Working Backwards

Innovation is constrained on the number of swings you can take and by executing faster we can take more swings. Faster moving teams innovate more than slow moving teams.

In addition to fast moving teams, Jeff Bezos says, “Most organizations embrace the idea of innovation, but are not willing to suffer the string of failed experiments necessary to get there.”

Many companies observe communication gaps between teams, then commit to improving those communications in both frequency and quantity. Amazon takes the opposite approach by looking to eliminate cross-team dependencies and communications in order to increase the autonomy of teams.

Amazon is known for two-pizza teams but the authors write, “… we later came to realize that the biggest predictor of a team’s success was not whether it was small but whether it had a leader with the appropriate skills, authority, and experience to staff and manage a team whose sole focus was to get the job done.”

You want both leaders and teams focused on a single domain, limiting their cognitive load and increasing the probability of delivering customer value.

PowerPoint presentations are rife with hand-waving, style, and entertainment. Conversely, written narratives offer nowhere to hide, forcing authors to show their work and explain their analysis coherently and logically.

Written narratives at Amazon primarily come in two forms: six page memos and PR/FAQs.

Six page memos are used for meetings. At the beginning of each meeting, the meeting organizer delivers a memo up to six pages in length, which attendees read prior to discussion starting.

PR/FAQ docs are used to pitch product ideas, highlighting customer value, business value, and addressing anticipated questions.

When presenting data, most people cover all the data. Amazons focus their minds on variances to drive understanding and decision making. Notably, YoY growth rates are compared rather than simple YoY static numbers because growth tells a more complete and often different picture.

When faced with build-or-buy decisions, companies often ask whether the problem fits into a core competency. If not, they outsource it.

The problem is that customers want highly integrated end-to-end experiences, not fragmented features, and outsourcing solutions limits your ability to meet customer demands.

Amazon is famous for customer focus, but I appreciated this simple recommendation to obsess over customers and pay attention to competitors. Too many product teams inverse that relationship by obsessing over competitors and entering into a feature rat-race, paying little attention to what customers actually derive value from.

Amazon’s customers care about three things according to the authors:

• Price. Is the price low enough?
• Selection. Does Amazon have a wide range of products–ideally everything?
• Convenience. Is the product in stock, nad can I get it quickly? Can I easily find or discover the product?

I found it refreshing to boil down such a large and complex business like Amazon into a simple model like this.

With a solid foundation in business and technology, strong general athletes (SGA) at Amazon often changed divisions, becoming subject matter experts in multiple domains along the way. By porting these highly adaptable SGAs to different domains, Amazon can spin up new product areas while upholding leadership principles.

Amazon caps salary relatively low compared to other FAANG companies but offers more stock compensation in order to align everyday employees’ incentives with long-term company success.