systems for cross business unit] communication is a sign of dysfunction.  It means people aren’t working together in a close, organic way. We should be trying to figure out a way for teams to communicate less with each other, not more.”
• Reorganized into “two-pizza [sized] teams” of less than 10 people to independently work on Amazon’s biggest problems who competed with one another for resources, sometimes on the same problems
• Though it did not stick, Bezos demanded each team have its own “fitness function” – an equation used to measure impact without ambiguity
• Senior team spends a week on the road, one day in each Fulfillment Center (FC), and used their commanding presence to focus attention on eliminating errors and improving processes
• Bezos personally runs the biannual operating review periods for the entire company, dubbed OP1 (done over the summer) and OP2 (done after the holiday season).
• Once a week, usually on Tuesday, various departments at Amazon meet with their managers to review long spreadsheets of the data important to their business. They force you to look at the numbers and answer every single question about why specific things happened.  The metrics meetings culminate with the weekly business review every Wednesday, one of the most important rituals at Amazon, run by Wilke.
• Amazon is a masterly navigator of the law and is careful to stay on the right side of it
• Discussions of personal wealth are frowned upon

Hiring & talent management

• Hiring versatile, high IQ brainiacs. Domain expertise (ex. Toy retailing) is less important than being able to move fast and get things down.
• For years, Bezos interviewed all potential hires and asked them for their SAT scores.
• Interviewers gather and express either strong no hire; inclined not to hire; inclined to hire, or strong hire. One holdout will sink an applicant.
• Reject candidates who express a desire for work-life balance, their titles, traditional status metrics, security, or their own wealth.
• Perpetually raise the hiring bar.
• Bar raisers: Designated employees with proven ability to be intuitive recruiters of talent who also interviews candidates and has full veto power
• The people who do well at Amazon are often those who thrive in an adversarial atmosphere with almost constant friction
• Backload stock grants toward the end of the 4 year vesting period
• Managers in departments of fifty people or more are required to “top-grade” their subordinates along a curve and must dismiss the least effective performers.

Cool | Not Cool

• Empowering others | Rudeness
• Defeating big, unsympathetic guys | Defeating tiny guys
• Inventing| close following
• Young | [stodgy]
• Risk-taking | [risk aversion]
• Explorers | Conquerors
• Missionaries | Mercenaries
• [Sharing value with creators] | Capturing all the value for the company
• Conviction | [uncertainty]
• Straightforwardness | pandering to the crowd
• Leadership | [complacency]
• Authenticity | Hypocrisy
• Thinking big | Obsessing over competitors