Working Backwards: Key Learnings
“Most of Amazon’s major products and initiatives since 2004 have one very Amazonian thing in common — they were created through a process called Working Backwards.”
― Colin Bryar, Working Backwards: Insights, Stories, and Secrets from Inside Amazon
To quote the celebrated scientist and philosopher Albert Einstein, “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” This quote resonates with me now more than ever since joining Atlan, an innovative company that epitomizes the problem-first solution-second approach. This philosophy is ingrained in Atlan’s DNA, and it was evident from my first few days of orientation. As I listened to colleagues toss this phrase around, I struggled to understand what it truly meant. It wasn’t until I experienced the ethos firsthand that I grasped its significance.
For instance, one day, I started a Slack thread requesting a new feature from the product team. However, I had neglected to explain the “why” behind it and the problem the feature would solve for our customers. Subsequently, I received a gentle reprimand from the team for not following the problem-first solution-second approach. This incident drove home the importance of understanding the problem and customer experience before proposing solutions.
At Atlan, we believe that this approach is integral to our growth and success. It ensures that resources are deployed to solve the right problems and that solutions are effective and valuable.
In fact, prioritizing the problem-first solution-second approach has been instrumental in helping us determine which features to focus on, given the multitude of requests that we receive from our customers. By taking the time to understand the problem, we can tailor solutions that effectively address our customers’ needs, leading to their satisfaction and retention. This is especially crucial in a hyper-competitive environment, as you must prioritize resources and ensure that the most significant problems are addressed first.
While reading “Working Backwards,” I couldn’t help but draw parallels between Amazon’s operating principles and how we operate at Atlan. For instance, Amazon’s philosophy of working backward aligns with our problem-first, solution-second approach. Similarly, Amazon’s approach to conducting meetings is similar to how we structure our own meetings, where the first 20 minutes are devoted to silence and reading the written problem statements.
Therefore, I am excited to write this blog post to share some of the key lessons I gleaned from “Working Backwards,” a book that offers insights into the inner workings of Amazon. If you are interested in understanding why putting the problem first and the solution second is critical to a company’s success, as well as many other key takeaways from this book, then please keep reading.
Leadership Principles
As Amazon grew from a few hundred people to hundreds of thousands, it established its Leadership Principles to encapsulate its distinct company culture and guarantee that all employees, irrespective of their role or level within the organization, embody and adhere to that culture. These principles offer guidance for decision-making, hiring, and employee advancement, ensuring that Amazon maintains its customer-centric focus, entrepreneurial spirit, and bias for action despite its growth and diversification.
Leadership principles are essential for any company as they provide a framework for decision-making and behavior that aligns with the company’s vision and values. By formalizing these principles, companies can communicate them clearly and implement them consistently across the organization, even in the absence of the CEO. This promotes desirable behavior and creates enduring value for shareholders and stakeholders. Moreover, by incorporating these principles into core processes such as hiring, performance management, and career development, companies can ensure that they are not just theoretical concepts but actual practices embraced in all aspects of the organization. This enables quicker and more effective decision-making and fosters a culture of accountability and trust.
Overall, the leadership principles are a critical component of Amazon’s success and offer valuable lessons for leaders in any industry.
Hiring
Every bad hiring decision comes at a cost. In the best cases, it quickly becomes apparent that the new hire is not a good fit, and the person leaves shortly after joining. Even then, the short-term cost can be substantial: the position may go unstaffed for longer than you’d like, the interview team will have wasted their time, and good candidates may have been turned away in the interim. In the worst case, a bad hire stays with the company while making errors in judgment that bring a host of possible bad outcomes. Along the way, a bad hire is a weak link who can bring the entire team down to their standards, a long-term cost that lingers long after they leave the company.
The hiring process at Amazon.com is a critical and challenging task that requires significant resources and a well-defined process. Amazon’s hiring process is simple to understand, easily taught to new people, does not depend on scarce resources, and has a feedback loop for continual improvement. The feedback loop is essential for coaching interviewers and improving the hiring process continually.
One of the most intriguing aspects of the hiring process at Amazon.com is the 14 Leadership Principles. These principles are an excellent way to assess candidates and maintain the corporate culture. However, hiring is a complicated task that requires a good process, metrics, and a team of experts known as Bar Raisers. The Bar Raisers are voluntary experts who are trained to minimize personal biases and maximize data-based hiring decisions.
The Amazon Bar Raiser process seeks to eliminate individual biases by preparing behavior-based interview questions in advance, insisting on written transcripts of the interview, conducting debriefs, basing debriefs on the interview transcripts, and making assessments based on well-understood principles. Having a diverse group of people involved in the process reduces the chance of unconscious bias creeping in.
The Amazon hiring process has a flywheel effect. The longer it is used, the more dividends it pays. Ideally, the bar is set higher and higher, attracting the best candidates and ensuring the growth and expansion of Amazon across the globe. The Bar Raiser process reinforces a key Amazon leadership principle: Hire and Develop the Best.
In conclusion, the hiring process at Amazon.com is an intricate and challenging task that requires a well-defined process, metrics, and a team of experts. The Bar Raiser process seeks to minimize personal biases and maximize data-based hiring decisions. The 14 Leadership Principles are an excellent way to assess candidates and maintain the corporate culture.
Organizational Structure
“The best way to fail at inventing something is by making it somebody’s part-time job.”
One of the key factors that enabled Amazon to maintain its innovation and agility despite exponential growth in its business is an innovative approach to organizational structure through a concept called “single-threaded leadership,” which entails a single individual leading a team focused on one initiative with minimal dependencies on other teams.
Amazon’s “two-pizza team” approach was Jeff Bezos’s initial solution to the problem of slowing innovation due to coordination challenges that came with the company’s growth. The solution was to create smaller teams that could operate autonomously, coordinating loosely only when necessary. These teams had clear ownership of specific features, allowing them to drive innovation with minimum reliance or impact on others. Two-pizza teams had another powerful benefit: they were better at course correction — detecting and fixing mistakes as they arose.
While it was initially believed that smaller teams were the key to success, the STL model extends the basic two-pizza team concept by creating “separable, single-threaded teams” being run by “single-threaded leaders” (STLs). Such teams have clear, unambiguous ownership of specific features or functionality and can drive innovations with minimal reliance or impact upon others. An STL’s focus is on one initiative. They work on only that initiative, with the appropriate skills, authority, and experience to manage a team whose sole focus is to get the job done.
The STL approach, which requires fewer organizational dependencies than conventional teams, has enabled Amazon to stay nimble and adapt quickly to change as they expand their business.
Instead of coordinating better, Amazon has eliminated communication, encouraging their builders to build while minimizing the dependencies on other teams. The book highlights the importance of having an unambiguous ownership structure of projects or initiatives, as it enables teams to operate autonomously with minimal reliance on others.
Six-Page Narratives
“As analysis becomes more causal, multivariate, comparative, evidence-based, and resolution-intense, the bullet list becomes more damaging.“— Edward Tufte
One of the key takeaways from the book is the importance of using six-page narratives as a communication tool at Amazon. Narratives are more information-dense than slides, allowing for efficient communication of complex ideas. Narratives remove the natural variance in speaking skills and graphic design expertise that play a significant role in the success of presentations. Anyone can read and edit the document, making it infinitely portable and scalable. Narratives also deliver much more information in a much shorter time, allowing for nonlinear, interconnected arguments to unfold naturally.
The six-page narrative meeting starts with the first third of the meeting spent on silent reading, followed by feedback from everyone in the room and then questions and discussions. The purpose of a meeting is to force presenters to think deeply about what they are presenting, enable the audience to understand the idea, and provide helpful feedback. Writing narratives is an iterative process that requires practice from writers and feedback from audience members over many cycles.
“PowerPoint becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of PowerPoint makes it easier for us to have foolish thoughts.“ — Edward Tufte
Narratives are designed to increase the quantity and quality of effective organizational communication by order of magnitude over traditional methods. Creating solid narratives requires hard work and some risk-taking. Good ones take many days to write. The team writing the narrative must circulate and review it many times and take the vulnerable step of saying to their management and peers, “Here’s our best effort. Tell us where we fell short.” This openness imposes duties and expectations upon the audience as well. They must objectively and thoroughly evaluate the idea and suggest ways to improve it.
In conclusion, using six-page narratives for effective communication is a crucial practice at Amazon. Creating such solid narratives requires hard work and some risk-taking, but they ultimately shape sharper, more complete analyses. The change from PowerPoint to narratives strengthens not just the pitch but the product and the company as well.
Working Backwards
“Start with the customer and work backwards — harder than it sounds, but a clear path to innovating and delighting customers.”
Amazon’s key to success lies in its Working Backwards process, which has been used to create most of the company’s major products and initiatives since 2004. The process starts by defining the customer problem and experience and working iteratively backwards until the team achieves clarity of thought around what to build. The PR/FAQ process is the principal tool for this approach, and it involves writing a press release and a frequently asked questions document before developing the product or service.
This approach might seem counterintuitive at first as, traditionally, companies work forward, coming up with a product that is great for the company and trying to shoehorn it into meeting unmet customer needs. However, this approach can lead to undesirable results. The Working Backwards process shifts the focus from an internal/company perspective to a customer perspective, where executives ask, “So what?” if the press release doesn’t describe a product that is meaningfully better than what is already out there.
The PR/FAQ format reinforces a detailed, data-oriented, and fact-based method of decision-making. It creates a framework for rapidly iterating and incorporating feedback, enabling the team to focus on the customer while enforcing due diligence on the business/product/tech development side. The format also has the benefits of being accessible to anyone in the organization, a complete record of the idea that can be easily passed along, reviewed, and edited, and enabling a richer narrative and higher information density than a presentation.
The PR/FAQ has three parts: the PR, which forces a perspective shift to the customer; the external FAQ, which continues to force a customer perspective; and the internal FAQ, which addresses the various risks and challenges from internal operations, technical, product, marketing, legal, business development, and financial points of view. Once an organization learns to use this valuable tool, it can be used to develop not only ideas and initiatives but also products and services.
Metrics: Manage Your Inputs, Not Your Outputs
“Before you can improve any system … you must understand how the inputs affect the outputs of the system. You must be able to change the inputs (and possibly the system) in order to achieve the desired results. This will require a sustained effort, constancy of purpose, and an environment where continual improvement is the operating philosophy.”— Donald Wheeler
The subject of metrics is particularly close to my heart, as a significant portion of my professional career has been devoted to data and analytics. Throughout my career, I have assisted numerous organizations in leveraging data to identify, quantify, and scrutinize metrics for the purpose of empowering data-driven decision-making.
Amazon’s way of measuring metrics and using those to make effective business decisions is based on the Six Sigma DMAIC (Define-Measure-Analyze-Improve-Control) process. This framework helps Amazon in selecting and defining the metrics that it wants to measure, separating signals from noise in data, and identifying and addressing root causes.
Amazon’s focus is on controllable input metrics, which are the drivers that, when managed well, can lead to profitable growth. Input metrics track things like selection, price, or convenience — factors that Amazon can control through actions such as adding items to the catalog, lowering costs so prices can be lowered, or positioning inventory to facilitate faster delivery to customers. Output metrics, on the other hand, cannot be directly manipulated sustainably over the long term.
The Weekly Business Review meetings are essential for evaluating the metrics and using them to detect anomalies/bad trends in the operation of the business. Anecdotes and exception reporting are woven into the deck, which enables leaders to audit at scale in a very detailed way.
“We focus on variances and don’t waste time on the expected.”
Amazon places a high value on the time of attendees at weekly business review (WBR) meetings. Instead of discussing expected results, the company prioritizes variances in order to make these meetings more efficient. While team members may be inclined to discuss their successes, Amazon recognizes the importance of staying on track during these meetings. If things are operating normally, Amazon acknowledges it and moves on quickly. The focus of the meeting is to discuss exceptions and what is being done about them. The company believes that the current state does not require elaboration and aims to address only areas that require attention. By concentrating on variances, Amazon ensures that the WBR meetings are productive and effective for all participants.
Finally, the use of anecdotes and exception reporting is crucial in complementing the metrics. It provides a reality check that helps to expose flaws or oversights in the metrics. Amazon’s approach to metrics is unique and can be helpful for small and large businesses alike. By using the DMAIC framework and focusing on controllable input metrics, Amazon is able to make effective business decisions and achieve profitable growth.
Long Term Thinking
AMAZON SVP (aggressively skeptical): Exactly how much more money are you willing to invest in Kindle?
JEFF (turns calmly to CFO, smiling, shrugging his shoulders): How much money do we have?
Amazon’s approach to long-term thinking is one of the key reasons for its success. This mindset requires a lot of patience, perseverance, and willingness to learn and improve over time. Jeff Bezos, the founder of Amazon, emphasized the importance of taking a long-term approach to invention and customer obsession. He believed that this approach enabled Amazon to do new things that they couldn’t have contemplated before.
Amazon’s long-term thinking is closely tied to its customer obsession. The company’s culture revolves around identifying a customer need and developing the conviction that the need is meaningful and durable. Amazon then works patiently for multiple years to deliver a solution to this need, constantly learning and improving along the way. This mindset is in stark contrast to many other companies that give up on initiatives if they don’t produce the desired returns within a few years.
At Amazon, patience is key. The company will stick with an initiative for five, six, or even seven years, constantly learning and improving until it gains momentum and acceptance. Amazon’s approach to long-term thinking leverages its existing abilities and allows it to do new things that other companies wouldn’t have the patience for. By deploying the practices to drive execution and using the Leadership Principles to guide the way, Amazon has been able to stay true to its long-term approach to invention and customer obsession, which has been a key driver of its success.
Failure is a Feature, not a Bug
In an interview after the Fire Phone was withdrawn, Jeff Bezos was asked about its failure and answered, “If you think that’s a big failure, we’re working on much bigger failures right now — and I am not kidding.
Another key takeaway from the book is that failure is a feature, not a bug. This means that failure is an inevitable part of the innovation process and should be embraced as a valuable learning opportunity rather than feared as something to be avoided at all costs. This is a perspective that Amazon has fully embraced, as evidenced by Jeff Bezos’ famous quote that “failure and invention are inseparable twins.”
For Amazon, failure is not only accepted but also celebrated, as it is seen as an important step towards eventual success. This mindset is particularly evident in the company’s less successful inventions, such as the Fire Phone, which are still viewed as valuable learning experiences. In fact, Jeff Bezos has stated that the company is currently working on “much bigger failures” than the Fire Phone.
This approach to failure is particularly important for large organizations that want to foster a culture of innovation. Often, these organizations may embrace the idea of the invention but are unwilling to suffer the string of failed experiments necessary to get there. By seeing failure as a feature, these organizations can create an environment where experimentation is encouraged and where failure is seen as a natural and necessary part of the innovation process. Ultimately, this can lead to more successful inventions that truly move the needle.
Speed of Decision-Making Matters
Yet another key takeaway from the book is the importance of speed in decision-making. As a company grows larger, it can become more difficult to maintain the same level of innovation, experimentation, and risk-taking that characterized its early days. Big companies often develop a decision-making process that is designed to manage one-way door decisions — those that are consequential and irreversible. This process tends to be slow, cumbersome, and risk-averse, and it can stifle innovation and impair idea generation.
Amazon, on the other hand, has always embraced a culture of experimentation and innovation, even as it has grown into one of the largest companies in the world. Jeff Bezos famously described this culture as a “Day 1” mindset characterized by continuous learning, risk-taking, and a willingness to embrace change. Amazon recognizes that not all decisions are equal — some are Type 1, one-way door decisions that require careful consideration and consultation, while others are Type 2, two-way door decisions that can be made quickly by high-judgment individuals or small groups.
Amazon’s approach to decision-making is focused on speed, nimbleness, and a risk-acceptance mentality. This allows the company to move quickly, experiment with new ideas, and adapt to changing circumstances. Amazon’s success is a testament to the power of this approach, and it serves as a valuable lesson for any company looking to innovate and stay ahead of the competition. By prioritizing speed in decision-making, companies can maintain a culture of experimentation and innovation, even as they grow and evolve over time.
In conclusion, Colin Bryer’s book, “Working Backwards,” offers a wealth of knowledge and insights into Amazon’s business model and how it has been able to innovate and succeed in a highly competitive market. Through its leadership principles, hiring strategies, organizational structure, ability to work backward, and long-term thinking, Amazon has set a high standard for other companies to follow.
While this blog post only touches on a few key lessons, it is clear that the book has much more to offer. Therefore, I highly recommend reading “Working Backwards” for anyone who is interested in learning from one of the world’s most successful companies.
Remember, knowledge is power, so stay curious and keep learning. If you found this post helpful, please consider giving it a clap and stay tuned for more content like this in the future.