We’re ending the year of disruption by shining the spotlight on Jeff Bezos & Amazon. Not just because millions of Christmas gifts will be bought on Amazon but because, more than any other company, Amazon never stops pushing.
Amazon’s ability to innovate and develop new offers is not luck or accident, it’s their approach to business that enables them to push forward with a constant stream of new offers. So here are the 3 lessons we’ve learnt from the Amazon brand.
1. Set a big vision & values, then repeat them a lot!
Before Amazon, its founder Jeff Bezos worked on Wall Street. One firm he worked for, D.E. Shaw, was very entrepreneurial and it was here that Bezos was introduced to the potential of e-commerce. Bezos saw the opportunity of selling everything online from day one, and his goal was that Amazon become ‘The everything store’. The reason Amazon started with books was because there were only two distributors in the US (so it was easier to buy wholesale and sell books online at a cheaper price, than traditional bricks & mortar retailers). The other reason was that books came in standard sizes, so they were easier to deliver, and of course, people don’t need to try them on! Three values have driven Amazon through their meteoric rise: 1. Put the customer first, 2. Invent, and 3. Be patient.
2. Two-pizza teams are the most effective.
To create a culture of invention, Jeff Bezos talks about empowering employees and making them behave like owners at Amazon. One tangible example of this is offering employees share options in addition to more frugal basic salaries. Another example is the ‘Two-pizza rule’; Bezos believes small autonomous teams (5-7 people) are more effective than larger more bureaucratic teams. So two pizzas should be able to feed any team when they’re working late.
3. Innovate or die, but don’t die innovating.
Many businesses see innovation as people and capital intensive, so new stuff that needs lots of money and energy. This often means CEOs want ‘sure things’ or they won’t invest. By contrast, Amazon sees ideas as reversible – test, but if the return doesn’t look good they kill it quick. Bezos said in 1997, “Given a 10% chance of a hundred times payout, you should take that bet every time.” The result of all this is twofold; Amazon is able to develop ideas faster, and they also get access to cheaper capital to test with.
Other Jeff’isms include:
a) “If we think long term, we can accomplish things that we wouldn’t otherwise accomplish. Time horizons matter. They matter a lot.”
b) “There are two kinds of retailers: those folks who work to figure how to charge more, and companies that work to figure how to charge less, and we are going to be the second.”
c) “Even well-meaning gatekeepers slow innovation… When a platform is self-service, even the improbable ideas can get tried… Many of those improbable ideas do work, and society is the beneficiary of that diversity.”
Read more: Jeff Bezos Biography