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How Amazon’s CEO Defends Against the Natural Decline

by Kevin D. Crone

May 17, 2017
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Let’s look at how Jeff Bezos and Amazon does it. He addresses what’s needed to grow by stating every year in his annual shareholders letter since 1997 that it’s day one for the Internet and Amazon. As a result, his company reinvests its sales juggernaut into ventures such as Amazon studios, cloud computing, enhanced logistics and now it’s popular Amazon Echo. All those risky innovative solutions for customers have paid off increasing stock price by more than 20-fold over the last ten years and making him the world’s third richest person.

Bezos said that day two is someplace he clearly doesn’t want Amazon to go. “Day two is about inactivity and succumbing to stagnation that can happen to any organization . It will be followed by irrelevance, followed by excruciating, painful decline, followed by death.” I learned through my corporate coaching that there is a beginning, middle and an end to everything. It requires discipline at doing what it takes to keep inventing yourself or your organization to prevent this natural decline. Anything that isn’t natural takes discipline. And that’s why it’s always Day 1 at Amazon.

Jeff Bezos offers a few ways to defend against the natural decline:

1) Continued obsession with the customer. He doesn’t let their internal systems rule even if they were well meaning at the time. (For example, see what happened to United Airlines this past month?) Thinking about the customer first is rare at mature companies, especially big ones where operations become the perceived driver of short term results.

2) His organization follows a rule of Disagree and Commit when there is no consensus but a lot of conviction. His teams don’t have to convince him to take a particular route by giving him 90% of the facts and information – 70% is enough. It would take too long for the 90% you wish you had. They just have to convince him enough that he is willing to take the gamble. So making fast, quality (70%) decisions is the goal. No one knows for sure the answer so he says to his teams “Look I know we disagree on this but will you gamble with me on it?” Alignment is faster than at most companies and time is everything to the creation of their ever-changing offerings

3) He instituted a rule that no team should contain more people than could be fed by two pizzas to speed up communication and decisions. “We can have the scope and capabilities of a large company and the spirit and heart of a small one” he says.

Wow, yes there are only a few Amazons in the world and it is easy to dismiss Bezos’ methods. Yet it made me think about whether or not many, even small companies, have the spirit and heart they could have. Or had the spirit at its beginning and lost it. It seems that after 50 years of helping individuals and companies build and improve I came to the sad conclusion that the majority of individuals and companies aren’t into the field of growth.

Oh yes, they all want it, but fewer than you might think actually would get into a field, succeed at it, stick to it’s importance, constantly take it deeper, stick to their values (or any values), and constantly advance their work and grow and change. Then we read or hear about the few who do like Amazon and wonder how they got so lucky.

Even small companies over the years become obsessed with what the owners want financially and focus on how to make life easier for themselves instead of paying attention to the trends and needs of the market and what else they can offer to make their customers happier and make their lives easier. But ideas are easy to come by if you are looking. Execution takes tough focus.

Again, the question is what are we focused on. If most of the commitments around your place trace back to an internal focus then you can see what the structure (how we are pulled to a way of doing things, what gets rewarded etc.) and culture is (the beliefs, sacred cows, habits, conversations). The structure and culture was probably created at a different time and it worked then. But, what is it that will take your business to a different level? You have many strengths – are you exploiting them all? What else could you offer?

MMM Insight - Sanchez

 

 

I have concluded that all businesses are technical companies today and being committed to staying ahead of the market a bit, even though we don’t have all the answers, is good advice to all of us. What does this mean? It means that every company has to be constantly changing and innovating to help their customers succeed more.

Tough quick questions:

  • What field are you in and are you advancing it?
  • Are you studying the market as much as you should or do you just succumb to a daily grind of operational things to do?
  • Can you turn up the aggressiveness in your decision making a tad and settle for 70% before you act?
  • Are you willing to take a chance?
  • Could you have two pizza teams focused on what would change your customer’s lives?  What could you do to start some?

What could you contribute that would help your company be at “day one”?

Kevin D. Crone
Chairman
Dale Carnegie Business Group
kdcrone@dalecarnegie.ca
(905) 826-7300

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