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Kindle Notes & Highlights
by
Colin Bryar
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May 29 - July 25, 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.”
Jeff and his leadership team crafted a set of 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
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the Amazon motto, “Work hard, have fun, make history.”
Space was so cramped that one of my interviews was conducted in a break room where, on the other side of a cubicle divider, people were getting coffee and chatting.
“We need to plant many seeds,” he would say, “because we don’t know which one of those seeds will grow into a mighty oak.”
As Jeff has written, “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…”4
In the first half of this book, we will lay out in detail some of the crucial principles and processes that define being Amazonian.
Description of part I
The Amazon Leadership Principles are the main focus of chapter one.
Focus of chapter 1
We also describe Amazon’s distinctive compensation policy, which reinforces collaboration and long-term focus over intramural competition and orientation toward short-term gains.
In chapter two, we discuss the Bar Raiser, Amazon’s unique hiring process.
Chapter 2 focus
In a company known for its inventiveness, separable, single-threaded leadership has been one of Amazon’s most useful inventions. We discuss it in chapter three. This is the organizational strategy that minimizes the drag on efficiency created by intra-organizational dependencies.
Chapter 3 focus
We also found that what really works in meetings is not what most companies do in meetings. As much as we respect PowerPoint as a visual communication tool and speaking aid, we learned the hard way that it’s not the
best format to communicate complex information about initiatives and ongoing projects in a one-hour meeting. We found, instead, that a six-page narrative written by a given team is the method that best enables everyone in a meeting to get up to speed quickly and efficiently on the project that team is working on.
In chapter five, we discuss how new ideas and products are developed at Amazon: Working Backwards from the desired customer experience. Before we start building, we write a Press Release to clearly define how the new idea or product will benefit customers, and we create a list of Frequently Asked Questions to resolve the tough issues up front.
Chapter 5 focus
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). We detail
Chapter 6 focus
these metrics as well as how to discover and track them in chapter six.
He was then a senior vice president at D. E. Shaw & Co., a New York hedge fund specializing in sophisticated mathematical models to exploit market inefficiencies.
Jeff's occupation
The job description he wrote for his very first employee said, “You must have experience designing and building large and complex (yet maintainable) systems, and you should be able to do so in about one-third the time that most competent people think possible.”
First job description
“When I interview people I tell them, ‘You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three.’”
What distinguishes Amazon is that its Leadership Principles are deeply ingrained in every significant process and function at
the company.
“I will have to work harder and smarter than I have ever worked if I am to live up to these.”
“Leaders do not believe their body odor smells of perfume”
“Leaders have relentlessly high standards—many people may think these standards are unreasonably high.”
Leadership principle
Amazon’s Leadership Principles6
Amazon’s Leadership Principles
Customer Obsession.
Ownership.
Invent and Simplify.
Are Right, A Lot.
Learn and Be Curious.
Hire and Develop the Best.
Insist on the Highest Standards.
Think Big.
Bias for Action.
Frugality.
Earn Trust.
Dive Deep.
Have Backbone; Disagree and Commit.
Deliver Results.
There’s a saying often heard at Amazon: “Good intentions don’t work. Mechanisms do.” No company can rely on good intentions like “We must try harder!” or “Next time remember to…” to improve a process, solve a problem, or fix a mistake. That’s because people already had good intentions when the problems cropped up in the first place. Amazon realized early on that if you don’t change the underlying condition that created a problem, you should expect the problem to recur.
Over the course of many years, Amazon has put in place mechanisms to ensure that the Leadership Principles translate into action. Three foundational mechanisms are: the annual planning process; the S-Team goals process (the S-Team consists of the senior vice presidents and direct reports to Jeff Bezos); and Amazon’s compensation plan, which aligns incentives with what’s best for customers and the company over the long term.
Amazon's foundational mechanisms
Annual Planning: OP1 and OP2
Goals process
This intensity is deliberate, because a poorly defined plan—or worse, no plan at all—can incur a much greater downstream cost.
The S-Team begins by creating a set of high-level expectations or objectives for the entire company.
Steam goal process
Examples have included: revenue growth targets by geography and business segment; operating leverage targets; improving productivity and giving back those savings to customers in the form of lower prices; generating strong free cash flow; and understanding the level of investment in new businesses, products, and services.
example of detailed Objectives
OP1—which sets out the individual group’s “bottom-up” proposal.
OP1
The main components of an OP1 narrative are:
The main components of an OP1 narrative are:
Assessment of past performance, including goals achieved, goals missed, and lessons learned Key initiatives for the following year A detailed income statement Requests (and justifications) for resources, which may include things like new hires, marketing spend, equipment, and other fixed assets
In January, after the holiday season ends, OP1 is adjusted as necessary to reflect the fourth-quarter results, as well as to update the trajectory of the business.
Op1 closure
