What Jeff Bezos taught me
At Amazon it is always Day 1
Jeff Bezos says at Amazon it is always Day 1. An employee asked him, What does Day 2 look like? After a pause, Jeff responded: Day 2 is stasis followed by irrelevance. Followed by decline. Followed by death. And that is why it is always Day 1.
Shareholder letters
CEO annual letters to shareholders can usually be characterised as, we are so great, blah, blah, blah. Jeff Bezos’ letters are different. They contain real insight into the mindset, tools and strategies he deployed to establish Amazon as the fastest company in history to make $100b in sales. Bezos believes that businesses, including startups, don’t grow unless they are willing to take calculated risks. A key metric is Return on Risk. The shareholder letters outline his approach and are based on four growth cycles: Test, Build, Accelerate and Scale.
Test
If you double the number of experiments you do per year you’re going to double your inventiveness. - Jeff Bezos
Intolerance to failure is common in businesses, including those I have worked for. At Amazon, team members are encouraged to test new ways of doing things. There is no punishment if an experiment does not work as it is seen as a learning opportunity. If the test succeeds and there is significant growth potential then Amazon backs the idea. This approach encourages successful failure, backs big ideas and has innovation at its heart.
Build
You have to be willing to be misunderstood if you’re going to innovate. - Jeff Bezos
Most businesses have a present bias, focusing on smaller short term gains at the expense of potential larger long term ones. Amazon takes the opposite perspective. They invest time and resources in promising ideas that pay back in the longer term. They build solid foundations for products they believe customers want, based on enduring needs, e.g. speed and value. As Amazon provides more choice, customer experience improves, demand increases, economies of scale reduce unit costs and this leads to lower prices. In turn, this leads to more choice and the flywheel spins faster. Amazon are customer obsessed, think long term and develop their flywheel.
Accelerate
What's dangerous is not to evolve. - Jeff Bezos
When an idea has been demonstrated to work, Amazon accelerates its development. They establish a highly motivated, fast paced and dynamic team to drive the idea forward. Technology is applied creatively, where appropriate, to accelerate growth. Amazon promote ownership, make quick decisions, simplify complexity and use technology to shorten timescales.
Scale
Scaling at Amazon is achieved by maintaining a culture of high standards and willingness to continually innovate. Bezos measures and improves metrics that matter, in his view, e.g. free cash flow per share. He believes that decisions should be made as if it is Day 1.
My key takeaways
Love him or loathe him, we have to acknowledge that Jeff Bezos knows a thing or two about business. The key things I’ve learnt from him are:
Think big. I plan to revolutionise the effectiveness of meetings through the use of AI.
Take a long term view. I started the weekly A Bit Gamey blog in September 2021 and have over 500 readers.
Experiment and learn. I’m developing my writing, business and app design skills, based on my belief that the Best Skill Stacker Wins.
Accept that things will always change and embrace the opportunities. I plan to write a book this year.
Other resources
The Bezos Letters book by Steve Anderson
Amazon’s Competitive Advantage interview with Jeff Bezos
My Top 5 Startup Teachers post by Phil Martin
It’s always Day 1 strikes me as a clever way of conveying a powerful idea. There is always opportunity for innovative growth, regardless of how big you are now.
Have fun.
Phil…
