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Amazon Legends

Understanding Amazon’s flywheel

Anyone who has worked at Amazon for more than a couple weeks has heard the term “flywheel”. In fact, I suspect that many, if not most, people who interview here discuss the flywheel as part of their onsite interviews. So getting your head around Amazon’s concept of the “virtuous cycle” prior to interviews here is a good idea; I recommend researching it as part of your preparation process, not only to understand the idea of the flywheel but also to be able to articulate how your potential work at Amazon (and/or the work of the group you are interviewing with would contribute to spinning it.

The concept says a lot about how Amazon thinks about investment opportunities and why we are growing so quickly. Along with the Leadership Principles, I think it makes very clear how Amazon operates day-to-day. So I thought I would help explain the flywheel a little bit here to introduce the concept.

A flywheel is a system where each of the components is an accelerator. Invest in any one of the components and, as the flywheel spins, it benefits all components. And the flywheel spinning is how the system grows. Jim Collins popularized the flywheel concept in Good to Great. I’ll drop a link to his writing on flywheels at the bottom of this post.

Here’s Amazon’s flywheel:
Amazon Flywheel

I think seeing the image helps put Amazon’s customer obsession in context too. Because you can understand the different levers that ultimately lead to great experiences for customers and how all of us Amazonians are all part of it. If we do work that brings more traffic to Amazon.com, we’ll attract more sellers wanting to reach this larger number of potential customers. Attracting more sellers increases our selection, which improves the customer experience. This brings more traffic to Amazon.com. You can see how focusing attention on any of these components – traffic, sellers, selection or customer experience – distributes more energy to all of them. The whole system grows.

Then, as a result of the spinning, we are able to lower our cost structure which allows us to lower prices, also enhancing the customer experience. So the flywheel spins even faster as it grows; the growth itself is an accelerator. This is how Amazon went from a garage to the company you know today in a relatively short period of time.

Here are some links to additional content that will help you learn more about flywheels in general and how the concept applies to Amazon’s business in particular.

Inc. Magazine does a good job of explaining the flywheel concept

Steve Rosenbaum on how Jeff Bezos leads from behind

Jim Collins’ articles on the flywheel


Star Trek Beyond, starring Jeff Bezos?

If you are looking forward to the upcoming Star Trek movie, keep your eyes open for a cameo from someone unexpected: Jeff Bezos. He’ll be appearing as Starfleet Official in Star Trek Beyond.

 

 

A fan of Star Trek since childhood – he even noted Star Trek as the inspiration for the Echo device and Alexa automated assistant – it sounds like Jeff is getting to live out a dream. I’m not sure how this particular dream ranks among others, like launching rockets into space (and returning them successfully) or changing how America (and the world) shops.


Another successful Prime Day

Prime Day thank you 2016

Did you participate in Prime Day yesterday? If so, you joined tens of millions of other shoppers who took advantage of some great deals. I bought a Cuisinart tabletop grill, which I am irrationally excited about.

I know this is only year 2 for Prime Day, but I like reviewing the data that we share after the event. Ninety-thousand TVs were bought. And the most popular item globally? The Fire TV Stick; I have one and understand the appeal.  Top product in the US was the Instant Pot 7-in-1 Multi-Functional Pressure Cooker.  Some other fun statistics:

Members purchased over 24,000 Double Hammocks by Vivere and over 23,000 iRobot Roomba 614 Vacuum Cleaning Robots. Vacuuming your home while hanging out in your hammock just got easier.

Members purchased on average one Alexa-exclusive deal per second during Prime Day using their voice. And next year, it’s likely even more people will; sales of Echo devices were 2.5x the previous record sales day.

If you want see additional data, you can read our Prime Day press release here.

And here is a little behind-the-scenes look at some of the fulfillment center employees getting those millions of products out the door and into your homes.

 


Jeff Bezos at ReCode, explaining the things you’ve been wondering about Amazon

Amazon is involved in many businesses, and since we are comfortable being misunderstood for long periods of time, people outside the company often speculate about the reasons behind some of our decisions (like producing our own video content for Prime members). Recently, Jeff Bezos participated in an interview with The Verge’s Walt Mossberg, covering a range of topics including the relationship between Amazon and FedEx when it comes to getting you your stuff, and why Amazon opened its own physical bookstore. I found the whole interview pretty interesting, so you can view it below, or click on the links by topic to pick up at different points in the conversation.

 

Artificial Intelligence, Echo and Alexa

Privacy

Amazon’s retail shipping infrastructure

Amazon’s brick and mortar bookstores

Jeff’s purchase of the Washington Post

Amazon culture and work/life harmony

Amazon’s Career Choice program, training fulfillment center associates in in-demand fields

Is Amazon a media company? The relationship between video and Prime

Jeff’s passion for space exploration

What Jeff will be doing in 5 years

Amazon’s 3 pillars and opportunities that might become the fourth

How to decide when to give up on an idea

Free speech and the media

Why Amazon is exploring brick and mortar

Amazon’s retail infrastructure investment in India

Big retail problems Amazon is trying to solve (now and in the future)

Learnings from Amazon in China

The wearables market


What the Blue Origin landing has to do with working at Amazon

If you heard about Blue Origin’s successful space flight and – more importantly- landing this week, you probably already know that Amazon founder Jeff Bezos is also the founder of Blue Origin. So it stands to reason that the two companies (and they are distinct) share a bit of cultural DNA.

Blue Origin
Photo credit: Blue Origin

I haven't visited Blue Origin, but the most obvious cultural common ground, to my eye, is the idea of exploring the impossible, or at least the improbable. Ten years ago, commercial space flight was a long-shot aspiration, having only been legalized in the US in 2004. I’m taking Wikipedia’s word for it as I am no expert in space travel. But I can tell you that nobody I knew in the early naughts would have expected to book a flight on a rocket any time in the near future. Private space travel is something that could change lives, but the uncertainty, risk and potential investment required to make it a reality were (and are) daunting, to say the least. Purveyors of such space travel have a vision and risk tolerance (and resources, of course) that are admirable.

I see similar “big bets” thinking at Amazon, specifically related to delivering great experiences for customers. I imagine many of our customer innovations starting like this:

“You know what would be outrageous? Getting customers their stuff in an hour… AN HOUR!”

or

“Call me crazy, but why don’t we produce our own video content?”

or

“What if we could lease Amazon’s computing power to other companies?”

Central to these innovations (Prime Now, Amazon Studios, Amazon Web Services) and thousands of others that happen here every day are daring and smart people who ask the right questions, and business processes and a culture that support the innovator and move the dial from “that crazy idea” to “the next big thing for customers.”


How far we’ve come

With the holiday season upon us, I’m seeing lots of Amazon news: black Friday deals, fulfillment center hiring, holiday gift lists, shoppers’ intentions to skip the long lines.

Looking at all of this (plus Jeff’s Blue Origin success yesterday), it’s easy to forget that Amazon started in a Bellevue, Washington garage. Re/code recently published a Jeff Bezos talk from the 1999 annual meeting of the Association of American Publishers (and broadcast on CSPAN’s BookTV). Jeff tells some of my favorite stories of the early days (knee pads and fuse boxes) and shares some of his favorite book reviews and site features. They look quaint now, but back then they were innovative.

 

It’s a bit of a long watch, but illustrates both that some things never change (Amazon’s customer obsession, thoughts about profitability) and how far we’ve come.


I hate meetings.

slide presentationThere. I said it. People who know me are already well aware. I’m the person in the meeting judging whether the current discussion is an effective use of everyone’s time. There have been times in my career when I’ve felt like meetings were what was standing between me and getting my job done to the best of my ability. And I’ve negotiated with managers (on account of the one-off nature of many of my roles) to get out of meetings that everyone else on my team was attending; meetings that weren’t specifically relevant or interesting to me. I’m not good at going along to get along. I may or may not have mumbled “oh goodie, another slide deck” under my breath from time-to-time.

It’s not the idea of meetings that I have a problem with; it’s how people use them. I push back on meetings that should be a phone call (and phone calls that should be emails, for that matter). I politely decline meetings about work that falls outside of my scope (“sorry, I’ve got a full roadmap and won’t be able to help but let me know if I can send you some resources that I think you’ll be interested in”). I ask for agendas prior to accepting requests. I think Dante should have added a ring of hell called “meeting for the sake of meeting”.  

Some people seem to use meetings to enforce deadlines on themselves, or others, which is just poor productivity management. The result is a vague topic and a slapped-together deck to drive a discussion. And the aforementioned mumbling.

To be fair, I have probably developed more than my fair share of slide decks. I have a special relationship with the written word. I also have a memory like Swiss cheese. When I was delivering training, I needed my decks. I also apparently needed clip art and animations. Because you haven’t lived until you’ve had someone illustrate what not to do on social media by having a big red X float on screen.

The problem I see with many meetings is that there is frequently a disconnect between the desired outcome from a meeting, and the medium used to frame the issues and communicate during the meeting. Amazon’s 6-pager approach to these types of meetings is a lot more comfortable, in my opinion. Pete Abilla has a good explanation of the six-page narrative here. At the beginning of the meeting, everyone reads your 6-pager, gets on the same page with all of the data and you don’t have to spend the first 45 minutes of the meeting walking everyone through how you got to your recommendation. I also find that I’m a lot better in print; when I have had time to select my words, prioritize my data and give extra thought to how I want to frame concepts. The benefit of this approach is that everyone gets to spend the bulk of the meeting discussing the merits of your recommendation (not trying to figure out how you came up with it).

Jeff Bezos once explained that PowerPoint presentations are easy for the presenter but hard for the audience. I guess it’s not surprised that Amazon has a customer-centric approach to meetings. Making it easier on the audience also makes it easier for them to say yes (to your idea, recommendation or budget request).

I’m not saying I’d never use a slide deck. For legitimate update meetings and trainings there is a certain utility that I can appreciate. But at this point, I just don’t know if I could ever feel comfortable trying to influence an important decision – one based on data as they are here – without a paper.

To read more:

The Beauty of Amazon's 6-Pager (Brad Porter)

Flipped meetings: Learning from Amazon’s meeting policy (GigaOm)

Leading Like Jeff Bezos: Words Are More Important Than Numbers (Forbes)

 

 


Yesterday WAS a good day to be Amazonian

Yesterday was Thursday, just a regular summer Thursday to most people. It was also a very good day to be an Amazonian, particularly if you work in Amazon's Seattle corporate offices. 

Last week marked Amazon's 20th birthday; Prime Day celebrated the milestone. We took advantage in my household. Among other things, I bought dog toys and harnesses, a hand-held vacuum and some new kitchen equipment. I was happy with all of purchases from last week, but yesterday was really something else.

You aren't going to see me talk much about Amazon's financial performance - it's not my area of expertise (neither the analyzing nor the talking about it). But yesterday, this happened. And it made a lot of Amazon employees happy. Then, last night, about 15,000 Amazon employees arrived at CenturyLink Field for a concert featuring Head & the Heart and Macklemore & Ryan Lewis. The weather was perfect, the beer was cold, the performances were great and everyone was in good spirits. Aside from some "20th Birthday" graphics, you wouldn't have known it was a corporate-sponsored event. But it was definitely full of lots of Seattle hometown love.

Here are some social media reactions to the event...

 


The Legend of the Amazon Door Desk

Door desk

As a company grows, a set of stories emerge that signify the values that the company holds. These stories become part of the fabric of corporate culture. They are repeated as examples of “how we do things here.” The great lengths an employee goes to in order to satisfy an early customer, that time the CEO pitched in during an all-night coding session; these stories become corporate legends.

Amazon has its own set of stories from the early days. One of the most frequently repeated is the origination of the “door desk”. Back in the mid-90s, when Amazon employed about a dozen people, team members would gather on the floor in the 400 square foot warehouse to pack shipments. As sales started to accelerate and these packing sessions extended into the late hours, working on the floor became uncomfortable. Jeff’s first idea (kneepads!) was quickly scuttled for a better one: packing tables. After a quick trip to Home Depot, tables were assembled from solid-core doors, four-by-fours and metal brackets. These packing tables became door desks and are standard Amazon office furniture today.

But this isn’t a story about a scrappy solution to a workplace challenge or opting for Home Depot over Ikea. To Amazonians, the desks represent something important: they are a symbol that the investments that matter are those which benefit the customer. As a company, Amazon values frugality, which it defines as making informed financial decisions with an eye on the customer; it sees frugality as the breeding ground of resourcefulness and invention.

Inventing on behalf of customers has been a critical component of Amazon’s success. Employees are reminded of it every time they sit down at their desks. 

(Image credit: Wonderlane)