Working Backwards: Insights, Stories, and Secrets from Inside Amazon

by Colin Bryar

the presenter and audience become integrally linked to the subsequent success or failure of the initiative, or the correctness or incorrectness of a team’s business analysis. When looking at any of Amazon’s big wins, remember that every major success has gone through multiple narrative reviews; it’s likely there were meaningful contributions from the audience as well as the team. On the other hand, for every failed initiative or analysis that fell short, there were senior leaders who looked at it and thought, “This makes sense,” or, “Yes, this should work.” Either way, if the narrative process works to its fullest potential, you’re all in it together.

Every week Jeff—and therefore I—had three recurring meetings: the four-hour S-Team meeting discussed in the previous chapter, a Weekly Business Review (chapter six), and an informal Monday-morning S-Team breakfast near the office.

on any given day we’d usually meet with two to four product teams, where we’d spend between one and two hours doing a deep dive on new products and features.

Jeff wanted to know exactly what we were going to build and how it would be better for customers than the competition. He wanted us to agree on those details before we started hiring a team or establishing vendor relationships or building anything.

It was clear that half-baked mock-ups were no better, perhaps worse, than no mock-ups at all. To Jeff, a half-baked mock-up was evidence of half-baked thinking.

The FAQ section, as it developed, included both external and internal questions. External FAQs are the ones you would expect to hear from the press or customers. “Where can I purchase a new Amazon Echo?” or “How does Alexa work?” Internal FAQs are the questions that your team and the executive leadership will ask.

The primary point of the process is to shift from an internal/company perspective to a customer perspective. Customers are pitched new products constantly. Why will this new product be compelling enough for customers to take action and buy it? A common question asked by executives when reviewing the product features in the PR is “so what?” If the press release doesn’t describe a product that is meaningfully better (faster, easier, cheaper) than what is already out there, or results in some stepwise change in customer experience, then it isn’t worth building.

The PR gives the reader the highlights of the customer experience. The FAQ provides all the salient details of the customer experience as well as a clear-eyed and thorough assessment of how expensive and challenging it will be for the company to build the product or create the service. That’s why it’s not unusual for an Amazon team to write ten drafts of the PR/FAQ or more, and to meet with their senior leaders five times or more to iterate, debate, and refine the idea.

The press release (PR) portion is a few paragraphs, always less than one page. The frequently asked questions (FAQ) should be five pages or less. There are no awards for extra pages or more words. The goal isn’t to explain all the excellent work you have done but rather to share the distilled thinking that has come from that work.

A good PR/FAQ is one in which the author has clearly considered and grappled with each of these issues, seeking truth and clarity on each.

These are the key elements of the press release:

Consumer Needs and Total Addressable Market (TAM) How many consumers have this need or problem? How big is the need? For how many consumers is this problem big enough that they are willing to spend money to do something about it? If so, how much money would they be willing to spend? How many of these consumers have the characteristics/capabilities/constraints necessary to make use of the product?

These consumer questions will enable you to identify the core customers by filtering out those who don’t meet the product constraints.

Leadership and management are often about deciding what not to do rather than what to do. Bringing clarity to why you aren’t doing something is often as important as having clarity about what you are doing.

If, after the PR/FAQ process, the leadership team still believes in the product and wants it to become a reality, the process will have given them a thorough understanding of the problems that would need to be solved in order to move forward with it. Perhaps a problem can be solved through an acquisition or a partnership. Perhaps it can be solved with the passage of time—new technologies may become available, or the costs of the technology might come down. Perhaps the company decides that the problem or constraint is solvable, that the solution will require risk and cost, and that they are willing to assume that risk and cost because the TAM is large and therefore the potential rewards are great.

“We shouldn’t be afraid of taking on hard problems if solving them would unlock substantial value.”

What’s really important is to focus on the “controllable input metrics,” the activities you directly control, which ultimately affect output metrics such as share price.

companies pay attention to the wrong signals, or lack the ability to see into key business trends, even while they feel positively awash in data.

When the retail, operations, and finance teams began to construct the initial Amazon WBR, they turned to a well-known Six Sigma process improvement method called DMAIC, an acronym for

Input metrics track things like selection, price, or convenience—factors that Amazon can control through actions such as adding items to the catalog, lowering cost so prices can be lowered, or positioning inventory to facilitate faster delivery to customers. Output metrics—things like orders, revenue, and profit—are important, but they generally can’t be directly manipulated in a sustainable manner over the long term.

Input metrics measure things that, done right, bring about the desired results in your output metrics.

You’ll notice a pattern of trial and error with metrics in the points above, and this is an essential part of the process. The key is to persistently test and debate as you go.

with the wrong input metrics or an input metric that is too crude, your efforts may not be rewarded

A big mistake people make is not getting started. Most WBRs have humble beginnings and undergo substantial changes and improvement over time.

the Weekly Business Review (WBR) is the place where metrics are put into action. We’ll talk first about how data presentation (mostly graphic) is designed to draw attention where it’s most needed. Second, we’ll describe the meeting itself, how it’s structured to maximize results, and some cautionary notes about how it can fail.

While departments shown on org charts are simple and separate, business activities usually are not.

The deck presents a consistent, end-to-end review of the business each week that is designed to follow the customer experience with Amazon. This flow from topic to topic can reveal the interconnectedness of seemingly independent activities.

The use of anecdotes and exception reporting has enabled leaders to audit at scale in a very detailed way.

Adding more junior members of the company to the WBR can increase their engagement in the business and further their growth and development—by allowing them to observe the discussions and thinking of more seasoned leaders.

The WBR is a tactical operational meeting to analyze performance trends of the prior week. At Amazon, it was not the time to discuss new strategies, project updates, or upcoming product releases.

While fear may be a good short-term motivator, it will ultimately cause more problems than it solves.

Mistakes should be a learning experience for all. If people become afraid of pointing out their own mistakes because they will feel humiliated in front of their peers, it’s human nature for them to do whatever they can to hide those mistakes in future meetings.

mistakes should be acknowledged as a chance to take ownership, understand the root cause, and learn from the experience. Some tension is unavoidable and appropriate, but we think it’s better to establish a culture where it’s not j...

Output Metrics Show Results. Input Metrics Provide Guidance.

output metrics—the data we graphed above—are far poorer indicators of trend causes than input metrics.

if you only pay attention to the output metric “revenue,” you typically won’t see the effects of new customer deceleration for quite some time. However, if you look at input metrics instead—things like “new customers,” “new customer revenue,” and “existing customer revenue”—you will detect the signal much earlier, and with a much clearer call to action.

These stories remind us that the work we do has direct impact on customers’ lives.

The problem with statements like that is that people are basically convicted and sentenced before they’ve even responded. The leader should have reserved judgment instead of attacking, then begun to understand what actually happened. People are only trying to do the right thing; they’re not trying to sabotage the business, and they don’t hate customers. They feel tremendous responsibility for what they build.

A lot of the output metrics, such as revenue and free cash flow, are what you’d typically see in a company’s financial report. Customers don’t care about those.

failure and invention are inseparable twins.

To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.

Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed expe...

Many companies will give up on an initiative if it does not produce the kind of returns they are looking for within a handful of years. Amazon will stick with it for five, six, seven years—all the while keeping the investment manageable, constantly learning and improving—until it gains momentum and acceptance.

You can’t afford to pursue inventions for very long if you spend your money on things that don’t lead to a better customer experience, like trade show booths, big teams, and splashy marketing campaigns.

Once we had a clear product plan and vision for how these products could become billion-dollar businesses that would delight tens, even hundreds of millions of consumers, we invested big. Patience and carefully managed investment over many years can pay off greatly.

Unlike baseball, where a home run can bring in no more than four runs, a big business hit can score an almost infinite number of runs.

a small number of very big winners can pay for a large number of experiments that fail or succeed only modestly.

“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.

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.”

During that time, I either observed, participated in, or acted as the leader of the development of the Kindle e-book reader, Fire Tablet, Fire TV, Prime Video, Amazon Music, Amazon Studios, and our voice-activated Echo speaker and the underlying Alexa voice assistant technology.