I’m a big fan of Amazon and Jeff Bezos. He’s the kind of entrepreneur I like — low profile (until recently), long term and mission focused, analytical, operationally excellent and relentlessly customer obsessed. Amazon is not a love at first sight for most people. In fact, Amazon is a slow burn to your heart (and wallet) — you eventually succumb to their low prices, convenience and vast amount of availability.
I have read Jeff Bezos’s annual letters to shareholders religiously since I found out about them a few years ago. His letters outline Amazon’s long-term mission, culture and values (along with progress reports on current products/projects). It’s the stuff of legends.
Here is a summary of all the key lessons from his annual letters, dating back to the first one in 1997.
1. It’s always Day 1
“It’s always Day 1” is Bezos’ mantra of resisting complacency and continuing the vitality, curiosity and focus of its early days.
- Don’t let the process become the goal (Bezos calls this resist proxies)
- Look outside the company and embrace trends that will make a difference, such as machine learning/AI
2. Obsess over your customer
Customers are always dissatisfied, even when they report being happy and business is great. Customer expectation is an ever moving bar that goes higher and higher. How do you keep up with these expectations?
- Create a culture of customer obsession as opposed to one that is focused on the competition
- Experiment patiently and double down with you see customer delight
3. Make quick decisions
Despite the fact that Amazon is now a huge company with hundreds of thousands of employees, they are not slow to act. Making high quality, high velocity decisions is key their business.
- Never use a one-size-fits-all decision-making process.
- Most decisions are reversible, make them quickly
- Most decisions should be made with 70% of the information
- If you don’t have consensus, disagree and commit to the decision
4. Expect failure with inventions
Amazon embraces failure as part of the invention process — they are inseparable twins. While many companies welcome experimentation and invention they often shy away from failure. Not Amazon.
- Make bold bets — outsized returns often come from betting against conventional wisdom
- You’re going to fail most of the time, but when you win, it’s a game changing win
5. Teach high standards
Having high standards is how you stay ahead of ever increasing customer expectations. Are high standards intrinsic to people or can they be taught? Bezos says that they are teachable and you should teach your people to recognize these high standards.
- High standards are teachable
- High standards are domain specific
- You don’t need to master the skill, per se, but be able to recognize it.
- It takes a while to develop high standards, so you also need to set realistic expectations on how difficult it is going to be.
6. Cultivate a distinct culture
Every company talks about culture but most of them don’t understand that culture isn’t a document you put in an employee manual. You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it — not creating it.
- Culture is created slowly over time by people and events.
- If it’s a distinctive culture, it will fit certain people like a custom-made glove.
- Culture is stable because like-minded people self select to become part of your company’s culture
7. Focus on the long term
Perhaps the biggest differentiator that sets apart Jeff Bezos from other business leaders is his commitment to the long term. The definition of “long term” may mean 5 to 10 years for most businesses, but in Bezos’ mind, it’s probably closer to 50 years.
- Make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions
- Measure programs and the effectiveness of investments analytically, and double down on the ones that work
- Stay lean and cost conscious
If you think Jeff Bezos is on point with his letters, please clap and share. Don’t agree? Please leave a comment below and we’ll discuss.