The Amazon Way, by John Rossman, TURBOMIND Book Notes by Miguel De La Fuente. 14 Leadership Principles Behind the World´s Most Disruptive Company
You can buy the Book Here: https://www.amazon.com/Amazon-Way-Leadership-Principles-Disruptive-ebook/dp/B00KHT2UJS
Visit John here: https://the-amazon-way.com/
by Miguel De La Fuente, Founder of turbomind.com.
Contact me Through WhatsApp or Telegram for a 30-Minute Free Coaching Session. I love helping people and Businesses become Exceptional.
This week we have an extraordinary book by John Rossman, “The Amazon Way”
John worked at Amazon, and as he says, “one of the things that amazon does greatly is EVERYTHING IS ALWAYS ON AN IMPROVEMENT PATH”.
Here are some of the most important ideas I learnt from this awesome book:
Amazon is a company anyone can learn from; regardless you like it or hate it.
These principles are golden, and fascinating.
As they say in Amazon, “it´s not the title, but who has the BEST IDEA”, that´s what makes Amazon a fascinating company to study.
Today, Amazon is one of the biggest companies by market capitalization in the world. However, most people don’t know, or remember, that at one time, it almost went out of business (year 2000) with the stock price going below $5.
Jeff Bezos is considered a legend of entrepreneurial excellence and one of the greatest success stories of modern history. But for him, is still Day-1, which means he has the beginner’s approach, always curious and learning.
At that time, there was not enough revenue and too much cost. Amazon Spent about 5-years fighting to survive, having tremendously difficult times.
Today, it dominates many industries.
Amazon obsesses over customer, invents, simplifies and thinks big while practicing frugality. Today, it continues to make big bets, pioneers new business models, and demonstrates the advantages of scale.
As Jeff said, “If you´re a competitor focused, you have to wait until there is a competitor doing something, being customer-focused allows you to be more pioneering”
An innovating company means you can never stop innovating. It even means you must challenge the innovation that got you there.
Which also means, Create an obsession about customers and the right results.
What about if you obsess about your customers, how could you delight them while you improve cost and efficiency?
Many companies will fail or go out of business in the next 10 years, ask yourself this great questions,
How would my business and industry change if Amazon would operate it?
In these days, its either you innovate or you die.
Jeff Bezos told Charlie Rose in 2013 that today’s companies have short life spans and Amazon will be disrupted one day, this is why Amazon is always pushing to invent and to improve.
Besides customers, Jeff Bezos only cares about results.
Company employees, and specially leaders, are rigorously rated during their annual performance reviews and self-evaluation. As a leader at Amazon, you are expected to record concrete examples of how you embody the 14-leadership principles.
As a leader you need to make your thinking very clear about what, as wells as why your decisions.
So, these are the 14 leadership principles,
1.OBSESS OVER THE CUSTOMER
At Amazon, leaders pay attention to their competitors but they obsess over their customers. They put themselves in the customer position constantly, seeing the business from their customer’s eyes.
This approach is at the core of how they work.
These are some key points about customer service:
–The Best customer service is NO customer service, because the best experience usually happens the customer doesn’t need to ask for help.
-When a company makes a customer happy, they will tell everyone.
-The best way to create the most pleasant frictionless customer experience is to minimize human involvement through PROCESS INNOVATION and TECHNOLOGY.
-People actually don’t like to talk to customer service.
Patterns in nature tend to repeat themselves at different scales, with a set of self-reinforcing energies that continue to flow even when the energy flow is discontinuous (like a flywheel), as Allen Mandelbrot found in the field of fractal mathematics.
Jeff focuses on free cash flow, not so much margins. He believes in the massive potential of the internet, still in its infancy and basically unexploited. It’s like in 1889 with the Oklahoma Land Rush. He develops programs like free shipping to cultivate customer loyalty and drive sales.
Sometimes the lever you need to pull in order to create the flywheel effect can take huge amount of resources and time, and not many people are willing to invest and wait.
Jeff was willing to operate in the red for a long time until his electronic business took off.
Price, selection and availability is what Amazon considers the holy Trinity of best customer experience and Jeff repeats it every chance he gets.
OFFER EVERYTHING YOU CAN, GET IT CHEAPER TO CUSTOMERS AND MAKE IT MORE EASILY AVAILABLE.
Word of mouth is the most powerful customer acquisition tool there is.
Word of mouth and repeat customer purchases are the absolutely best tools to become a market leader.
Jeff would bring an empty chair into meetings as a constant reminder that the customer needs to be acknowledge.
He has invested millions to build automated systems that monitor the online feedback reviews from its customers as well as email communication and other internal systems.
The “Look inside the Book” is a great example of an extraordinary system built by Amazon, which started with 120.000 books and took massive amount of space as well as resources but gave the feel of someone in a bookstore being able to open and see the book inside. It became an asset to sales.
It probably wouldn’t have worked with only 1000 or 2000 books. It took because Amazon took the gamble in time and resources to develop the system correctly.
Amazon Prime is not only a shipping program but a clever loyalty program.
2. TAKE OWNERSHIP OF RESULTS
A leader at Amazon will never say “this is not my job”, they act on behalf of the entire company, not just the team they are running.
Leaders think long-term, as Jeff did at the beginning with his famous 10-year plan. They don’t sacrifice long term value for short-term results. They approach business as an owner, not a renter. Compensation rewards long-term thinking.
The advantage for Jeff of still owning about 20% of the company (2019) allows him to make multiyear plans, even to think in decades.
Successful organizations with long term strategic visions tend to have a low turnover at their leadership teams.
The key is to balance long-term commitments with short-term excellence. Maintaining a sense of urgency is crucial.
Develop a culture that rewards people who defend passionately their projects and ideas while at the same time respectful challenge decisions.
The “OPEN KIMONO” philosophy, is to be willing to be brutally honest about where you are, where your project is, and what your numbers are. This is the only way to attain your goals.
When a project doesn’t work, or it’s not working, at Amazon, they need to know what didn’t work, why it didn’t work, and how you´re going to change it.
Accountability is not painless or frictionless but it’s the path to extraordinary results.
AMAZON PRINCIPLES OF OWNERSHIP
Acknowledging that everyone in the company is an owner makes people accountable for their decisions, actions and results.
“Yes, it is your job” philosophy instead of “it´s not my job? Your job description is never limited to simply running things. Regardless what is your job, you are expected to IMPROVE ON THE PROCESSES that will lead to improve the customer experience while lowering the cost.
Ownership means that not only mastering your job but also be willing to go beyond your role whenever something needs to be fixed, improved or optimized.
Your success is intrinsically linked to the success of your team and people, since your team is one of the most important aspects of your job.
To reinforce its long-term thinking philosophy, Amazon prefers to reward employees with STOCK OPTIONS rather than salary or cash bonuses.
The success of any company lies in its ability to attract and retain a motivated employee base by incentivizing and rewarding its growth.
3. INVENT AND SIMPLIFY
One of Jeff´s core principles is to invent and simplify every single day. The best things are the simplest. Simple is the key to a great customer experience. It is also a key to fast, intuitive and low cost.
It takes vision, creativity, desire, commitment and courage to be regularly inventing and simplifying.
It’s amazing how Amazon sells more products online that its next 12 biggest competitors COMBINED.
People at Amazon at willing to innovate fearlessly, despite that it might create frictions and be misunderstood. They are expected and required to innovate.
This innovation mentality is the engine to the THINK BIG philosophy because at Amazon you are not expected to create something for a couple thousand people bur for millions of potential customers. This means truly understanding the users and improving with them on mind.
This BIG THINKING creates solutions and inventions instead of small temporary fixes.
Amazon believes in the power of process automation to make things easier, simpler, and more productive.
When a process is automated is much easier to scale it, it´s less expensive, it can have a real time capability, and, it can be measured.
This is why algorithms, automation, and technology architecture are the engines behind most of Amazon platforms like kindle.
This is a great question by John,
“If I had to completely automate the process and eliminate all manual steps, how would I design it?”, this question will lead a more radical rethinking of your assumptions.
“STRONG PROCESSES WITH MEASURABLE OUTCOMES ELIMINATE BUREAUCRACY AND EXPOSE UNDER-PERFORMERS”
4. LEADERS ARE RIGHT A LOT
Leaders define clear goals and have the metrics to measure success.
There is a high degree of tolerance for failure at Amazon because a culture of innovation cannot succeed unless it has room for failure too. Just don’t make too often.
As leaders are required to write long narratives of their ideas and plans to achieve them, it helps them clarify their thinking, most likely obstacles and plans for the overcoming those obstacles.
As Jeff stated on the Charlie Rose interview, “When you have to write your ideas in complete sentences and complete paragraphs, it forces a deeper clarity of thinking”.
CREATING A VISION: “FUTURE PRESS RELEASE”
At Amazon they have a curios exercise to develop the vision for a project. Instead of defining it as a vision, they use the term “FUTURE PRESS RELEASE”
In this future press release, it’s an announcement of the product written before its development even began and it´s used for internal purposes only.
Writing this press release forces people to articulate what would be a newsworthy product or service.
Writing a future press release is a great technique to force yourself to make something truly unique and extraordinary.
Here are some suggestions,
1. Write the release as if you are writing when success has already happened.
2. Discuss how the initiative benefit the customer.
3. Set audacious, clear and measurable goals, include financial results, and market share.
4. Outline the principles lead to success. This is tricky. Describe the hard things accomplished, the important decisions along the way, and the principles that led to success.
This future release helps teams stay accountable.
CONSTANT DAILY EVALUATION:
At Amazon employees have scorecards to know if they had a good day. This scorecard is constantly review day over day, week to week, month to month and it provides a clear way to measure how things are going, what’s working and what’s not working. It provides up to date feedback.
Repeatable, consistent performance reflected in metrics is the highest standard at Amazon.
They rely on real-time metrics or instrumentation. They tracked performance against 500 goals and most of them had to do with customer objectives.
5. LEARN AND BE CURIOS
A leader at Amazon is never done learning. They are curious about new possibilities and they push themselves to explore these opportunities. They are expected to be experts in diverse fields.
They are encouraged to learn, to be curious and to figure a way to get to the “yes” part of the equation.
Every day is day 1.
Jeff Bezos constantly says “this is day 1 for the internet. We still have so much to learn”.
They have a beginner’s mind set, relentlessly asking questions, “Why, why, why”.
6. HIRE AND DEVELOP THE BEST
Leaders at Amazon recognize exceptional talent and move them around the organization. They try to raise the bar with each hire and promotion.
They take seriously the role of coaching other people.
The bar raiser is a person who can veto the hiring of a new employee. It´s done to make sure the highest standards in the organization and to make sure that every hire INCREASES THE COMPANY IQ, CAPACITY AND CAPABILITY.
The goal is always improving and making Amazon better.
7. INSIST ON THE HIGHEST STANDARDS
The leaders at Amazon must set high standards, some of them are considered unreasonably high. A leader must raise the bar and deliver an ever increasing level of quality. They have to make sure the problems are fixed on time.
A leader must perform to the highest standard because he is also an owner and he is accountable for results.
SERVICE LEVEL AGREEMENTS:
This is kind of a contract that specifies the precise standard to which a particular service or product will be held.
It is a well written SLA that defines the inputs, outputs, and the metrics that will be used to define acceptable quality and performance.
8. THINK BIG
A leader at Amazon looks for big ways he can serve customers. They set bold directions and goals that inspire action and results.
Jeff is associated with an organization called “The Long Now” which is concerned with society´s shortening attention span.
On a West Texas property Jeff owns, he is building a clock that ticks once a year. The century hand advances once every 100 years and the cuckoo comes out once every 1000 years for the next 10.000 years. Amazing.
This is a symbol of the power of thinking big and looking long term.
Jeff sees “a lot of people believe that you should live for the now”, but he is not one of them.
He recommends that people “think about the great expanse of time ahead of you and try to make sure that you´re planning for that in a way that´s going to leave you ultimately satisfied”.
A renew quest for greatness, a call to think big.
In one of his letters to shareholders, Bezos addressed as one of Amazon´s most important factors massive success, as the willingness to sacrifice this year´s profits to invest in long term success, which includes long term customer loyalty. The willingness to invest this year´s profits in the next year’s bigger profits.
This is contrary to the way most companies are run today, giving all their attention and focus on short term profit over long term success.
THE REGRET MINIMIZATION FRAMEWORK
When you have an important decision to make, do this exercise:
Imagine you are 80 years old, and you look back in your life, and you want to minimize the number of regrets you have. Ask yourself, what would I think at the time?
This will get away from the daily confusion and distraction and give you a wider perspective.
9. HAVE A BIAS FOR ACTION
Speed is very important in business. When you are in doubt, go ahead and try something, take advantage of the opportunities that being THE FIRST I THE FIELD CAN OFFER YOU.
A BODY AT REST TENDS TO STAY AT REST. It tends to be easier to stop things from happening than making things happen.
So, at Amazon, a natural tendency is action, and pushing forward.
10. PRACTICE FRUGALITY
Frugality tends to bring resourcefulness, self-sufficiency and invention. At Amazon, leaders make a commitment not to spend money on things that’s don´t matter to customers. They try to keep a cost conscious culture.
Jeff believes frugality drives innovation.
Amazon drives a low-cost, egalitarian culture.
11. EARN THE TRUST OF OTHERS
A leader at Amazon is open, sincere and genuine. His openness enables him to trust those around him.
Amazon devotes itself to earn the customer´s trust every single day.
This requires transparency, commitment and respect between employees.
True collaboration is only possible through an atmosphere of trust, and this attitude starts at the top.
These are 6-keys to earning trust:
1. Open your kimono, take accountability.
2. Take the hit, when things happen resist the temptation to point fingers.
3. Build up your team members, when appropriate praise your team.
4. Ditch and leash, allow your team members to explore new ideas.
5. Accept confrontation, fighting is not good but neither is false agreement. When there is A DIFFERENCE OF OPINION, PROMOTE OPEN DISCUSSION.
6. FIND THE VALUE IN EACH PERSON, we all have weaknesses and strengths. Find what’s unique in each individual.
12. DIVE DEEP
Leaders at Amazon stay connected to the details and monitor them frequently.
The leader is responsible for the life of the project. Your job is also to improve customer experience.
This means relentless sense of curiosity.
Jeff encourage to experiment but the results must be rigorously measured.
With any major initiative at Amazon, the leader stays close to the project, its data, information, monitoring progress, asking questions, challenging assumptions all the way to the smallest details.
- Write a description of the problem. This will help you formalize the problem.
- Ask why the problem happens and write down the answers.
- Identify the root cause, if not keep asking why
- Make sure the root cause is identified and the team agrees on this root cause. Keep asking 5 x why until the problem has been identify.
The last 5 why, usually takes to an answer like this: Because I have not engineered it to handle these conditions and exceptions.
The commitment to dive deep within an issue is why Jeff has BANNED POWERPOINT presentations and demands clear decision making narratives.
In other words, you must present a written description of your project and not a PowerPoint presentation. You MUST dive deep in the issue and the decisions and actions to take.
You must develop this 6-8 pages, in-depth essay, and dive deeper because you will publicly present it to your peers and bosses. This helps build an environment of accountability.
YOU MUST KNOW YOUR STUFF BETTER WHEN YOU PRESENT IT TO OTHERS. This build an organization that dives deep and forces a deeper clarity of thinking.
Narratives forces clarity, prioritization and accountability to produce results.
In this essay you will describe your business, growth opportunities and the plans for taking advantage of those opportunities.
“At Amazon, no big decision is made without first making sure that is based on a deep dive into the underlying details that will determine its success”
13. HAVE BACKBONE-DISAGREEMENT AND COMMITMENT
Jeff Bezos describes the Amazon culture as friendly and intense, but “if push comes to shove, we´ll settle for intense”
Leaders at Amazon are required to challenge decisions when they disagree. They must challenge them, even when its uncomfortable or exhausting. They cannot compromise for the sake of social acceptance or cohesion. ´However, once the decision is made, the fully commit to its execution.
Amazon is a GLADIATOR CULTURE. No one leaves the Coliseum unbloodied. However, if you fight hard, maybe you obtain glory and legendary status, or maybe you will get ready for another fight.
You have a duty to fight for the customer.
The mental toughness required to disagree with bright business minds (specially in public) and commit to your own vision is HUGE. It requires a relentless and courageous attitude.
Amy Morin compile a great list of traits that characterized mental toughness in a person. If you want to survive and thrive in a super-competitive world, you cannot:
- Feel sorry for yourself
- Give away your power
- Shy away from challenge
- Waste energy on things you cannot control
- Fear talking calculated risks.
- Dwell on the past.
- Make the same mistakes over and over.
- Resent others´ success
- Give up after failure
- Feel the world owes you anything.
- Expect immediate results.
The real ability to become truly successful depends more on perseverance than on talent, as psychologists Angela Duckworth writes in the awesome book GRIT.
As John states, “The most successful are those who can excel in the pressure cooker, week in and week out, shaking off the occasional failure and the subsequent tongue-lashing, put their heads down, and keep on driving”
14. DELIVER RESULTS
Leaders at Amazon deliver results regardless of setbacks and challenges. At the end of the day, it’s all about results. All other principles live for this the most important one, deliver results.
All of these principles drive behavior and execution at Amazon. They are just not principles. They live by them. And this is a major difference between Amazon and other companies which they just have it on the wall.
I love Jeff´s quote, “If you´re not stubborn, you´ll give up on experiments too soon. And if you´re not flexible, you´ll pound your head against the wall and you won´t see a different solution to a problem you´re trying to solve”
The future is completely integrated “end to end” experience, one in which customer has a complete array of products and services in one platform and under one package.
IMPORTANT IDEAS FROM THE BOOK
- Don’t be afraid to fail. Try new things, be proactive. Some of the best businesses at Amazon emerged from the ashes of defeat.
- IMPROVEMENT: focus always on improving processes and ideas, invest in your own internal infrastructure if necessary.
- DEEP DIVES ON IDEAS: write 8 to 10 essays, not PowerPoint. As Jeff stated on the Charlie Rose interview, “When you have to write your ideas in complete sentences and complete paragraphs, it forces a deeper clarity of thinking. This works in any area, personal as well as business arena.
- Practice the “Future press release exercise”. Create a press release for a service you haven’t even start creating. This helps you make it newsworthy.
- Amazon is always pushing to invent and to improve.
- OFFER EVERYTHING YOU CAN, GET IT CHEAPER TO CUSTOMERS AND MAKE IT MORE EASILY AVAILABLE
- Word of mouth is the most powerful customer acquisition tool there is.
Word of mouth and repeat customer purchases are the absolutely best tools to become a market leader
- Leaders think long-term, as Jeff did at the beginning with his famous 10-year plan. They don’t sacrifice long term value for short-term results. They approach business as an owner, not a renter. Compensation rewards long-term thinking
- The key is to balance long-term commitments with short-term excellence. Maintaining a sense of urgency is crucial.
- “Yes, it is your job” philosophy instead of “it´s not my job? Your job description is never limited to simply running things. Regardless what is your job, you are expected to IMPROVE ON THE PROCESSES that will lead to improve the customer experience while lowering the cost
- At Amazon employees have scorecards to know if they had a good day.
- Jeff sees “a lot of people believe that you should live for the now”, but he is not one of them
- When you have an important decision to make, do this exercise: Imagine you are 80 years old, and you look back in your life, and you want to minimize the number of regrets you have. Ask yourself, what would I think at the time?
- Leaders at Amazon are required to challenge decisions when they disagree.
- I love Jeff´s quote, “If you´re not stubborn, you´ll give up on experiments too soon. And if you´re not flexible, you´ll pound your head against the wall and you won´t see a different solution to a problem you´re trying to solve”
1. Amazon hires a lot of ex-military personnel because of their know how and bias for action.
2. The vast majority of stock options go to the A+ employees.
MY FAVORITE BOOKS ON WINNING
If you are looking for other exceptional books on mental training as well as mental toughness here are my favorites, the ones I have personally read:
Download Now my TotalSuccess App, Your Daily Medicine against being “average”, for my most important ideas about these exceptional books. This app will help you develop the ultimate vision for your life and steps to get there.
- How Champions think by Dr Bob Rotella, https://www.turbomind.com/how-champions-think-by-dr-bob-rotella/
- An IRON WILL, by Orison Swet Mardin, https://www.turbomind.com/an-iron-will-what-all-great-men-have-in-comon/
- The Champion´s Mind, by Jim Afremov.
- With winning in Mind, by Lanny Bassham, https://www.turbomind.com/with-winning-in-mind-by-lanny-bassham/
- Chasing Excellence, by Ben Bergeron, https://www.turbomind.com/chasing-excellence-by-ben-bergeron/
- Mind Gym, by Gary Mack, https://www.turbomind.com/mind-gym-gary-mack-turbomind-book-club/
- Tom Coughlin, by him, https://www.turbomind.com/tom-coughlin-earn-the-right-to-win-best-ideas/
- No Limits, by Michael Phelps, https://www.turbomind.com/no-limits-by-michael-phelps-the-will-to-succeed-turbomind-com-book-club/
- Relentless by Tim Grover, https://www.turbomind.com/relentless-from-good-to-great-to-unstoppable-by-tim-s-grover-summary-by-miguel-de-la-fuente/
- Unbeatable Mind, by Mark Divine, https://www.turbomind.com/unbeatable-mind-mark-divine-turbomind-com-bookclub/
- Get the Life You Want, by Richard Bandler.
- Can´t Hurt Me, by David Goggins, https://www.turbomind.com/cant-hurt-me-by-david-goggins-turbomind-book-club/
- Make Your Bed, by Admiral William H- McRaven, https://www.turbomind.com/make-your-bed-by-admiral-william-h-mcraven-turbomind-bookclub/
- The 10X Rule by Grant Cardone, https://www.turbomind.com/the-10x-rule-the-difference-between-success-and-failure-book-summary/
- Discipline Equals Freedom. Jocko Willink, https://www.turbomind.com/discipline-equals-freedom-by-jocko-willink/
- RAFA, by Rafael Nadal, https://www.turbomind.com/rafa-by-rafael-nadalbook-summary/
- How to Win by Mark Cuban,https://www.turbomind.com/how-to-win-by-mark-cuban-book-discussion/
I keep updating this list regularly….
Contact me Through WhatsApp or Telegram for a 30-Minute Free Coaching Session. I love helping people and Businesses become Exceptional.