Engineering Ideas
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Engineering Ideas

Summary of “Working Backwards”, a book about Amazon’s culture

Principles, causal models, the role of intuition in business, PR FAQ, people-centric approach to invention, critical rationalism

Capitalistic ethics

Important note: the book is written in the frame of a capitalistic ethic where the very existence and the growth of the company (or the larger economy) are considered overarching goals. I personally don’t endorse this view. Think about almost every section in the review as having a disclaimer: “this is a good practice as long as keeping the company alive and growing is your goal that supersedes any other goals in a given context”.

Active inference

Active inference is a concept that unifies maintenance of boundaries, keeping homeostasis, learning, achieving goals, and more things that organisms do. The following Amazon’s principles and methods fall in this category as well:

Customer obsession instead of competitor obsession

Focus on input metrics (i. e., the metrics of product or service quality) to ensure that teams work on activities that propel the business.

Grow a new org capability in response to a market need rather than “do what the company already knows how to do”

Building a new function in response to an environmental need is fundamentally predictive, keeping doing what an organism already doing will eventually lead to decay and death because the environment always changes.

Dive deep

Write down the organisation’s principles and put them to use

In the early days of Amazon, Jeff Bezos often worked in pairs with almost everyone in the company. He was never shy of saying how he wanted things to get done. He was also solely responsible for hiring for a long time. This way he could shape the working (entrepreneurial, managerial, engineering) principles before the company grew.

Organisation’s principles should be aligned with the moral matrices of the employees

A moral matrix is a proportion of different moral foundations in the “moral taste” of a person or a group of people. I think that the working principles and the mission statement should be aligned with the prevailing moral sentiments among the people who work at the company. For example, if the company makes some product that alleviates human suffering in some way, then it makes the most sense to hire people who emphasise the Care/harm foundation and also make sure that people in the workplace also feel that they are cared about.

Make a causal model of the important aspects of your organisation’s functioning

Such aspects could be growth, customer acquisition, customer satisfaction (added value), operational excellence, innovation, etc.

People should have a single goal they are responsible for

So-called “single-threaded leadership” helps Amazon to achieve their goals more reliably. Note that with “single-threaded leadership”, multiple people may be responsible for a single goal: what’s prohibited is that a single person is responsible for multiple goals.

Applications of intuitive thinking and deconcentration in management and entrepreneurship

I’ve already covered how intuitive thinking should be used in decision-making in a recent post: “Formal reasoning, intuition, and embodied cognition in decision making”.

Amazon’s PR FAQ document is essentially the project alphas schema

At Amazon, people write and iterate on a so-called PR FAQ document (a press release and two FAQs: an internal and an external one) of the future product ahead of starting to build that product.

  • Problem Paragraph — alpha “Opportunity”, sub-alpha “External stakeholders’ needs”. As noted above, in systems thinking, the first move is always to think about the higher-level system’s needs.
  • Solution Paragraph(s) — alpha “System Description”, sub-alpha “Architecture”, functional view of the system.
  • “Quotes & Getting Started: Add one quote from you or your company’s spokesperson and a second quote from a hypothetical customer in which they describe the benefit they are getting from using your new product.” — alpha “Stakeholders”.
  • “Q: What is the price?” — alpha “Opportunity”, sub-alpha “Economic viability”.
  • “Q: How do I get it?” — alpha “System”, sub-alpha “Delivery/Distribution”.
  • “Q: How does it work? (You are likely to have multiple versions of this question that cover different aspects of the customer experience.)” — alpha “System Description”, sub-alpha “Architecture”, various views of the system, e. g. constructive, spatial, and informational, in addition to functional. See types of system views.
  • “Q: How large is the estimated consumer demand for XXX? What is the TAM (total addressable market)?” — alpha “Opportunity”, sub-alpha “Economic viability”.
  • “Q: What happens if a customer encounters x? How does the product deal with use case x? (there are likely to be several such questions).” — alpha “System Description”, sub-alpha “Requirements”.
  • “Q: What are the challenging product engineering problems we will need to solve?” — alpha “Opportunity”.
  • “Q: What are the challenging product engineering problems we will need to solve?” — alpha “Opportunity”, sub-alpha “Innovation”. Best product pitches set stretch goals for price or functionality or other characteristic and discuss how to achieve them.

Goal discovery

Eagerness to invent is one of the cornerstone pieces of Amazon’s culture. Here’s how Amazon achieves a good invention/discovery rate:

People-centric approach to invention

When Amazon started digital media division and AWS division, the main questions that the higher-up executive team has decided on were whom to put in the leadership of this new team and how to place this new division within the existing organisation structure (which also implies what dependencies and relationships the new division will have with the existing teams), not what they should do and how they should do it. Then the leaders of the new team were tasked to write PR FAQ documents and submit them for review by the executive team.

Autonomous teams

Both digital media and AWS divisions were hooked “high” in the organisation structure and the decision was made that they should use little (if any) of the existing infrastructure, but rather build it up on their own. This is because both projects were recognised to have a high potential early on. If these projects depended on the existing organisational and system structures, this could have limited their “search space” and prevented them from finding and realising some interesting product ideas.

Generate more ideas than you have resources to realise and filter them

Only about 10% of product or service ideas that have had a PR FAQ document have been eventually realised at Amazon.

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