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Kindle Notes & Highlights
by
Colin Bryar
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June 14 - September 16, 2021
“We have an unshakeable conviction that the long-term interests of shareowners are perfectly aligned with the interests of customers.”2 In other words, while it’s true that shareholder value stems from growth in profit, Amazon believes that long-term growth is best produced by putting the customer first.
“Our culture is four things: customer obsession instead of competitor obsession; willingness to think long term, with a longer investment horizon than most of our peers; eagerness to invent, which of course goes hand in hand with failure; and then, finally, taking professional pride in operational excellence.”
14 Leadership Principles, as well as a broad set of explicit, practical methodologies, that constantly reinforce its cultural goals. These include: the Bar Raiser hiring process that ensures that the company continues to acquire top talent; a bias for separable teams run by leaders with a singular focus that optimizes for speed of delivery and innovation; the use of written narratives instead of slide decks to ensure that deep understanding of complex issues drives well-informed decisions; a relentless focus on input metrics to ensure that teams work on activities that propel the business. And
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The customer is also at the center of how we analyze and manage performance metrics. Our emphasis is on what we call controllable input metrics, rather than output metrics. Controllable input metrics (e.g., reducing internal costs so you can affordably lower product prices, adding new items for sale on the website, or reducing standard delivery time) measure the set of activities that, if done well, will yield the desired results, or output metrics (such as monthly revenue and stock price).
Jeff had one simple rule: “It has to be perfect.” He’d remind his team that one bad customer experience would undo the goodwill of hundreds of perfect ones.
In the 2015 shareholder letter, Jeff wrote, “You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it—not creating it.”
For example, the Insist on the Highest Standards leadership principle is described like this: “Leaders have relentlessly high standards—many people may think these standards are unreasonably high.” The words “relentlessly” and “unreasonably high” are distinctly Jeff-ian and therefore Amazonian ways of thinking and speaking.
Another important Amazonian phrase often appears alongside the Amazon Leadership Principles and key tenets: “Unless you know better ones.” This reminds people to always seek to improve the status quo.
People often ask, “How do you remember all 14 principles?” The answer is not that we are particularly good at memorization. In fact, if a company’s principles must be memorized, it’s a warning sign that they aren’t sufficiently woven into the fabric of that company. We know and remember Amazon’s principles because they are the basic framework used for making decisions and taking action. We encountered them every day, measured ourselves against them, and held one another similarly accountable.
Amazon’s Leadership Principles6 Customer Obsession. Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers. Ownership. Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say, “that’s not my job.” Invent and Simplify. Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally
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Mechanisms: Reinforcing the Leadership Principles There’s a saying often heard at Amazon: “Good intentions don’t work. Mechanisms do.”
S-Team goals must be Specific, Measurable, Attainable, Relevant, and Timely (SMART).
At many companies, when the senior leadership meets, they tend to focus more on big-picture, high-level strategy issues than on execution. At Amazon, it’s the opposite. Amazon leaders toil over the execution details and regularly embody the Dive Deep leadership principle, which states: “Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdotes differ. No task is beneath them.”
The wrong kind of compensation practice can cause misalignment in two ways: (1) by rewarding short-term goals at the expense of long-term value creation, and (2) by rewarding the achievement of localized departmental milestones whether or not they benefit the company as a whole. Both can powerfully drive behaviors that are antithetical to the company’s ultimate goals.
Adding, subtracting, and modifying your principles in response to change or deeper understanding is a sign that you’re probably doing things right.
Like all good processes, it’s simple to understand, can be easily taught to new people, does not depend on scarce resources (such as a single individual), and has a feedback loop to ensure continual improvement.
The Bar Raiser was granted the extraordinary power to veto any hire and override the hiring manager.
There are eight steps in the Bar Raiser hiring process: Job Description Résumé Review Phone Screen In-House Interview Written Feedback Debrief/Hiring Meeting Reference Check Offer Through Onboarding
If the JD is for a new position, members of the interview loop often begin by meeting with the hiring manager and Bar Raiser to review the description and ask clarifying questions. Typically, this process reveals aspects of the job that the hiring manager has failed to identify.
Second, no loop participant should be more than one level below the level of the position the candidate will hold. Nor should there be an interviewer who would become a direct report of the candidate.
The method that Amazon interviewers use for drilling down goes by the acronym STAR (Situation, Task, Action, Result): “What was the situation?” “What were you tasked with?” “What actions did you take?” “What was the result?”
every interviewer must take detailed notes—as close to a verbatim record as possible.
The feedback should be written shortly after the interview is complete to ensure that nothing of value is forgotten. We found it wise to block out fifteen minutes immediately afterward to complete the feedback. The write-up should be thorough and clear enough that the author need not be present for their conclusions to be understood.
The meeting begins with everyone reading all the interview feedback. Afterward, the Bar Raiser may kick off the meeting by asking the group, “Now that everyone has had a chance to read all the feedback, would anyone like to change their vote?”
the hiring manager soon learns that they do not lead the meeting and they should not seek to sell the other interviewers. The role of the interviewers is to help the hiring manager gather data and make an informed decision, not to block the hire. The best practice for the hiring manager is to listen and learn and to speak infrequently. The process is designed to prevent urgency and bias from negatively affecting the decision, which could result in wasted time and months of agony.
One question that often gets a telling response is, “If given the chance, would you hire this person again?” Another is, “Of the people you have managed or worked with, in what percentile would you place this candidate?”
One director wanted to increase the gender diversity of the team. Over the ensuing quarters, the efforts were so successful that they were noticeable outside the department. When asked how they did it, the team revealed their very simple solution: every résumé received from a female applicant automatically led to a phone screen.
In my tenure at Amazon I heard him say many times that if we wanted Amazon to be a place where builders can build, we needed to eliminate communication, not encourage it. When you view effective communication across groups as a “defect,” the solutions to your problems start to look quite different from traditional ones.
Amazon’s approach to morale was to attract world-class talent and create an environment in which they had maximum latitude to invent and build things to delight customers—and you can’t do that if every quarter some faceless process like NPI smites your best ideas.
Amazon’s belief that focusing on controllable input metrics instead of output metrics drives meaningful growth. Morale is, in a sense, an output metric, whereas freedom to invent and build is an input metric. If you clear the impediment to building, morale takes care of itself.
A two-pizza team will: Be small. No more than ten people. Be autonomous. They should have no need to coordinate with other teams to get their work done. With the new service-based software architecture in place, any team could simply refer to the published application programming interfaces (APIs) for other teams. (More on this new software architecture to follow.) Be evaluated by a well-defined “fitness function.” This is the sum of a weighted series of metrics. Example: a team that is in charge of adding selection in a product category might be evaluated on: a) how many new distinct items
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Think of it like a restaurant. If you are hungry, you don’t walk into the kitchen and fix what you want. You ask for a menu, then choose an item from it. If you want something that is not on that menu, you can ask the waiter, who will send a request to the cook. But there is no guarantee you’ll get it. What happens inside the walled-off area in question is completely up to the single team that owns it, so long as they don’t change how information can be exchanged. If change becomes necessary, the owners publish a revised set of rules—a new menu, if you will—and all those who rely on them are
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One significant lesson became clear fairly early: each team started out with its own share of dependencies that would hold them back until eliminated, and eliminating the dependencies was hard work with little to no immediate payback. The most successful teams invested much of their early time in removing dependencies and building “instrumentation”—our term for infrastructure used to measure every important action—before they began to innovate, meaning, add new features.
Other teams, however, put off doing the unglamorous work of removing their dependencies and instrumenting their systems. Instead, they focused too soon on the flashier work of developing new features, which enabled them to make some satisfying early progress. Their dependencies remained, however, and the continuing drag soon became apparent as the teams lost momentum.
In the 2016 shareholder letter, even though he wasn’t explicitly talking about two-pizza teams, Jeff suggested that “most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.”5
After experimenting over many months across many teams, we realized that as long as we did the up-front work to agree on the specific metrics for a team, and we agreed on specific goals for each input metric, that was sufficient to ensure the team would move in the right direction. Combining them into a single, unifying indicator was a very clever idea that simply didn’t work.
we later came to realize that the biggest predictor of a team’s success was not whether it was small but whether it had a leader with the appropriate skills, authority, and experience to staff and manage a team whose sole focus was to get the job done.
What was originally known as a two-pizza team leader (2PTL) evolved into what is now known as a single-threaded leader (STL). The STL extends the basic model of separable teams to deliver their key benefits at any scale the project demands. Today, despite their initial success, few people at Amazon still talk about two-pizza teams.
Amazon’s SVP of Devices, Dave Limp, summed up nicely what might happen next: “The best way to fail at inventing something is by making it somebody’s part-time job.”6
Amazon uses two main forms of narrative. The first is known as the “six-pager.” It is used to describe, review, or propose just about any type of idea, process, or business. The second narrative form is the PR/FAQ. This one is specifically linked to the Working Backwards process for new product development.
essay called “The Cognitive Style of PowerPoint: Pitching Out Corrupts Within,” by Edward Tufte, a Yale professor who is an authority on the visualization of information.1 Tufte identified in one sentence the problem we’d been experiencing: “As analysis becomes more causal, multivariate, comparative, evidence based, and resolution-intense,” he writes, “the more damaging the bullet list becomes.” That description fit our discussions at the S-Team meetings: complex, interconnected, requiring plenty of information to explore, with greater and greater consequences connected to decisions. Such
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In his essay, Tufte proposed a solution. “For serious presentations,” he wrote, “it will be useful to replace PowerPoint slides with paper handouts showing words, numbers, data graphics, images together. High-resolution handouts allow viewers to contextualize, compare, narrate, and recast evidence. In contrast, data-thin, forgetful displays tend to make audiences ignorant and passive, and also to diminish the credibility of the presenter.”
We all want to deep dive on important points but have to wait through the whole presentation before being satisfied that our questions won’t be answered somewhere later on. In virtually every PP presentation, we have to take handwritten notes throughout in order to record the verbal give-and-take that actually supplies the bulk of the information we need. The slide deck alone is usually insufficient to convey or serve as a record of the complete argument at hand.
High-resolution handouts allow viewers to contextualize, compare, narrate, and recast evidence. In contrast, data-thin, forgetful displays tend to make audiences ignorant and passive, and also to diminish the credibility of the presenter.”
Tufte estimates that people read three times faster than the typical presenter can talk, meaning that they can absorb that much more information in a given time while reading a narrative than while listening to a PP presentation. A narrative therefore delivers much more information in a much shorter time.
Narratives also allow for nonlinear, interconnected arguments to unfold naturally—something that the rigid linearity of PP does not permit. Such interconnectedness defines many of our most important business opportunities.
Our goal as presenters is not to merely introduce an idea but to demonstrate that it’s been carefully weighed and thoroughly analyzed. Unlike a PP deck, a solid narrative can—and must—demonstrate how its many, often disparate, facts and analyses are interconnected.
A complete narrative should also anticipate the likely objections, concerns, and alternate points of view that we expect our team to deliver. Writers will be forced to anticipate smart questions, reasonable objections, even common misunderstandings—and to address them proactively in their narrative document.
The old essay-writing adage “State, support, conclude” forms the basis for putting a convincing argument forward. Successful narratives will connect the dots for the reader and thus create a persuasive argument, rather than presenting a disconnected stream of bullet points and graphics that leave the audience to do all the work.
Edward Tufte sums up the benefits of narratives over PP with his own blunt clarity: “PowerPoint becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of PowerPoint makes it easier for us to have foolish thoughts.”
