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Amazon

A mission to become the world's most customer-centric business

Sector: Futurestore
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Amazon, from Dash to drones, Alexa and Echo, uses technology to disrupt and redefine a range of adjacent industry, and then do it again, whilst adding new business models that create a convenient and personalised customer experience.

Jeff Bezos laughs with a distinctive cackle. He is still the hands-on CEO, strategist and innovator, keeps a relatively low profile, but his innovations have become bolder. His Kindle Fire, significantly better than his early e-book reader, is now challenging the iPad, whilst his repurposing of books into short-read “singles” is challenging the whole book trade. The development of self-publishing has helped Kindle “own” content, whilst acquisitions of rivals such as Audible’s talking books in 2008, LoveFilm movies on demand and The Book Depository in 2011, whilst two years later Goodreads has consolidated its position, and extended the customer experience.

Zappos, famed for its customer service became part of Amazon in 2009, and more of General merchandising has been a big success, with the acquisition in 2010 and rapid expansion of Quidsi from personal care to pet supplies, toys, and groceries. This included more brands to add to the Amazon portfolio, and sourced through its main website, include Diapers.com, Soap.com and BeautyBar.com. There is also the development of streaming-video services to include CBS and Fox movies.

Whilst Amazon has acquired around 50 businesses as it has grown and diversified, it keeps the businesses small and distinctive, whilst connecting them through the retail platform. Zappos, for example, which started by selling shoes, has built a much-admired culture of happiness. CEO Tony Heish recalled his early days “Women don’t buy more shoes because they need them, but because it makes the happy. We therefore don’t deliver shoes, we deliver happiness”.

The $75 billion business is truly international, with versions in everything from Chinese and Japanese, to Spanish and Brazilian Portuguese. Whilst the profits from its devices and content sales have been much slower than Apple’s, Amazon has always played a longer-term game, shaping the market first, then letting the rewards follow

Bezos likes to point out the shift in power from companies to consumers, yet Amazon becomes more powerful every day. The Kindle Fire now rivals the iPad, Amazon Prime’s annual membership that gives free next-day shipping was a masterstroke, whilst the same-day grocery delivery service Amazon Fresh is set to transform behaviours and expectations further. And we wait to see whether the former investment banker’s vision of 30 minute delivery by mini-drones will come true.

Pivot points for Amazon in “changing the game” of retail has been:

  • Explore: Making sense of changing markets, finding the best growth opportunities
  • Disrupt:  Shaping the markets in your own vision, rewriting the rules of play
  • Design: Creating business models that are consumer-centric and scalable
  • Enable: Delivering a more personal, sticky and contagious customer experience

Day 1

In his first letter to Amazon shareholders in 1998, Jeff Bezos declared that it was “Day 1 for the internet, and if we execute well, for Amazon.com.” He meant that the company, which was already four years old, should always think of itself as being at the beginning of its journey.

21 years later, “It’s still Day 1” (or the variant “It remains Day 1”) remains a rallying cry for the company. Bezos signs off each new shareholder letter with the sentiment, and Amazon executives from across the company often slip it into conversation when I interview them.

I always knew that the company liked its nuggets of wisdom. But it wasn’t until I spent time at Amazon for our new profile of its HR chief, Beth Galetti, that I realized quite how many of them the company had formalized. Here are four of its lists of philosophies and goals. Many of them, the company has never publicized to us outsiders–but each of them helped me understand Amazon better.

6 core values

Brad Stone’s 2013 book, The Everything Store: Jeff Bezos and the Age of Amazon, explains the origin of this list–which, unlike later ones, was as succinct as it could be:

Amazon’s purchase of Telebuch in Germany and BookPages in the U.K. in 1998 gave Bezos an opportunity to articulate the company’s core principles. Alison Allgor, a D.E. Shaw transplant who worked in human resources, pondered Amazon’s values with the Telebuch founders. They agreed on five core values and wrote them down on a whiteboard in a conference room: customer obsession, frugality, bias for action, ownership, and high bar for talent. Later Amazon would add a sixth value, innovation.

Leadership principles

These consist of the six core values, plus additional virtues–explained a bit, and positioned as characteristics of outstanding leadders. Jeff Wilke, the CEO of Amazon’s consumer business, told me that the principles, in written-down form, dated to conversations he had in 2002 with a couple of colleagues: “We asked the question, are these principles just for people with formal management jobs, or are they for everyone? We started to work on the language, and Jeff Bezos got involved, too. Things like customer obsession and invent and simplify, deliver results, ownership: These principles really do apply to every employee at Amazon.”

Though some of these principles are utterly conventional wisdom–who wouldn’t want to hire leaders who were “right a lot?”–they add up to a manifesto that helps define what Amazon aspires to be. The “unless you know better ones” is also a typically Amazonian flourish. The Leadership Principles may be the most public-facing of Amazon’s various lists of rules:

Whether you are an individual contributor or a manager of a large team, you are an Amazon leader. These are our leadership principles, unless you know better ones. Please be a leader.

Customer obsession
Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.

Ownership
Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say, “That’s not my job.”

Invent and simplify
Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here.” As we do new things, we accept that we may be misunderstood for long periods of time.

Are right, a lot
Leaders are right a lot. They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs.

Learn and be curious
Leaders are never finished learning and always seek to improve themselves. They are curious about new possibilities and act to explore them.

Hire and develop the best
Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization. Leaders develop leaders and take seriously their role in coaching others. We work on behalf of our people to invent mechanisms for development like Career Choice.

Insist on the highest standards
Leaders have relentlessly high standards–many people may think these standards are unreasonably high. Leaders are continually raising the bar and drive their teams to deliver high-quality products, services, and processes. Leaders ensure that defects do not get sent down the line, and that problems are fixed so they stay fixed.

Think big
Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.

Bias for action
Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.

Frugality
Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing headcount, budget size, or fixed expense.

Earn trust
Leaders listen attentively, speak candidly, and treat others respectfully. They are vocally self-critical, even when doing so is awkward or embarrassing. Leaders do not believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best.

Dive deep
Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdote differ. No task is beneath them.

Have backbone; disagree and commit
Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

Deliver results
Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.

Peculiar ways

Amazon, which likes to describe itself as “peculiar,” created this list of its own traits and even gave it its own mascot, Peccy. I saw it posted inside the entrance of an Amazon fulfillment center in Kent, Washington, although some of the peculiar ways seem to relate most directly to the Amazon.com storefront and how the company expresses itself to customers.

  • We earn trust with our customers by making precise, high-bar promises and then keeping them.
  • We are willing to make long-term investments–sometimes at the expense of short-term gain.
  • We share the good and the bad to help customers make informed buying decisions.
  • We work to avoid the bland personality that customers typically associate with the big, homogeneous, corporate Borg.
  • We take credit for (i.e., brag about) the impressive things we do in a way that is subtle and sophisticated.
  • We endeavor to speak to our customers in a tone that is neither boastful nor boring.
  • We use specificity when possible and sensible.
  • We prefer to title features factually with a degree of precision.
  • We don’t make content look like an ad.
  • We stay away from creating new icons.

HR tenets

HR chief Galetti’s department has its own codified goals. They’re full of identifiably Amazon-esque touches, such as the emphasis on serving the customer and the “unless you know better ones” proviso. But elements such as attempting to be “the most technically proficient HR organization in the world” also reflect Galetti’s own vision: She is an electrical engineer who spent 16 years at FedEx in operational roles before coming to Amazon, where she arrived with no previous HR experience.

We build a workplace for Amazonians to invent on behalf of customers.

Employees come to Amazon to do meaningful work, and we make that easier by removing barriers, fixing defects, and enabling self-service. Applying to, working at, and leaving Amazon should be frustration-free experiences.

We seek to be the most scientific HR organization in the world. We form hypotheses about the best talent acquisition, talent retention, and talent development techniques, and then set out to prove or disprove them with experiences and careful data collection.

As we develop new programs and services, we work backwards from the employee and candidate, understanding our work has a direct impact on customers. We prioritize work that results in measurable impact for our customers.

We acknowledge that no process or policy can be so well designed as to properly cover every situation. When common sense is at odds with one of our policies or pracitices, we make high-judgment exceptions.

We seek to be the most technically proficient HR organization in the world. Our team includes dedicated engineers, computer scientists, and principals who develop world-class, easy, and intuitive products for candidates and employees.

We manage HR as a business, and we must scale faster through technology and simplified processes rather than through HR head count growth. We rigorously audit ourselves to disrupt and reinvent HR industry standards.

We favor straightforward, two-way communications. When we talk about our work, we use plain language and specific examples over generalizations and corporate speak.

One notable thing about some of Galetti’s HR tenets: They are stated as aspirations, not missions accomplished. She emphasized that when I asked her a question that suggested I might believe that Amazon claims to have “the most scientific HR organization in the world.”

“Just to be clear, we seek to be the most,” she quickly replied. “I wouldn’t be bold enough to claim that we are.” That Galetti can set out audacious goals but retain a degree of humility sounds like it could be an Amazon leadership principle itself. And indeed, it’s not far from the leadership-principle sound-bite she told me was her favorite: “Leaders do not believe their or their team’s body odor smells of perfume.”

 

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