By Theodore Kinni
Theodore Kinni has written, ghosted, or edited more than 20 business books. He was book review editor for strategy+business for 7 years.
I’ve been waiting for Amazon—with its annual sales of almost $90 billion in 2014—to crash and burn for a long time. There was no way that a public company could continue to operate almost entirely without profit year after year—Amazon lost $241 million in 2014. I was positive that a reckoning was just around the corner. Now, 20 years down the road, and before Jeff Bezos dispatches a fleet of delivery drones to bombard me with the company’s ubiquitous shipping cartons, I hereby publicly and unconditionally surrender. Never again will I mutter—even under my breath—about the company’s prospects.
No matter what you think of Amazon, it is clear that it is a juggernaut of a company—and that its leaders play a big role in its ability to generate topline growth. That’s why it’s worth reading The Amazon Way: 14 Leadership Principles Behind the World’s Most Disruptive Company by John Rossman. Rossman, who was formerly Amazon’s director of enterprise services and now serves as managing director of professional services firm Alvarez & Marsal, says that the principles he describes in the book were embedded in the corporate culture by founder Bezos and remain the “core tenets on which company leaders are rigorously rated during their annual performance reviews and self-evaluations.” Here are a few that are especially notable—not so much for their commonsensical nature, but for the diligence with which the company pursues them:
Obsess Over the Customer: Not surprisingly from a company that rewrote the book on retailing (driving myriad competitors in segments such as books and music out of business altogether), Amazon’s first leadership tenet dictates an intense focus on the customer. Rossman writes that Bezos has always maintained that the “best customer service is no customer service.” This koan-like statement means that Amazon seeks to always give its customers exactly what they want the first time around, which eliminates a whole bunch of problems—and costs—from the get go. That’s why the company instituted policies like the then-innovative free shipping on orders over $100 program, “Look Inside the Book” previews, and Amazon Prime, which has become a major revenue generator in its own right.
Take Ownership of Results: The second of Amazon’s leadership tenets ensures that its managers have nowhere to hide when their performance doesn’t live up to expectations. This tenet stipulates that every Amazonian leader act like an owner rather than an employee, ensuring that they adopt a long-term, good-of-the-company perspective over short-term-and-out results. Bezos not only hires people who embody an ownership mindset, he also insists that “every employee must be unflinching in his accountability and honesty.” This policy is known as “the open kimono,” and while that image may give you pause, Rossman says that it also allows department heads the opportunity to “fail forward,” by learning from less-than-stellar attempts at new programs and innovations—instead of burying them.
Leaders Are Right—A Lot: It may be okay to fail at Amazon, but its leaders don’t get to keep making the same mistakes. Executives must, says Rossman, “learn from their mistakes, develop specific insights into the reasons for those mistakes, and share those insights with the rest of the company.” How exactly does this happen? Through a corporate-wide emphasis on “clarity in the setting of goals, the communication of those goals throughout the organization, the establishment of metrics, and the use of those metrics in gauging the success or failure of any initiative,” and by avoiding even the hint of imprecision when making decisions regarding the deployment of corporate resources.
Have a Bias for Action: A cultural acceptance of failure also supports Amazon’s emphasis on calculated risk taking. Executives are encouraged to try new and innovative ideas, even though they may not be perfectly formed. “Jeff [Bezos] has always reassured his people that they will never be punished for erring on the side of action,” says Rossman. This tenet enables the company to gain a first-mover advantage and stay ahead of its competitors. It also explains why I’m busy setting up defenses against delivery drone strikes.
Practice Frugality: Finally, in case you’re thinking that Amazon is throwing around its billions in revenue a little too wildly, Amazon instituted a leadership tenet that dictates cost-consciousness—because that “breeds resourcefulness, self-sufficiency, and invention.” Flying coach, booking reasonably priced hotel rooms, and keeping corporate salaries out of the stratosphere are all ways Amazon keeps costs in line for all its employees. Thus, Bezos’s salary is a mere “$81,840—just $14,000 more than the average Facebook intern makes,” says Rossman.
Of course, a salary of less than $1600 a week can’t be all that tough for Bezos to live on given the fact that his personal fortune is valued somewhere north of $30 billion. If Amazon’s leadership principles can deliver that kind of return, it seems like they might be worth a try.
Queue it up: The Amazon Way: 14 Leadership Principles Behind the World’s Most Disruptive Company by John Rossman