And Other Insights, Stories, and Secrets from Inside Amazon
This is a summary of the book “Working Backwards” — By Colin Bryar. This book tells the story of how Amazon changed the way people live.
Key Insights in this book:
- The success of Amazon is built on its leadership ideals.
- Amazon has eliminated confirmation bias and hurry from its hiring process.
- When it comes to delivering complex material, PowerPoint presentations fall short.
- Amazon distinguishes itself by prioritizing the needs of its consumers over their own.
- Amazon’s next-day delivery option is the result of obsessive consumer focus.
- The company’s leadership ideas were ignored in Amazon’s initial video-on-demand program.
- Working backwards, Amazon entered the hardware market and created the Kindle.
Who can benefit the most from this book:
- Executive coaches looking for fresh insights.
- Entrepreneurs hoping to turbo-charge their business.
- Managers wanting to boost their teams’ performance.
What am I getting out of it? Take Amazon’s winning leadership philosophy home with you.
What can your firm learn from the most innovative, game-changing corporation on the planet? The way people shop, read and live have all changed because of Amazon. It can also change the way you operate, as the insights that follow demonstrate.
This is your guide to thinking like an Amazon leader – or, as they like to be called, Amazonians. It's jam-packed with fascinating anecdotes and straightforward advice. You'll get a behind-the-scenes look at how Amazon makes decisions, conducts meetings, and employs the best employees. As you learn about the company's promising beginnings and the tales behind its most iconic items, you'll also learn about Jeff Bezos' core leadership ideals. You'll learn how Amazon gets it right so often, from Kindle to Prime to video-on-demand, and what happens when it doesn't.
- You’ll learn how Amazon Prime altered the way we purchase.
- Why Jeff Bezos despises PowerPoint presentations.
- And Amazon’s recruitment secret weapon in this summary.
1. The success of Amazon is built on its leadership ideals.
The narrative of Amazon begins with a single individual. Jeff Bezos worked for a New York hedge fund in 1994. That year, Bezos learnt that the internet's user base was expected to rise by over two thousand per cent per year in the future years. Soon after, he made a bold decision that would come to define Amazon's philosophy: he quit his hedge fund position and set out to build his own Internet-based corporation.
Books, Bezos thought, were the ideal product for an e-commerce firm. Even the largest bookstores could only stock tens of thousands of volumes at a time, even though the United States alone had over a million books in print. Bezos would be able to provide practically every book that was available if he opened an online bookstore.
The essential takeaway is that Amazon's leadership values are the bedrock of its success.
Amazon's Invent and Simplify concept was exhibited by Bezos' imaginative thinking. Amazon executives are constantly looking for fresh and imaginative ways to accomplish their goals.
Bezos displayed another principle by quitting his job: a Bias for Action. Amazon executives believe that speed is critical to their company's success. Even if you act fast and make a mistake, you can generally recover. It's better to take a calculated risk like Bezos did when he quit the hedge fund, rather than spending a lot of time evaluating your choices.
Furthermore, by taking part in the Internet revolution, Bezos demonstrated that he was not afraid to Think Big. This is a core principle for Amazon's executives, who realize that tiny dreams lead to small accomplishments. Instead, the Amazon team sees a bright, daring future, and it is this vision that has led to such remarkable success.
The company's earliest offices were in a small basement in Seattle when Bezos launched his online bookstore. They used old doors attached to four-by-fours as workstations instead of proper desks. This represented the Frugality ethic, which still exists at Amazon. There are no incentives for increasing headcounts or expenditures, so leaders are praised for getting more done with less.
Finally, despite Amazon's assurances that their books would be delivered via first-class mail, each book was delivered by priority mail. The corporation paid a higher price for this, but buyers were happy when their books arrived considerably sooner than expected. Every decision Amazon takes today is still driven by an obsession with customer experience.
2. Amazon has eliminated confirmation bias and hurry from its hiring process.
Business-critical decisions are considered trivial in far too many companies. Consider yourself a senior executive tasked with purchasing a multimillion-dollar plant to produce your company's goods. Because the decision you make will have a long-term impact on the company's bottom line, you should go through a thorough procedure to ensure that you select the proper manufacturer.
Many firms, on the other hand, have little rigour in their recruitment processes when it comes to hiring the proper personnel. This is a major issue. After all, your recruiting decisions have a long-term impact on the operation of your firm. That's why Amazon's hiring judgments are so accurate.
Here's the main point: Amazon has eliminated confirmation bias and hurry from its hiring process.
Urgency bias occurs when a team feels compelled to fill a vacant position, maybe because they are responsible for the work of the absent worker. Because they're so eager to find someone, they overemphasize a candidate's qualities and ignore his weaknesses. In many circumstances, this means they hire someone who isn't the best fit for the job.
However, Amazon has a unique weapon in their recruitment process that avoids urgency bias: the bar raiser. A bar raiser is a highly experienced interviewer who is not a member of the hiring team and has no vested interest in ensuring that someone is hired swiftly. The bar raiser is in charge of conducting final interviews with candidates and, more importantly, has the authority to veto individuals who aren't a suitable fit. This guarantees that teams apply a high level of discipline to their hiring procedures. They know, after all, that the bar raiser will only allow the greatest to join them.
Confirmation bias is another hiring hazard. When multiple interviewers conduct interviews with the same candidate, this can happen. After the first interviewer has finished, she may speak with the other interviewers informally about whether they liked or disliked the candidate. This may appear innocuous, but it establishes expectations in the minds of the other interviewers about how good the candidate is. Instead of fairly evaluating the candidate, they will hunt for evidence that confirms their ideas when conducting their own interviews. Amazon avoids confirmation bias by requiring all interviewers to write full reports on candidates immediately following their interviews and before speaking with coworkers. The interviewers consult these reports when they meet to discuss the candidate. This system ensures that each person's opinion is their own.
3. When it comes to delivering complex material, PowerPoint presentations fall short.
What does an Amazon meeting entail? You might be surprised by the response. For starters, no PowerPoint presentations are ever used. Second, every meeting begins with silence for the first twenty minutes. The secret to Amazon's effective decision-making is silence.
In 2004, Jeff Bezos realized that PowerPoint was causing problems in his senior management meetings. Until then, his senior managers took turns stepping up and giving a weekly presentation on a significant topic. However, these presentations were frequently ineffective. Attendees had to sift through a lot of data in order to fully comprehend the topic at hand. They needed to not only comprehend how different thoughts and pieces of data fit together, but they also needed to dig deeper into this information.
The main point is that PowerPoint presentations are ineffective at communicating complex information.
You're probably aware that PowerPoint works with slides and bullet points, with each slide displaying only one idea. However, as Amazon's top management team realized, this makes it impossible to see the links between concepts or to refer back to one from another. Furthermore, using bullet-point lists to convey results in the loss of all nuance in concepts. Complex issues are reduced to their simplest parts as they are crammed into a bullet-point style. It was hard for Amazon's executives to make educated decisions without understanding the finer nuances of a subject.
This is where the six-page memo comes in.
After years of tense meetings, Amazonians ditched PowerPoint in favour of a six-page document in 2004. Meeting attendees now read this message for twenty minutes during each meeting. The six-pager follows a narrative format to explain the subject. This enables the topic to be discussed in greater depth and complexity, rather than just bullet points. A six-page memo, in fact, contains roughly nine times the amount of information as the slideshows it replaces. This also allows for considerably greater exploration of links between various ideas.
The six-page document also attempts to equalize the playing field among employees. Meeting attendees would invariably rate new suggestions based in part on the presenter's speaking and graphic-design skills when PowerPoint was used to explain them. Regardless of how strong their ideas were, skilled speakers with compelling graphics tended to garner more positive answers. The six-page letter, on the other hand, kept attendees' attention on the ideas rather than the presenter, removing bias from the feedback process.
4. Amazon distinguishes itself by prioritizing the needs of its consumers over their own.
What does it mean to work backwards? It means prioritizing the client at Amazon. When Amazonians come up with new product ideas, they don't start with Amazon's needs and capabilities in mind. Instead, they exclusively evaluate what will improve the lives of their clients.
They work backwards to make the customer-centric product a reality once they've found an answer.
The main point here is that Amazon stands out by putting its customers' needs ahead of their own.
Working backwards from your clients' needs may seem obvious, but most businesses operate in the opposite direction. Rather than prioritizing the consumer experience, product teams look for inspiration closer to home. They may begin by appraising the skills of their research and development teams, or by confining themselves by taking into account their company's cost and profit margin choices. After they've created a new product that fulfils the company's needs, they hand it over to their sales and marketing department, which considers how to persuade customers to buy it. This forward-thinking mentality frequently results in organizations holding things that they desire but their customers don't.
So, how does it feel to work backwards in practice?
If a product team has a new product idea, they should start by drafting a one-page document. This paper is formatted like a press release. It imagines that the product has already been created and extols the benefits that the product will bring to Amazon's customers. The e-great reader's screen, for example, was stressed in the press release, as was the e-simple reader's book-buying and download experience. Of course, this press release will not be distributed to the media. Instead, it's used as a product proposal, which will be read by various internal stakeholders before deciding whether or not to pursue the idea further.
The product team also creates a frequently asked questions document, or FAQ, in addition to the press release. The FAQ is a five-page document that answers queries from customers and internal personnel. Amazon's top leadership team, for example, may want to know how many new data scientists or software developers they'll need to build the product. The FAQ addresses whether the product is viable, or even desired, for the company by attempting to answer key questions.
Amazon assures that it only creates viable items that make its customers' lives faster, easier, or less expensive by working backwards from the press release and FAQ method.
5. Amazon's next-day delivery option is the result of obsessive consumer focus.
Amazon experienced difficulty in 2004. Its e-commerce sales were increasing in all categories but at a slower pace. Simultaneously, the worldwide e-commerce market grew year after year. If things kept continuing the way they were, Amazon would become a little player in an ever-growing industry. Fortunately, Jeff Bezos had a plan in place that would forever change Amazon's fortunes and the face of e-commerce.
Amazon's main stumbling block, Bezos found, wasn't its pricing or product choice; it was its convenience – or lack thereof.
Here's the main point: Amazon's next-day delivery option is the result of obsessive consumer focus.
Many consumers still didn't find online purchasing convenient in the mid-2000s. Most things still took several days to arrive, which meant that consumers who wanted something quickly, such as a last-minute gift, preferred to shop at a physical store. Shipping charges, which were quite high in the early days of e-commerce, also turned off many customers. Customers were more likely to buy from Amazon when the company offered free shipping rather than discounts on the products themselves.
Bezos had to make a difficult decision. Amazon had already made a $600 million investment in its fulfilment centre. The payback on its massive investment may take seven years if it changed direction and revised its shipping strategy. Alternatively, it might postpone substantial changes and focus on improving the customer experience by modifying the existing systems and infrastructure.
Bezos' choice was ultimately driven by Amazon's leadership values. Amazon was fascinated with its customers; it could be better for the company's profit line in the short term if it didn't make substantial changes, but it wouldn't be better for its customers, who demanded more convenience. And Bezos was certain that whatever was best for his customers would eventually be best for his shareholders.
With this in mind, Bezos and his team decided to establish Amazon Prime, a subscription-based membership club. By 2018, approximately a hundred million people had joined up for Prime, which offered free two-day shipping and a reduced alternative for next-day delivery. Customers who needed something right away could order online and pick next-day delivery, eliminating the need to go to a store. In this regard, Amazon Prime has set a new standard for e-commerce speed and simplicity. Amazon has remained a prominent participant, causing competitors to scramble to catch up.
6. The company's leadership ideas were ignored in Amazon's initial video-on-demand program.
Even Amazon does not always get things right. Senior executives were on stage during an Amazon launch celebration in 2005. Unbox was the name of the product they were introducing, a service that would allow users to download movies and TV series and watch them on their computers. The audience was given a demonstration of how Unbox will work at the launch. The audience chuckled uneasily when a movie was downloaded and flickered onto a large screen; the image was upside down. It was a foreshadowing of what was to come.
The most important message is this: The company's leadership ideas were ignored in Amazon's initial video-on-demand program.
In 2005, movie buffs could go to their local Blockbuster on a Friday night, only to discover that the film they desired was not available. They may also subscribe to Netflix, which was at the time a mail-order DVD company, and wait for their DVD to arrive. Instead of these sub-optimal alternatives, Bezos intended to provide customers with the ability to select and watch movies they genuinely wanted to watch, all from the comfort of their own homes.
This was a brilliant idea. The issue was that when it came to the Unbox service, the Amazonians in charge neglected to follow their main leadership principles.
First, they failed to uphold their principle of maintaining consistently high standards. Amazon uses Microsoft's digital rights management software to allow users to download their favourite movies and TV shows. However, this software was riddled with flaws; many users had trouble downloading, and the software didn't work at all for others. The product team should have solved these issues before the launch, but they couldn't come up with a viable alternative to Microsoft's digital rights management software, so they went with it. Customers and the press both gave Unbox negative evaluations as a result of this.
Second, Amazon failed to check what their customers genuinely desired during the development stages of Unbox. Customers, Amazon presumed, wanted to view high-definition digital movies and TV shows. However, offering these high-quality images meant that download speeds were extremely long; clients had to wait up to four hours for a single movie to download. And, ironically, in 2005, customers were unconcerned about visual quality. Millions of people discovered YouTube that year, a platform that offered low-quality films uploaded by users – and customers could start watching them right away, which was more significant to them than the image quality.
7. Working backwards, Amazon entered the hardware market and created the Kindle.
Amazon is unconcerned about being misunderstood. Apple introduced iTunes in 2005, a ground-breaking application that allowed people to purchase and save music digitally. Within months, top executives from the music industry were asking Jeff Bezos when Amazon would launch its own digital music service to compete with Apple. Some music executives reportedly attempted to get Bezos to intervene. Bezos, on the other hand, was not thinking about the music industry at all. Instead, he was pondering literature.
Amazon's leadership principles would have been violated if it had rushed to produce a clone digital music offering to compete with iTunes. Amazon would have prioritized the competition over its customers if it had focused on competing with Apple's iTunes service. After all, iTunes was an incredible piece of software. Were customers genuinely looking for a different option?
The essential takeaway here is that Amazon transitioned into hardware and developed the Kindle by working backwards.
Instead, in the six months following the iTunes debut, Bezos and his team focused on what buyers could want next from a digital product. They eventually came up with a solution: a quick and easy e-reading experience. E-books could only be read on a PC back then, which made for a frustrating experience.
Bezos' aim was to move e-books away from PCs and onto a purpose-built digital gadget that would allow customers to browse, buy, and begin reading any book in seconds. The Kindle was the name given to this device later on.
But how did Amazon come up with this ideal e-reader?
Amazon needed to undertake its first push into hardware creation and develop the gadget itself, according to Bezos. Many members of his management team were adamantly opposed. They said that Amazon was primarily an e-commerce corporation, with few members of the senior management team having any experience with hardware development. But, once again, putting customers' demands first meant that Amazon's only option was to build the Kindle in-house. Amazon wouldn't be able to continue to adjust and improve it if it was created by an outside hardware development company.
As a result, Amazon did what it does best: it reversed the process. It determined what its customers desired, then hired people with the abilities and skill sets necessary to make it a reality. Millions of Kindles have been sold to date, and Amazon has forever transformed the way people read books.
