When the richest man in the world sends a letter, you are intrigued. Especially so, when the firm he heads is resetting our expectations of what a huge enterprise can achieve. On what a consumer can expect and experience. Jeff Bezos and Amazon are reshaping our digital world like few others have.
A 232 BUSD conglomerate, Amazon houses some of our most innovative brands today. A passing mention by Bezos or news of Amazon entering a particular market sends share prices of incumbents tumbling. Firms are charting their destiny with Amazon as the north star! For instance, Uber wants to be the Amazon of the ride sharing world. This year has seen Amazon in the radar for a variety of reasons from Congressmen broaching anti-trust, to his personal life and Amazonians (as Amazon’s employees are called) asking the firm to adapt more sustainable practices.
Here is a look at the dominance of Amazon in retail and 140 fun facts. No wonder a letter from Jeff Bezos invokes as much curiosity.
Jeff Bezos’s letter this year is his 20th Annual letter to shareholders. A tradition he has kept up from 1997 and since Amazon’s first year of operations. Dig up the first letter and look at it, or all since the first one . A sense of Amazon and Bezos having grown and evolved over the years emerges. Yet what is striking, is how the basic tenets have remained the same
1. Day 1
Jeff Bezos sits in a building called Day 1, to serve as a reminder to himself and others in Amazon on how important that concept is. Day 1 in four simple principles is about
- Being obsessed with the customer
- Focusing on results over processes
- Make high quality decisions quickly
- Embrace external trends quickly.
What does Day 2 look like? Here it is in his own words
“Day 2 is stasis. Followed by irrelevance.
Followed by excruciating, painful decline.
Followed by death. And that is why it is always Day 1.”
2. Culture of builders and wanderers
This allows Amazon to imagine the Alexa even though no customer was asking for it. Yet learn from the massive failure of Fire Phone and apply them to Alexa.
3. Decision Making
The nemesis of many organisations. Delays and looking for data and more data, has made the term paralysis by analysis, apt and fashionable! “Have Backbone, Disagree and Commit” is one of the leadership principles at Amazon. Jeff Bezos lives this. In the earlier shareholder letters, he said that while he wasn’t convinced about Amazon studio’s yet he agreed to disagree and commit.
The letter this year has evoked many reactions. From adulation to questions being raised. Many wondered why Jeff Bezos was playing down the performance of Amazon. Was he worried about the anti-trust noises? Was he sending a message to the investors that there could be surprises?
We don’t know. What we do know is that Ebay shares dropped by 5% and the CEO sent a terse reply on Twitter. Walmart the ‘you-know-who-you-are’ competitor who was not named, responded asking Bezos to pay his taxes. That in raising wages, incentives were done away with for employees. Well well well. It was all happening around ‘the’ letter.
Apart from all the noise and reactions, something else was staring at us in the letter. Not only was Amazon redefining the customer experience in many walks of our life. Amazon was also busting a few myths and accepted conventions of large enterprises. Here are three, in no particular order;
1. Every huge bureaucratic and process driven organization today, was once an entrepreneurial firm. Size=Bureaucracy
Amazon is the 48th largest country in the world in terms of economy size. It is bigger than the economies of 40+ countries put together. Yet it remains the entrepreneurial spirit it was 20 years ago. How? Some pointers come from adopted principles like Day 1, Flywheel Concept.
2. Low Price vs Exceptional service.
As a consumer, thank God we don’t have to choose between these two on Amazon. Amazon has proved that these are not mutually exclusive. For enterprises, Amazon has proved that it is not important to play the cost/scale game alone. Amazon has deployed the increasing returns model to benefit from the loyalty of its customers won through low prices!
3) A large company’s culture is a trade-off between Creativity and Effectiveness.
Amazon has proven to us that both can exist in the same firm. Bezos beautifully calls it ‘Wandering’. To quote the letter ‘Wandering in business is not efficient … but it’s also not random. It’s guided – by hunch, gut, intuition, curiosity, and powered by a deep conviction that the prize for customers is big enough that it’s worth being a little messy and tangential to find our way there. Wandering is an essential counter-balance to efficiency. You need to employ both. The outsized discoveries – the “non-linear” ones – are highly likely to require wandering.’
Amazon has proved time and again, that there are clichés and conventions we hide behind. Not just corporates but you and I as individuals too. We must hold each of these up for consideration. Are we taking shortcuts for thinking?
“Success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again…the path to success is anything but straight.”