The Bezos Letters

14 Principles to Grow Your Business Like Amazon

Steve Anderson, Karen Anderson

• Publisher: Morgan James Publishing
• Year: 2020
• Print ISBN: 9781642793321
• eBook ISBN: 9781642793338
• Topic: Business
• Subtopic: Management
• Index: Business

"A perceptive look at [the] Amazon founder's annual shareholder letters, extracting 14 key 'growth principles' that [businesses] can use to scale up." — Publishers Weekly
Jeff Bezos created Amazon, the fastest company to reach $100 billion in sales ever, making him the richest man in the world. Business owners marvel at Amazon's success, but don't realize they have the answers right at their fingertips as Bezos reveals his hidden roadmap in his annual letters to shareholders. For the first time, business analyst Steve Anderson unlocks the key lessons, mindset, principles, and steps Bezos used, and continues to use, to make Amazon the massive success it is today. Steve shows business owners, leaders, and CEOs how to apply those same practices and watch their business become more efficient, productive, and successful?fast!
"So much of what Steve Anderson has uncovered about Jeff Bezos and Amazon reminds me of the legacy of Walt Disney. Walt had a vision and made it happen; Jeff had a vision and made it happen; and you, too, can make your vision happen—and make it happen faster and easier using the principle's Steve has laid out in The Bezos Letters." —Lee Cockerell, former executive Vice President of Walt Disney World Resorts and author of Creating Magic: Common Sense Business Strategies from a Life at Disney
"If you ever wanted a manual for building and growing your business, this is it." —Dan Miller, New York Times–bestselling author of 48 Days to the Work You Love

Growth Cycle: Scale

To Amazon, scaling is how you achieve tremendous growth without sacrificing who you are or what you offer. It requires creating and maintaining an innovative culture—a culture that’s willing to take risk on behalf of the customer.

It involves a committed focus on maintaining high standards and not sacrificing quality to achieve greater profitability. It involves measuring only what matters and continuously questioning what you measure to make sure you are always focused on the right metrics—but not ignoring your intuition in the process.

And, finally, it requires you to always—above all things—make decisions as if it is your first day in business, with passion and focus on customers. Be lean, be focused, and remember what mattered on Day 1 still matters.

Scaling makes Amazon able to come full circle—to leverage its successes and begin again the process of testing another offering.

Chapter Eleven

Principle 11: Maintain Your Culture

“…we are working to build something important, something that matters.” —Bezos (1997 Letter)

“We never claim that our approach is the right one—just that it’s ours—and over the last two decades, we’ve collected a large group of like-minded people. Folks who find our approach energizing and meaningful.” —Bezos (2015 Letter)

“We challenge ourselves to not only invent outward facing features, but also to find better ways to do things internally—things that will both make us more effective and benefit our thousands of employees around the world.” —Bezos (2013 Letter)

There are lots of stories out there about what it’s like to work for Amazon. And there’s probably a bell-shaped curve at work—some people love working there, some people hate working there, and most people are somewhere in the middle.

But there are some interesting ways to look at the culture of Amazon from the outside. Two of those are through LinkedIn and the Wall Street Journal/Drucker Institute. LinkedIn looks at overall employee satisfaction and retention, and WSJ/Drucker Institute looks at overall management.

The 2019 LinkedIn Top Companies list revealed the fifty companies where Americans want to work—and stick around once they’re in. Alphabet (Google), Facebook, and Amazon were the top three.

In its post, LinkedIn said, “Every year, our editors and data scientists parse billions of actions taken by LinkedIn members around the world to uncover the companies that are attracting the most attention from jobseekers and then hanging onto that talent. The data-driven approach looks at what members are doing—not just saying—in their search for fulfilling careers.”²⁹

The Wall Street Journal publishes an annual list of the Management Top 250 companies in cooperation with, and compiled by, the Drucker Institute, ranking the most effectively run major U.S. public companies.

The rankings are made up of thirty-seven indicators that fall under five dimensions of performance: customer satisfaction, employee engagement and development, innovation, social responsibility, and financial strength. These ideas represent core values of management expert Peter Drucker, who wrote more than thirty business books over his long career.

In 2017, Amazon was number one on the list for the Best Run Company in the U.S. and number two in 2018, being beaten out for the top spot by Apple. And Amazon’s score for innovation topped every other company by a wide margin.

How has Amazon maintained its culture as it has scaled from a few employees to over 600,000 and growing?

Amazon has done many things to maintain its culture, but two stand out: its focus on personal leadership and its corporate focus on constant and continuous growth.

In his annual Letter to Shareowners, Bezos reminds everyone that it is always Day 1. In the Bush Center interview at the SMU (Southern Methodist University) campus, when asked about Day 1 (given the exponential growth Amazon has had with over 600,000 employees and growing), Bezos quickly reframed the question, stating,

“So, the real question for me is, how do you go about maintaining a Day 1 culture?

“It’s great to have the scale of Amazon, we have financial resources, we have lots of brilliant people. We can accomplish great things. We have global scope; we have operations all over the world. But the downside of that is that you can lose your nimbleness, you can lose your entrepreneurial spirit, you can lose that kind of heart that small companies often have. And so, if you could have the best of both worlds, if you could have that entrepreneurial spirit and heart, while at the same time having all the advantages that come with scale and scope—think of the things that you could do.

“So, the question is how do you achieve that? The scale is good because it makes you robust. A big boxer can take a punch to the head. You also want to dodge those punches. So, you’d like to be nimble; you want to be big and nimble. I find there are a lot of things that are protective of the Day 1 mentality. I already spent some time on one of them, which is customer obsession. I think that’s the most important thing.

“It gets harder as you get bigger. When you’re a little tiny company, say you’re a ten-person startup company, every single person in the company is focused on the customer. When you get to be a bigger company, you’ve got middle managers, and you’ve got all these layers. And those people aren’t on the front lines. They’re not interacting with customers every day. They’re insulated from customers, and they start to manage not the customer happiness directly, but they start to manage through proxies like metrics and processes. And, some of those things can become bureaucratic. So, it’s very challenging.

“But one of the things that happens is the decision-making velocity slows down. And I think one of the reasons that happens is that people, junior executives inside the big company, start to model all decisions as if they are heavyweight, irreversible, highly consequential decisions. And like two-way doors, if you make a decision, and it’s the wrong decision, you can just back up, back through the door, and try again. But even those reversible decisions start to be made with heavyweight processes.

“And so, you can teach people [about] these pitfalls and traps and then teach them to avoid those traps. And that’s what we’re trying to do at Amazon so that we can maintain our inventiveness and our heart and our kind of small company spirit, even as we have this scale and scope of a larger company.” —2018 Forum on Leadership, “Closing Conversation with Jeff Bezos”

In that context, employees are reminded of what Day 1 means through the Amazon Leadership Principles, which define what Amazon expects from each and every employee, including Bezos. They define how each employee is to treat each other. They also define how each employee is to treat Amazon’s partners and customers.

Amazon’s Day 1 culture and mindset can be felt throughout the organization. It can be observed through what Bezos says in the Letters, how Amazon maneuvers in the marketplace, and through the Amazon Leadership Principles.

14 Amazon Leadership Principles

“We use our Leadership Principles every day, whether we’re discussing ideas for new projects or deciding on the best approach to solving a problem. It is just one of the things that makes Amazon peculiar [a word used by Bezos and most Amazonians].”³⁰

Customer Obsession: Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.

Ownership: Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say “that’s not my job.”

Invent and Simplify: Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here.” As we do new things, we accept that we may be misunderstood for long periods of time.

Are Right, A Lot: Leaders are right a lot. They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs.

Learn and Be Curious: Leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act to explore them.

Hire and Develop the Best: Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization. Leaders develop leaders and take seriously their role in coaching others. We work on behalf of our people to invent mechanisms for development like Career Choice.

Insist on the Highest Standards: Leaders have relentlessly high standards—many people may think these standards are unreasonably high. Leaders are continually raising the bar and drive their teams to deliver high quality products, services, and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed.

Think Big: Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.

Bias for Action: Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.

Frugality: Accomplish more with less. Constraints breed resourcefulness, self-sufficiency and invention. There are no extra points for growing headcount, budget size or fixed expense.

Earn Trust: Leaders listen attentively, speak candidly, and treat others respectfully. They are vocally self-critical, even when doing so is awkward or embarrassing. Leaders don’t believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best.

Dive Deep: Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdote differ. No task is beneath them.

Have Backbone; Disagree and Commit: Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

Deliver Results: Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.

Inward Innovations: An Approach to Build...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Note from the Publisher
• Table of Contents
• Foreword by Michael Hyatt
• Risk and Growth
• Why the Bezos Letters?
• The Anderson 14 Growth Principles
• 1997 Letter to Shareholders with The Anderson 14 Growth Principles (highlighted)
• Growth Cycle: Test
• Growth Cycle: Build
• Growth Cycle: Accelerate
• Growth Cycle: Scale
• 2018 Letter to Shareowners with The Anderson Growth Principles (highlighted)
• Amazon Commonly Used Terms
• Acknowledgments
• About the Authors
• Endnotes
• Recommended Books