Amazon’s exceptional customer focus and success have been widely acknowledged. In their book, ‘Working Backwards’, Colin Bryar, a former Vice President at Amazon, and Bill Carr, a former Vice President of Digital Media, delve into the details of how Jeff Bezos and the Amazon leadership team constructed a framework that enabled them to achieve their current level of success.
Let’s look at some crucial takeaways:
The process of development takes time
If you are looking to launch a new product that is not your primary business, it is important to take the necessary time and effort to ensure its success. Amazon Web Services (AWS), for example, achieved $10 billion in revenue just four years after launching, although it took 18 months for the initial programming to begin. According to author Nicholas Carr, Amazon’s success is mainly due to its focus on delivering value to consumers and its dedication to creating distinctive and differentiated products.
Colin emphasises that speed is not the only factor to be taken into account when creating something new. It is essential to pause and evaluate the value that is being generated for the consumer and the problem that is being addressed, especially when venturing into unknown areas.
If you are launching a business, or what Bryar terms an ‘innovation machine’, it is essential to consider whether the product you are offering will be of value to your customers, and to identify their needs.
Focus on what people want rather than what you can provide
Most business schools teach you how to create a company based on your abilities. Amazon, on the other hand, takes a different method.
In 2004, the organisation in question earned a revenue of $5 billion. However, despite the large sum, Jeff Bezos, the founder and CEO, saw potential in the emerging digital media market, particularly in the rising popularity of iPods. Subsequently, he removed both Richard Carr and his supervisor, Steve Kessel, from their posts in the physical media company and assigned them to focus on developing digital media.
This managerial decision to create the Kindle in-house rather than outsourcing it was a wise move. After three years of development, the Kindle was released with a massive library of over a million books, making it the ideal device for bookworms. This device helped to solve a major problem of having easy access to e-books, and its immense success has made it the go-to gadget for avid readers.
Amazon is committed to staying true to their purpose while simultaneously being accommodating of the various details. Their single-threaded leadership strategy ensures that each individual in charge of one product does not need to be concerned with anything else. This system allows for a more organised and efficient workflow, with each team leader able to focus on their own specific project.
Amazon Prime is a prime example of how a powerful executive decision can drive a team to success. Former Amazon CEO Jeff Wilke made the bold move to have one of his most influential vice presidents step down from their post in order to solely focus on Prime. This decision enabled the team to be fully equipped to complete the product and launch the program in a matter of mere months.
Begin at the end
Companies typically engage in a process of brainstorming, creating prototypes, trialling the product, and then releasing it to the public. This process can lead to one of two possible outcomes: success or failure.
By working backward, Amazon has adopted a structure that starts with the consumer. Rather than devoting time to the preliminary stages of product development, the team begins by writing a series of press releases and conducting surveys in order to gain a comprehensive understanding of what consumers want. Following the analysis of the responses, they create the product based on the results. Finally, a strategy is formulated and responsibilities are delegated accordingly.
Amazon emphasises the importance of proactively recognising potential issues that may arise in the development process. According to Bryar, it is far more cost-effective to address any concerns that arise in the early stages of development, rather than waiting until the manufacturing process begins and dealing with the difficulties that may present themselves then.
He outlines a few questions that CEOs should consider before embarking on a new product:
- What is the product’s scalability?
- What are the major factors that might lead to this product’s failure?
- How much failure is acceptable?
- Is the product trustworthy?
These questions may assist executives to understand what might stymie their product’s development and what can help it flourish.
Mechanisms work, not intentions
When Bryan Bryar encountered a challenge or difficulty while working with Jeff Bezos, Bezos asked a critical question: “Do we have a process in place to ensure that this problem does not occur again?” This inquiry was a key factor in Amazon’s development of solutions and strategies for overcoming obstacles. Just like Toyota, Amazon utilises the “Five Whys” technique to discover the essential source of the issue.
According to this method, it is generally necessary to answer up to five questions in order to identify the root cause of an issue. Once the underlying cause is determined, the necessary steps should be taken to prevent the problem from occurring again. In cases where the issue is more complicated, it may be beneficial to ask additional questions beyond the initial five to gain further insight.
The organisation has adopted the Andon Cord system from Toyota, which involves the use of a pull cord that employees can utilise to stop production and notify management in the event of a significant issue. Additionally, if a large number of customers are having the same difficulty with a specific product, Amazon will suspend the product until the difficulty has been remedied.
Additionally, Amazon is devoted to monitoring the critical metrics. To augment productivity, the organisation continuously reviews customer satisfaction, mean delivery time, amount of orders, new items in stock, and other indicators.
Since its inception, the e-commerce giant Amazon has launched a plethora of incredibly profitable products. When it comes to business growth and expansion, it is key for company leaders to take into account the broader context. The executives at Amazon, however, prefer to take a more granular approach. According to Bryar, Amazon’s Director of Strategic Planning, “Deep digging is not micromanaging, it’s staying abreast of the details of your business.” Thanks to this meticulous approach, Amazon has been able to successfully maintain its diverse range of companies, all underpinned by carefully devised strategies.