The culture and processes are somewhat unique at Amazon and its rise to the top of the global corporate ladder has been astonishing.
An understanding of why that might be, where it is heading and some of the broadly libertarian philosophical worldview comes across in the annual Amazon shareholder letters.
Besos has not been as accessible to the wider public as a Warren Buffet or Bill Gates, or even accessible to most other Amazon shareholders.
Debates on tax, technology, workforce labour, globalisation, inequality, sustainability and consumerism can all be filtered through an Amazon lens.
A careful reading of the letters can tell you an awful lot, I think. If you simply want three highlights I suggest looking at (1) the 6 page memo decision making technique used at Amazon and (2) the articulation of type 1/type 2 decisions (crucial big decisions hard to change vs nimble decisions that can easily be reversed or course changed) and (3) a reflection on corporate culture.
Here are some exceprts with link to the letters below:
Jeff Besos and Nassim Taleb both agree on the danger of surveys and proxies. This is Besos in the 2016 Shareholder letter:
“A common example is process as proxy. Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second. Another example: market research and customer surveys can become proxies for customers–something that’s especially dangerous when you’re inventing and designing products. “Fifty-five percent of beta testers report being satisfied with this feature. That is up from 47% in the first survey.” That’s hard to interpret and could unintentionally mislead. Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design. I’m not against beta testing or surveys. But you, the product or service owner, must understand the customer, have a vision, and love the offering. Then, beta testing and research can help you find your blind spots. A remarkable customer experience starts with heart, intuition, curiosity, play, guts, taste. You won’t find any of it in a survey.”
Besos on corporate culture:
“A word about corporate cultures: for better or for worse, they are enduring, stable, hard to change. They can be a source of advantage or disadvantage. You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it–not creating it. It is created slowly over time by the people and by events–by the stories of past success and failure that become a deep part of the company lore. If it’s a distinctive culture, it will fit certain people like a custom-made glove. The reason cultures are so stable in time is because people self-select. Someone energized by competitive zeal may select and be happy in one culture, while someone who loves to pioneer and invent may choose another. The world, thankfully, is full of many high-performing, highly distinctive corporate cultures. We never claim that our approach is the right one–just that it’s ours–and over the last two decades, we’ve collected a large group of like-minded people. Folks who find our approach energizing and meaningful.”
On decision making:
“One common pitfall for large organizations–one that hurts speed and inventiveness–is “one-size-fits-all” decision making. Some decisions are consequential and irreversible or nearly irreversible–one-way doors–and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that–they are changeable, reversible–they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups. As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.1 We’ll have to figure out how to fight that tendency. And one-size-fits-all thinking will turn out to be only one of the pitfalls. We’ll work hard to avoid it… and any other large organization maladies we can identify.”
“Six-Page Narratives
We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of “study hall.” Not surprisingly, the quality of these memos varies widely. Some have the clarity of angels singing. They are brilliant and thoughtful and set up the meeting for high-quality discussion. Sometimes they come in at the other end of the spectrum.
..Here’s what we’ve figured out. Often, when a memo isn’t great, it’s not the writer’s inability to recognize the high standard, but instead a wrong expectation on scope: they mistakenly believe a high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more! They’re trying to perfect a handstand in just two weeks, and we’re not coaching them right. The great memos are written and re-written, shared with colleagues who are asked to improve the work, set aside for a couple of days, and then edited again with a fresh mind. They simply can’t be done in a day or two. The key point here is that you can improve results through the simple act of teaching scope – that a great memo probably should take a week or more.”
The Amazon site with Reports and letters here: https://ir.aboutamazon.com/annual-reports
All Amazon Besos letters 1997 to 2017 in PDF form here.
