Learn from Jeff Bezos’ Approach
We’re all familiar with Amazon’s dominance in the online space. By 2021, Amazon is expected to own 50% of the world’s market share in the online retail. But how did the company, founded in 1994, grow to such epic proportions so fast? Amazon’s founder and CEO Jeff Bezos attributes his company’s success to the firmly held core values at the center of Amazon’s work culture.
In a recent interview, Bezos discussed how important core values were when running a business. Asked whether he worried that Amazon might be expanding in too many directions when venturing into new technological areas, he responded that as long as the same values were applied to every business venture, he wasn’t afraid of taking bold bets.
And his bets have payed off, big time. In 2018, Bezos became the world’s richest man. Though he has jokingly said the title didn’t make a huge difference since being the second richest wasn’t bad either, with a net worth of 112 billion dollars he is now richer than Bill Gates.
The Early Years
Amazon was founded by Jeff Bezos in 1994. In the 1990s, few people were using the internet. However, Bezos came across an interesting statistic. According to the entrepreneur: “I came across the fact that Web usage was growing at 2,300 percent per year. I’d never seen or heard of anything that grew that fast, and the idea of building an online bookstore with millions of titles was very exciting to me.” Bezos soon realized, however, that Amazon could sell anything and everything beyond just books.
To start the company, thirty year old Bezos invested his savings from working as a hedge fund manager. He drove across the country and started Amazon in Seattle, Washington. He chose the name of Amazon because it ranks alphabetically first among most other e-commerce companies. Bezos describes the early years of Amazon as busy, weekend-working days where his team labored hard to reach more customers and keep them happy.
Since then, Amazon hasn’t just focused on books or online sales. They’ve expanded into hardware, cloud services, and are even experimenting with bipedal robots. But through all of these ventures runs a common thread, according to Bezos: the same 14 core values. Here they are, with explanations and examples of each.
1. Customers Are #1
Bezos has stated that one of his goals with Amazon is to become “The World’s Most Customer-Centric Company.” He wants to raise the bar for what’s expected of businesses. As Bezos points out, even though customers might not know that they’d want something better, there are always ways to keep improving. Consider for example Amazon’s investment into Prime Air, a service aimed at rapid package delivery by drone. Right now, many people think that same day delivery feels great. But what about delivery within an hour? If you had that regularly, you’d probably be pretty disappointed if an item you ordered was going to take an entire day to arrive!
2. Leaders Are Owners
At Amazon, Bezos encourages all his employees to think long term. No leader should every say “that’s not my job.” Cutting corners for short term results is frowned upon. Bezos is an advocate of “get rich slowly schemes” otherwise known as actually working hard for a long time, which he has joked doesn’t sell quite as well for entrepreneurs looking for a quick way to retire. Bezos also believes that leaders should act on behalf of the entire company, rather than just pushing the interests of their team. In a well balanced company, the interests of every team should align.
3. Good Leaders Are Right A Lot
This one seems counterintuitive at first. Shouldn’t good leaders be open to doubting themselves, and changing their minds? Bezos says so, but also points out that good leaders have the experience and listening skills to help them make great decisions. This is best summed up by the old saying “practice makes perfect.” If you want to be a great leader, be a leader worth listening to. And if you want to be worth listening to, start by listening. Most importantly, be open to changing your mind and never develop an ego.
4. Think Big
Thinking big is the most important part of being an entrepreneur. Statistically, more startups will fail. Most ideas won’t be that good when you actually try them out, unless you’re really experienced. That’s the reality of being a software or hardware developer. That said, dreaming big has and always will be a pre-requisite for getting big. Bezos first thought he would only sell books, but soon realized that Amazon could sell anything. Cloud services and Kindle were both big bets that payed off, but required a huge amount of time and energy to develop. Each big success pays for a lot of failures, but startups just need one or two big ideas get off the ground.
It’s human nature to have doubts about the potential impact of your work. After all, there are 7 billion people in the world… what are the chances of any one person’s work being particularly influential or really mattering? Bezos dislikes this mentality. Seeing beyond the critics at the launch of AWS and focusing on Amazon’s online services when Walmart and other offline stores dominated the retail market have payed off. Thanks to Bezos’ foresight that the internet has key distribution and growth advantages over conventional retailers and would dominate in the future, Amazon has been able to eclipse the market cap several times over of the formerly dominant companies like Walmart.
5. Invent and Simplify
Bezos encourages Amazonians to look elsewhere for sources of inspiration. In addition, simplifying and innovating the status quo is always supported. The goal of Amazon’s online store is an innovative and simpler way to get what you want. You don’t have to drive anywhere, and you can even get what you want with a “One Click Buy”option. What used to be an hour’s errand is now a one minute process on a computer or phone.
Technology is always changing. No matter how big a tech company becomes, embracing new technology has helped amazon grow. When Amazon made a big bet on cloud services in 2002 by launching Amazon Web Services, some critics were fast to call out the gamble as “probably more of a distraction than anything else,” as one BusinessWeek article called AWS in October 2006. But it turns out that Bezos was right, and now AWS is a household name among developers. With the rapid growth of Web 2.0 in the 2000s, the demand for cloud services skyrocketed. Staying inventive and building products that make other people’s jobs easier has been key to Amazon’s success.
6. Bias For Action
In business, testing out different options and making decisions quickly keeps a company ahead of the curve. That doesn’t mean rushing decisions, but it also doesn’t mean taking too long to try out easily reversible ones. There an old saying that applies: “Be quick, but don’t hurry.”
7. Frugality
Amazon is an internet business, and its core product speaks for itself. There’s no need for fancy offices to get more customers when all your customers come to you online. At Amazon, Bezos discourages spending more resources except only when necessary. Having more subordinates or a higher team headcount doesn’t get anyone brownie points.
8. Earn Trust
Earning the trust of customers and colleagues is paramount, claims Bezos. Customers won’t come back if they don’t trust you, and other company leaders won’t respect you if they can’t trust you. For companies like Amazon, maintaining a professional site and having good customer support goes a long way. Many early internet startups had to make early customers trust that items they bought online would actually arrive. To do so, they had to build up reliable online reputations, and must continue to do so. That’s a lot of work. As Warren Buffet says, “It takes 20 years to build a reputation and 5 minutes to ruin it.”
9. Dive Deep
Leaders don’t delegate problems when making decisions that require in depth knowledge. They gather data, audit everything they can, and seek to understand a problem in its entirety before making a decision. When metrics and anecdotes differ, good leaders dive in and try to figure out where the inconsistencies are.
10. Disagree & Commit
Bezos teaches that it’s okay to respectfully challenge others’ decisions. Passively agreeing with those around you, or agreeing to please your boss or manager means you’re not actually looking at the root of a problem. Even if you’re the only one in the room with a different opinion, you should feel free to be vocal about your disagreement. This is similar to Google’s principle that age and status is irrelevant in the workplace. The quality of an idea is much more important.
11. Raise The Employee Bar
Bezos insists that hiring and nurturing the best is key to improving the quality of an employee workforce. When hiring employees, Amazon hiring managers are looking for employees who are as good or better than their current hires. There’s an old saying that goes “Surround yourself with those who are smarter than you” and that saying is taken seriously at Amazon. They thoroughly vet all employees and compare them against their current workforce.
12. Curiosity Is Key
If Bezos had never been curious about the web while working as a hedge fund manager, he may have never left his job to start Amazon. So many of the other principles at Amazon, like inventing and thinking big, require curiosity to seed a big idea. The principle has proved true for other startups as well. Facebook, the now massive social network with over 2.25 billion monthly active users, was an online spin-off of a physical directory of college dormitories and their occupants.
13. Have High Standards
Complacency in large corporations leads to stagnation and a company’s death. Just look at the downfall of Yahoo, AOL and a slew of other companies that failed to innovate. At Amazon, employees are held to the highest standards. According to Bezos, the phrase “not my job” is never an acceptable response from employees. In fact, Amazon employees are held to such a high degree of accountability that the company has been criticized for over-working their employees, but Bezos maintains that Amazon employees can have a healthy “work-life harmony.” When asks about whether such criticism has changed his mind about workloads on his employees, Bezos says “I’m very proud of the culture that we have at Amazon… I think of it as a gold standard culture for innovation and pioneering work.”
14. Deliver Results
The best leaders always deliver. Think of the most dependable person you know. You can probably also think of many other people around them who look up to them as an example. Maybe it’s a mentor, colleague or friend from college who you ask for advice. Leaders are not only right a lot, but they know how to get the job done in a timely manner.
Today, Amazon is a trillion dollar monolith and dominates the retail and cloud markets. They’re looking into cryptocurrencies, futuristic robots and home security. Where else will they go over the next few decades?
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