Leadership lessons from Amazon

Amazon is one of the companies that I highly admire – both from business, and company’s culture perspective. Founded back in 20th century, now Amazon is one of the most valuable enterprises in the world.

Having this in mind, it is very interesting to understand what made all of this possible, and what kept the company moving forward through all those years, through ups and downs. Obviously, it is a set of principles, some core beliefs that stem from Jeff Bezos and his management philosophy.

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1”, - Jeff Bezos.

All the essential values are very well encoded in Bezos most recent letter to Amazon shareholders. As the CEO notes, the core focus in Amazon is put on Day 1 since Day 2 is stasis, irrelevance, decline, and death. In order to defend Day 1, Amazonians focus on 4 principal things: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making. Let us briefly review each of them.

Customer Obsession

There are many ways how you can center and position a business. You can focus on technology, you can focus on products or services etc. Yet, according to Amazon, customer focus is by far the best strategy there is. And there is one key advantage it has: customers are always dissatisfied, even when they report being happy. This, in turn, forces you to innovate and delight your customers in every step they take.

“No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it”, - Jeff Bezos.

And when you have thrilled customers with exceeded expectations, there is no wonder that your business will thrive.

Skeptical View of Proxies

When companies grow, both in terms of size and the number of employees, everything becomes more complex, and there is a tendency to manage proxies. According to Amazon, this is very dangerous.

“It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second”, - Jeff Bezos.

This is especially risky if we think about process as a proxy. When you stop looking for outcomes and just make sure you are doing the process right, you miss opportunities, you lose the ability to innovate, and eventually the Day 2 comes.

Eager Adoption of External Trends

We must note that big trends are easy to spot, but are hard to implement. Especially for large organizations. However, they are a must if the company wants to survive and stay relevant. As the world is changing so rapidly, you have to keep up with it, and even lead this race. Otherwise, you might be left behind, and no one can help you then.

“The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind”, - Jeff Bezos.

Amazon is a perfect example of a visionary organization, where global trends are not only implemented, but are created as well. We can name Prime Air delivery drones, the Amazon Go convenience store that uses machine vision to eliminate checkout lines, and Alexa, Amazon’s cloud-based AI assistant. In addition to this, they have Amazon Web Services (AWS) that enable other organizations to use machine learning and employ AI.

High-velocity Decision Making

As Bezos stresses, Day 2 companies make high-quality decisions, but they make them slowly. In order to dominate, you have make those decisions as fast as possible. It is easy for start-ups and young organizations, but is particularly hard for big corporations. As speed highly matters in business, their several pieces of advice how to maintain it.

• Never use a one-size-fits-all decision-making process. Many decisions are reversible and adjustable.
• Don’t expect to have full information.  Most decisions should be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re being slow.
• You need to be good at quickly identifying and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly, whereas being slow is going to be expensive for sure.

Bringing it all together

From what has been outlined above, it is more than clear that Amazon has a really strong management philosophy. The reviewed principles are universal, and can be applied to any organization around the globe. The Amazon success story indicates that this is something truly worth following. So, read them carefully and apply responsibly.