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Wednesday, November 14, 2007

The HBR Interview with Jeff Bezos

Harvard Business Review did an interview with Jeff Bezos, founder and CEO of Amazon, on the October 2007 issue.

Here are my key take aways: = Strategy was born of strategy.

Base your strategy on things that won't change:
Jeff Bezos: When I am talking with people outside the company, there's a question that comes up very commonly: "What's going to change in the next five to ten years?" At Amazon we're always trying to figure that out, because you can really spin up flywheels around those things. All the energy you invest in them today will still be paying you dividends ten years from now. Whereas if you base your strategy first and foremost on more transitory things — who your competitors are, what kind of technologies are available, and so on — those things are going to change so rapidly that you're going to have to change your strategy very rapidly, too.

If in the old world you devoted 30% of your attention to building a great service and 70% of your attention to shouting about, in the new world that inverts.

No-brainers = important
Jeff Bezos: We're still working on identifying [the constants] for the developer community, although we have some good guesses as to what they are. Reliability of the platform would be one, which is a kind of a no-brainer. But then a lot of these things are no-brainers. No-brainers are no-brainers for a reason: They actually are important.

Social features = Customers first
Jeff Bezos: One of the ways to get vast selection is to invite other sellers, third parties, onto our websites to participate alongside us, and make it into a win-win situation...

Now, if we're offering a certain digital camera and you're a seller with the same camera to sell, you can go right on our own detail page and underbid us.

It was a very controversial decision internally at the time.

Whenever we're facing one of those too-hard problems, where we get into an infinite loop and can't decide what to do, we try to convert it into a straightforward problem by saying, "Well, what's better for the consumer?"

We don't make money when we sell things; we make money when we help customers make purchase decisions

How to be #1 = customer focus
Jeff Bezos: If you're competitor focused, you tend to slack off when your benchmarks say that you're the best. But if your focus on customers, you keep improving. So there are a lot of advantages.

Listen to your customers first-hand
Jeff Bezos: Every new employee, no matter how senior or junior, has to go spend time in our fulfillment centers within the first year of employment.
HBR: Even you?
Jeff Bezos: Oh, yeah. I just got re-certified about six months ago. The fact that I did a lot of customer service in the first two years has not exempted me. Besides, it's quite entertaining, and you learn a ton. It's not a chore.

Response to Barnes & Nobles = customer focus
Jeff Bezos: I told everyone [in an all-hands meeting], "Yes, you should wake up every morning terrified with your sheets drenched in sweat, but not because you're afraid of our competitors. Be afraid of our customers, because those are the folks who have the money. Our competitors are never going to send us money."

Don't just ask why, but why not as well
Jeff Bezos: When something seems like an opportunity — it seems like you have the skills, and maybe some kind of advantage, and you think it's a big area — you will always get asked the question, "Why? Why do that?" But Why not?... But that question doesn't get asked. It's an asymmetry that is linked to those errors of omission.

Innovation: The institutional yes
Jeff Bezos: Sometimes you make guesses and you think, When we launch this, people are going to love it. And they don't... Our history is full of things like that, where we came up with an innovation that we thought was really cool, and the customers didn't care. Fortunately, there are also quite a few that went the other way... And by the way, it's very fun to have the kind of culture where people are willing to take these leaps &mash; it's the opposite of the "institutional no." It's the institutional yes. People say, "We're going to do this. We're going to figure out a way."

Pursue your believes
Jeff Bezos: My observation on [the early results of experiments] would be that it's important to be stubborn on the vision and flexible on the details. I talked about the evolution of our marketplace business — that's a good example of where we wee relentless on the vision... We worked on it for a few years. But we didn't give up on the vision... If you really believe that the addressable market is big enough for it to matter, then it pays to be stubborn in pursuing that.

Company culture at Amazon
Jeff Bezos: I'm actually thinking, who doesn't [say no to me]?... Intensity is important. I always tell people that our culture is friendly and intense, but if push comes to shove, we'll settle for intense. But there is no contradiction between being intense and having fun... In a one-hour meeting we may spend ten minutes of it joking around, and I'm often the worst offender. I'll laugh and say, "This reminds me of..." and get us off on some story. Eventually somebody says, "Well, that is very interesting, but you do see we have an agenda..." And I think that works out great."

Full article available as a PDF for purchase at HBR:
Harvard Business Review: 2007-10: The Institutional Yes: The HBR Interview with Jeff Bezos: How Amazon's CEO leads strategic change in a culture obsessed with today's customer by Julia Kirby and Thomas A. Stewart

Also available in the print edition of Harvard Business Review: 2007-10: pp.74-82

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