Entrepreneurship

The 5 Unexpected Yet Essential Lessons I Learned At Amazon

I used to believe that start-ups had nothing to learn from large companies. They were too dissimilar in nature and they didn’t pursue the same goal. My time at Amazon taught me another story. The purpose of this article is to shed light on unexpected things I learned there that have a significant impact on how I run my company today.
So here are the 5 unexpected yet essential lessons I learned at Amazon.

1. Writing is a skill. Raise the bar.

At Amazon, the “art” of writing is a key competence. They expect the highest degree of excellence. Putting things in writing is much more challenging than talking about them, documents are carefully read and very criticized. To write the Amazon way you must follow the company’s set of writing rules:

  • Tool: Forget about Powerpoint, every document must be in Word format. Why? Because writing an actual document vs. slides raises the standards. It’s more difficult but more effective in transferring information. A well-written Word document is complete in itself, it doesn’t need a presentation.
  • Length: Make it short. Project presentations should fit on 1 page and strategic plans on 6 pages, at most. I had the opportunity to read Amazon’s 3-year strategic development plan. In 6 pages, you know everything there is to know.
  • Style: Writing should be concise and precise. Every word counts.
  • Comprehension: Writers should anticipate the questions that may arise. documents must include an FAQ. The ultimate goal is that anyone who reads through a document should know as much as the author.

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 3 Amazon writing standards you can apply to any business communication

  • Forget about adverbs: avoid “significantly, more, really, etc.” They are useless words. Use data instead. Removing adverbs changes everything, you’ll see.
  • Be specific: instead of  “We have put in a lot of effort to improve our margin” prefer “we have dedicated X resources/ implemented Y actions that resulted in a Z% margin increase”.
  • Keep it concise: write a draft and then reduce the number of words/characters to a minimum.

New recruits at Amazon tend to send long and wordy emails. Three months later, the same emails, reduced by 80 %, become “sharp and crisp.”

All of this may seem extreme, but it’s not. It will help set in train a virtuous circle:
Thinking, analyzing and anticipating – Concise and precise writing – clear communication – great understanding – enhanced decision making – time and energy savings

Takeaway: Whenever you start a new project, or work on a new feature, write things down. Use a one-page format and write the Amazon way. Use this framework: 1) What’s the issue? 2) What’s the solution? 3) How will it work? 4) How will we measure success?

2. Start with the customer and work backwards

Let’s face it: for most companies, customers are always right…until they’re not. They’re right only when they purchase expensive items. They’re right until they ask for too much. They’re right until they’re rude.

Well, at Amazon, the customer is really king. Their founding principle is to be “earth’s most customer-centric company”.
“Start with the customer…

Any new draft project has to be presented in the form of a fake press release. This is a critical exercise as it’s how all innovation projects are chosen.
The project owner has to state in simple words how customers will benefit from his/her project, put him or herself in the client’s shoes right from the beginning.
The project will provide significant revenue but no clear value to customers? It doesn’t stand a chance.
The project doesn’t look profitable but will bring in customer experience killer features? it is likely to be launched.

Jeff Bezos quote

…and work backward”
Customer obsession is what drives Amazon’s strategic decisions. It starts with the customer, no matter what. They first identify and anticipate clients’ needs and then work backward.

For instance, one of the purposes of Amazon is to offer customers the widest range of products in each category. At some point, they realized they could never store so many products in their warehouses. However, from a customer perspective, it didn’t matter if the products were held in Amazon’s warehouse or not. What mattered is that customers could find whatever they were looking for on Amazon. That’s why Amazon decided to start the “Marketplace” in 2000, enabling third-party sellers to use its platform.

They did so, against all the business practices and economic thinking that prevailed at that time.
The marketplace model has since become a huge success and most online retailers have followed their lead, developing their own.
That kind of innovation could never have happened if Amazon hadn’t “started with the customer” in the first place.

Takeaway: Before starting to work on a new project, write down its fake press release. To do so, answer the following: in which newspaper would you like it to be published? What would be the headline? What are the key points that will have a wow effect on the readers?

3. The data devil is in the details

Amazon is THE data-driven company. Nothing is left to chance. Everything is being analyzed with genuine scientific discipline. Key performance indicators (KPI’s) are tracked and reviewed every day, at the greatest level of detail. And teams rapidly implement an action plan upon the resulting data. This is very different from what you can see in other companies: endless KPI’s and reporting, no action.

Looking at figures for hours can become a huge waste of time. On the matter of data, you need to have a smart and somewhat sophisticated approach if you want to make the best of them:

  • Establish smart metrics with the highest level of granularity. They have to be actionable and consistent with your goals. A basic example would be: imagine your goal is to shorten the delivery time. Instead of tracking the average delivery time (not actionable), track the number of product page views listed with a “quick delivery option”.
  • Use data analysis in an “active way”. In the above example: prioritize your action plan according to the indicator stated above and take actions on products with the highest number of page views and without the quick delivery option.  
  • Keep passive reporting streamlined and automated as much as possible.

The benefits of Amazon’s data-driven approach? First, it enhances the efficient implementation of business decisions. Secondly, it also forces any employee to stop being complacent (read what Bezos thinks about Social Cohesion) about his or her ideas and his or her performance.
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Takeaway: Analyze your current reporting’s return on investment. How much time do you spend on reporting per week? How often does it result in tangible actions? Do these actions deliver results? Could you define more useful KPI’s?

4. Company “culture”: NOT overrated 

A strong company culture is its most long-term valuable asset, whether it’s a large, small or startup business. Culture shapes the way the company will look next month, next year and hopefully in the next 10 years.

Amazon invest time, thought, and energy in corporate culture. They enforce their rules and principles on every employee. Those who don’t fit in prefer to leave. Amazon’s corporate culture is so strong that new recruits need 3 to 6 months to get acclimated, whether they’re coming from a small startup or a large consulting firm, whether they’re junior associates or former CEO, VIP…

WHY a strong culture?
Amazon’s culture is Jeff Bezos’ (JB) answer to what should drive every decision in his company. Even if you never meet JB, after 3 months at Amazon, you’ll have the mindsethe expects you to have. This mindset is shared among all the “Amazonians” I worked with. Things simply have to be done the Amazon way.  That’s very powerful, it prevents conflicts within teams from unclear guidance.

A few lived examples…
# Making the most of meeting times
In many companies, when people join a meeting, they chat and wonder what the aim of the meeting is. A lot of time is wasted.  Amazon has also had to deal with these – human – behaviors. But instead of sending “please read the documents” notes, Amazon established a process to fix the issue once and for all.
1) Every meeting host must prepare a document presenting the purpose of the meeting. 2) The meeting starts with people actually sitting and reading through the documents. If necessary, this can take up to 30 minutes for a one-hour meeting!
Starting a meeting that way is effective. People have everything in mind. The discussion is sharp, straight to the point. In the end, the meeting is useful.

# Applying core company principles on a day-to-day basis
Amazon’s “Leadership Principles” (LP) apply to every single hiring choice, performance review, promotion or business decision. On a day-to-day basis. They are not just words, they are true principles in action. Every decision and success can be pointed back to them.  For instance “Amazonians” are expected be data driven. > In meetings, if you start a sentence with “I think…” you’ve already lost your audience, and you’ll be asked if you “think” or if you “know.” If you don’t have data to support your word, nobody cares what you think.
Takeaway: Project yourself in the future. Your company has 100+ employees. You hire a new recruit. What do you expect the new manager to tell him/her? What do you want his/her business decisions to be based on? What are the key leadership principles you want him /her to have?

5. Take care of inputs

Have you ever been in a working environment where you weren’t sure about the strategy and objectives? Where this lack of vision generated lots of unnecessary discussions and demotivation?
Well, Amazon’s strategy and vision are well known by all its employees… and are actually summarized in a smart and straightforward business framework (see graph below): the “flywheel”, Amazon’s engine for growth.
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The flywheel is self-explanatory: give customers the largest choice of products (“Selection”) at the best prices and the fastest delivery (“Customer Experience”). That will drive  more “traffic” and bring new “Sellers” to the marketplace, thereby adding new products. Sellers will also lower their costs structure (they handle the shipping and the inventory) and offer much lower prices, also improving the customer experience.

Inputs vs Outputs …
It’s amazing to see that the strategy of a billion dollar company can be that clear-cut. All “Amazonians” are aware of the flywheel, they respect it and trust it. They know for sure that, within their business units, if they provide clients with the right “product selection” and “customer experience” (THE INPUTS) then THE OUTPUTS will follow: traffic, sales, prices, economies of scale and growth.
This also means that key business performance indicators focus on inputs. If site traffic drops, teams will deep dive to identify and solve a problem in selection or customer experience. They focus on inputs, not on outputs.

Come to think of it, understanding the Inputs and Outputs of your business is crucial. Inputs are in your control (products, prices, press release…) while Outputs aren’t (revenue, web traffic, social networks likes…). While it may sound basic or obvious, focusing on inputs is a strong long-term guideline for saving huge amounts of time and energy.

Takeaway: List your business inputs vs outputs. Don’t forget, inputs are actionable. Trafic, new customer accounts, social likes are outputs. Blog posts, new features, are inputs. Which inputs have the highest impact on your revenue? Set up action plans on your inputs.  
 

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I hope this article will be helpful to you, don’t hesitate to share your feedback. And if you are an ex-”Amazonian”, I’m curious about how your Amazon experience influence your work life today – feel free to share it here

Benjamin Cahen Ex-Amazon, Ex-VC, crypto-addict. WisePops founder.

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