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Thursday, July 14, 2016

How Jeff Bezos Maintains Amazon’s Killer Company Culture

How Jeff Bezos Maintains Amazon’s Killer Company Culture

Added on June 27, 2016 by Kavi Guppta.
Amazon's stellar growth and reinvention isn't just magic, it's engrained in the company culture. We dig through Jeff Bezos's letter to shareholders and unearth concrete examples of how Bezos builds a company culture that constantly pioneers in new spaces. At the end of this post, we give you a concrete way to capture your culture with Amazon as a reference. 
Amazon is a fascinating example of what academics call the “ambidextrous organization”. This is a company that improves its existing business while creating an organizational space to inventfuture businesses at the same time.
Ambidextrous organizations are difficult to achieve, but it can be done. In his annual letter to shareholders, Jeff Bezos laid out how Amazon intentionally designs an organizational culture that makes space for invention inside the company. The points we pulled out below are elements that any company can design into its culture.
Bezos avoids a one-size-fits-all culture
Amazon is a large company with over 224,000 employees worldwide. When companies swell in size and scale out products or services, the organization can fall into a trap of slowness, unthoughtful risk aversion, and failure to experiment (three elements that are opposite of a company that constantly reinvents itself). Bezos is highly aware of these “large company maladies”, and emphasizes that it’s something Amazon will address every step of the way:
“We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness, and risk-acceptance mentality normally associated with entrepreneurial start-ups...There are some subtle traps that even high-performing large organizations can fall into as a matter of course, and we’ll have to learn as an institution how to guard against them. One common pitfall for large organizations – one that hurts speed and inventiveness – is “one-size-fits-all” decision making...We’ll work hard to avoid it… and any other large organization maladies we can identify.”
Bezos wants Amazon to avoid a “one-size-fits-all” culture of decision making. He emphasizes the importance of constantly assessing and adjusting Amazon’s culture so it never loses the agility, nimbleness, and hunger for experimentation that made the company so successful.
Bezos champions customer obsession over competitor obsession
We can’t echo this sentiment enough: your customers are far more important than your competitors. Your customers contain the evidence your organization needs to validate or invalidate new business ideas that could propel your company into the future. Bezos puts it bluntly:
“Many companies describe themselves as customer-focused, but few walk the walk. Most big technology companies are competitor focused. They see what others are doing, and then work to fast follow. In contrast, 90 to 95% of what we build in AWS is driven by what customers tell us they want.”
Continued customer development is the hallmark of tweaking existing products, creating new services, or scaling an established product into an entirely new marketplace.
For example, Amazon took to the streets of India to understand the jobs, pains, and gains Indian merchants experience when buying and selling goods online. Bezos explains how a simple mobile beverage cart got the Amazon team in front of over 10,000 potential customers, and the valuable insights the company learned about its new market:
“Last year we ran a program called Amazon Chai Cart where we deployed three-wheeled mobile carts to navigate in a city’s business districts, serve tea, water and lemon juice to small business owners and teach them about selling online. In a period of four months, the team traveled 15,280 km across 31 cities, served 37,200 cups of tea and engaged with over 10,000 sellers. Through this program and other conversations with sellers, we found out there was a lot of interest in selling online, but that sellers struggled with the belief that the process was time-consuming, tedious and complex. So, we invented Amazon Tatkal, which enables small businesses to get online in less than 60 minutes. Amazon Tatkal is a specially designed studio-on-wheels offering a suite of launch services including registration, imaging and cataloguing services, as well as basic seller training mechanisms.”
Amazon “got out of the building” and interacted with customers in India to really understand what the market needed. Instead of trying to out perform existing competitors in the market, Amazon’s team went directly to the people to understand how its service could be more more attractive than others in the region.
Bezos leads with an eagerness to invent and pioneer
Amazon Marketplace, Amazon Web Services, and Amazon Prime have transformed Amazon into a global giant. The bold bets Bezos and his company have made are strong foundational pillars that support the next bold bets that Amazon will make. However Amazon’s size has never deterred Bezos from his eagerness to constantly invent and pioneer in entirely new industries:
“...there are certain things that only large companies can do. With a tip of the hat to our Seattle neighbors, no matter how good an entrepreneur you are, you’re not going to build an all-composite 787 in your garage startup – not one you’d want to fly in anyway. Used well, our scale enables us to build services for customers that we could otherwise never even contemplate. But also, if we’re not vigilant and thoughtful, size could slow us down and diminish our inventiveness.”
We often see large companies fall victim to disruption by smaller or newer players in the market because they’re too slow to act on opportunities, and incredibly focused on existing success. But Bezos believes size shouldn’t slow you down, it should be an advantage for success. Large companies have the advantage of accessing budgets, existing assets and resources that can power the search for future opportunities. A startup has to scramble for such a head start, where a large company has the means to disrupt right under its nose.
Bezos displays a willingness to fail
Amazon has endured its share of failure in its rise to the top. Bezos firmly believes that failure and invention go hand-in-hand, and singles out the companies that want to invent but are fearful of failure:
“One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”
Amazon constantly runs numerous experiments. Pundits and experts will constantly criticize Amazon for making bets on ideas that have nothing to do with the company’s core business. None of this deters Bezos and Amazon in their journey of reinvention. Through all the experiments, failure and learning, Amazon is patient in its discovery of the next big business that will carry the organization into a new future:  
“...you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in awhile, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.”
Tangibly capture culture

What can you do to see how your current company culture is designed for growth and reinvention? 
Yves Pigneur, our long-time Strategyzer collaborator and co-author of Business Model Generation, took examples from Bezos's letter and applied it to the Culture Map tool we developed with Dave Gray:
Note: If you're new to the Culture Map tool, check out this post here
In the Culture Map above, Yves organizes the outcomes centered around the stellar growth that Bezos desires for Amazon. These are followed by very tangible behaviors that are visibly enacted inside the organization. Lastly, these positive behaviors are driven by enablers--the space where culture can really be designed and played with. 
Now we can really capture the culture in a tangible way. Your culture and company will be different, but you can use Amazon as a reference for understanding what part of your existing culture enable growth, and what parts block growth. 
With details of Amazon's culture mapped out like this on the Culture Map, you can discuss and capture how your current organizational culture aids or blocks growth. And you can also discuss and capture how to design your future desired culture that encourages growth. 
Ask yourself: 
  • What are the outcomes of growth in your organization? Like the Culture Map above, these could be financial goals, logistics goals, or achievements with talent.
  • What are the visible positive and negative behaviors taking place inside your company? How do those actions impact your outcomes?
  • Lastly, what are the drivers that enable or block behaviors and outcomes in your current culture of growth? What policies, rituals or rules can help you achieve the growth outcomes your company desires?
This is a small way to get started and have a productive conversation around where your culture is now, and where it needs to be in order to enjoy growth like Amazon.

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