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

by Colin Bryar

it takes exceptionally patient and unwavering leadership to persevere through the prolonged process of building a new business and navigating through transformative times in an established industry with entrenched interests.

his first action was not a “what” decision, it was a “who” and “how” decision. This is an incredibly important difference. Jeff did not jump straight to focusing on what product to build, which seems like the straightest line from A to B. Instead, the choices he made suggest he believed that the scale of the opportunity was large and that the scope of the work required to achieve success was equally large and complex. He focused first on how to organize the team and who was the right leader to achieve the right result.

Jeff felt that if we tried to manage digital media as a part of the physical media business, it would never be a priority.

Before Steve moved over to head Digital, the most senior leader of the digital media business was a product manager, four levels below Steve. There was no way that someone at that level could lead and develop the kinds of new products and initiatives that we would launch in the coming years.

the industry was changing more rapidly than most. With a fast-follower strategy, by the time we could have built and deployed a reasonable replica of a competitor’s service, they or someone else would have already created something better, and we wouldn’t have had enough time to recoup returns on our existing service before we had to build a different one.

invention is a more challenging path than fast following. The roadmap for fast following is relatively clear—you study what your competitor has built and copy it. There is no roadmap for invention.

he was given the autonomy and authority to devote single-threaded focus to Digital. Second, it meant that Diego and his peers would not be required to spend any of their time on Digital.

Once he and the team had aligned on each detailed PR/FAQ, Digital and AWS leaders could then run as hard as possible to build their teams and launch new products, with the knowledge that they were in lockstep with the CEO.

Each general manager (GM) category leader had a corresponding peer leader on the engineering side. Each engineering category had a two-pizza team for each major component of the software services (e.g., content ingestion and transformation) and for client application software. This was mostly a pragmatic decision based on the skills of the leaders.

With each modification, the scope of each leader’s responsibilities would become narrower, but the intended scale of each role was greater.

we learned that relying on third parties, while operationally and financially less risky, was much riskier from the point of view of customer experience.

You can’t outsource a customized, integrated, end-to-end experience.

Deliver Results. Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.

retail customers don’t care about a company’s revenue—they care about what they get back in return for parting with their hard-earned dollars.

By the time Jeff sent that October 2004 email calling us to action on Prime, we had actually been working for two and a half years to develop an array of everyday free shipping initiatives that worked for customers, without harming the financial health of the company.

But it would not last. Customer expectations are not static. They rise over time, which means you cannot rest on your laurels.

The institutional no refers to the tendency for well-meaning people within large organizations to say no to new ideas. The errors caused by the institutional no are typically errors of omission, that is, something a company doesn’t do versus something it does. Staying the current course offers managers comfort and certainty—even if the price of that short-term certainty is instability and value destruction later on.

the errors of omission caused by the institutional no can be notoriously tricky to spot. Most businesses don’t have the tools to evaluate the cost of not doing something. And when the cost is high, they only realize when it’s too late to change. The institutional no can infiltrate all levels of the organization.

The Amazon Deliver Results leadership principle states, “Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.”

at some point he had decided that it wasn’t the idea that was flawed, but the decision-making process, a process encumbered by institutional risk-aversion. The “October surprise” email arose out of his realization that you simply could not prove a priori that free shipping would work. You just had to try it.

At this point in mid-October, the thought experiments transitioned to a “tangible project,” albeit one with no dedicated resources and no definition other than “launch a shipping membership program by the end of the year.”

I had hoped and expected the launch of Unbox to be one of the greatest achievements of my Amazon career. Instead, it turned out to be my single biggest failure.

There is a difficult chicken-and-egg problem with a subscription service. You need to have a great offering to attract paying subscribers. To be able to afford a great offering, you need a lot of paying subscribers. It’s a challenging cold-start problem that generally requires a large up-front investment, which you can hopefully pay back with subscriber growth in future years.

The “oh-by-the-way” addition would become a “gotta-have” benefit.

as Jeff often mentions, customers are divinely discontented, and “yesterday’s ‘wow’ quickly becomes today’s ‘ordinary.’”

can say confidently that the extra time we spent slowing down to uncover the necessary truths was ultimately a faster path to a large and successful business. The results speak for themselves.

Bias for Action does not obviate the need for the painstaking aspects of the Working Backwards process.

We did not allow ourselves to be so driven by what our competitors might do that we would launch a product without first having thought very carefully about how our customers would use it and benefit from it.

Ban PowerPoint as a tool to discuss complicated topics and start using six-page narratives and PR/FAQ documents in your leadership team meetings. This can be implemented almost instantly. There will be pushback and grumbling, but we’ve found it produces results swiftly, and eventually your leaders will say to themselves, “We can never go back to the old way.”

Establish the Bar Raiser hiring process. This approach is no longer unique to Amazon and we have seen it work in many companies. It too can be established relatively quickly, once a training process is in place. It also delivers short-term results by improving the quality of the process and enabling learning for everyone involved in the loop. It should reduce the number of poor hires and, in the long run, improve the overall quality of thinking and performance in each team, and in the company as a whole.

Focus on controllable input metrics. Amazon is relentless about identifying metrics that can be controlled and have the greatest impact on outputs such as free cash flow per share. This is not an easy process, because it requires patient trial and error as you seek the input metrics that best allow you to assume control of your desired results. Note too that this is not an ar...

Move to an organizational structure that accommodates autonomous teams with single-threaded leaders. As noted in chapter three, this takes time and requires careful management, as it invariably raises questions about authority and power, jurisdiction, and “turf.” You’ll also have to be on the lookout for dependencies and roadblocks that are preventing autonomy in your organization. But it can be done...

Revise the compensation structure for leaders so that it encourages long-term commitment and long-term decision-making. Avoid making too many exceptions for “special cases.” Make sure that leaders in all areas of ...

Articulate the core elements of the company’s culture, as Amazon did with long-term thinking, customer obsession, eagerness to invent, and operational excellence. Then build these into every process and discussion. Do not assume that simply s...

Define a set of leadership principles. These must be developed with participation from many contributors. Don’t assign the task to a single group or outsource it to a consultant or service provider. Do it yourselves. Hash out the details. Revisit the principles from time to time and revise if and as necessary. Then, as with the aspects of ...

Depict your flywheel. What are the drivers of growth for your company? Make a picture of them that shows how they act upon the flywheel. Evaluate everything you do in light of its positive or ne...