Brief: Jeff Bezos’ recipe to prevent Amazon’s death

Jeff Bezos, CEO and founder of Amazon. Photo credit: Steve Jurvetson.

Amazon CEO Jeff Bezos, in his annual letter to shareholders, outlined his philosophy for keeping the ecommerce giant spry and competitive. Here’s a summary:

• Be obsessed with customers: they’re always dissatisfied. So, if you’re obsessed with meeting their needs, you’ll invent great things. It’s about creating what they want even before they know they want it. Amazon Prime is a good example.
• Resist proxies: it’s too easy to let other goals substitute the primary goal of serving customers. An example is having a good process. Managers often end up focusing on following the process, at the expense of users. It’s sometimes better to change the process. Surveys and beta tests are other kinds of proxies. Good inventors “study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design.”
• Embrace external trends: Big trends are easy to spot, but big organizations often don’t implement them. Hop onto the next big tech bandwagon quickly.
• Make high-velocity decisions: Organizations focus too much on making the best decision slowly. It’s better to make decisions with 70 percent of the information you need rather than wait until you have 90 percent. Tell your team members, “I know you disagree, but let’s gamble and commit.” Made a wrong choice? Quickly recognize and correct it. Sometimes, teams are misaligned on objectives and viewpoints. Avoid getting bogged down in the discussion as that won’t solve it. In such cases, escalate to your superior and settle quickly on a path.

Jeff’s full letter is below. It’s worth a read:

2016 Letter to Shareholders

April 12, 2017

“Jeff, what does Day 2 look like?”

That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.

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

To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.

I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?

Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.

True Customer Obsession

There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.