Founding and managing companies successfully like Jeff Bezos: Do it like Amazon


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Text comes from: Mach's wie Amazon!: Mit 50 ½ Ideen zum digitalen Vorreiter werden (2020) by John Rossman, published by Münchener Verlagsgruppe (MVG), Reprints by friendly permission of the publisher.
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A successful one Company Setting up a business is not easy, but there are role models. Jeff Bezos is one of them, at least in terms of financial success. How do you emulate him?

Founding and managing companies successfully like Jeff Bezos: Do it like Amazon

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John Rossman is a consultant and ex-Amazon manager

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What would jeff do?

In the 1990s, the acronym "WWJD" - "What would Jesus do?" - appeared on stickers and t-shirts in the United States. Variants of this were not long in coming. Scientists asked, "What would Darwin do?", Fans of the rock group "The Grateful Dead" asked, "What would Jerry do?" *

It went on and on, once I even saw a sticker that said, "What would Atticus Finch do?" ** You see what I mean. Over the past five years my customers have asked themselves their own version of this question, namely: "What would Jeff do?" When I am asked this question, it usually means something like: "What does 'digital' actually mean? «,» How do I protect my company from disruption? «,» Will Amazon penetrate our industry or our area? «,» How does Amazon achieve such results? «,» Would Amazon want me as a partner? «,» Would Amazon our Company want to buy? "," How can I make my shopping functions as easy as on Amazon? "There are hundreds of questions in this direction, but all of them can be reduced to the one question:" What would Jeff do? "

Recognize the patterns of success

Why do I think I could answer even one of these questions? Why do I think I could write about ideas that are needed to survive in the digital age? Since I left Amazon at the end of 2005, I have answered questions like this to my customers in many different industries, with a wide variety of goals and for a wide variety of conditions. To answer the question "What would Jeff do?" One only needs to see the patterns.

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And these are the patterns: Jeff Bezos and Amazon have a strikingly consistent way of facing challenges, doing business and dealing with technology, encountering new ideas and markets, and dealing with growth. In other words, there is a playbook or system of beliefs and action patterns for how to get results and think about your company there. Once you pay attention to that, you'll also find out how to think like Amazon. Among the many scenarios and examples in this book, you may not find the direct answer to your particular question. But when you understand Jeff's basic view of the world, you can, to some extent, apply his insights and principles to your situation.

The best attack is even more attack

Why will 80 percent of Fortune 1000 companies be replaced by others in the next ten years? Why are companies threatened with disruption? Even if I risk giving an overly simple answer to a complex question, my answer is: First, because companies rely too much on the way they think, their patterns and approaches; and second, changing is really difficult. "Transformation" sounds good, but the truth is, the concept is incredibly difficult to pin down.

For the most part, this great idea of ​​organizational and business revitalization manifests itself in just a few short-term projects and efforts rather than creating permanent change or long-term value. "Companies have a short lifespan, and Amazon will one day fall victim to disruption," Bezos said in a 2013 interview. “I'm not worried about this because I know it's inevitable. Companies come and go. Companies that are the most glamorous and important of an era. But if you wait a couple of decades, they're gone. I would prefer it [the Amazon disruption] to happen when I'm already dead. "

Disruption: Don't cling to old business models

Companies that do not define themselves by their old models and past successes retain their potential to remain market leaders, they determine the coming era and are able to change and grow in the course of these turbulent times. Cultivating and maintaining this potential requires world-class mental agility. So instead of resting on ongoing deals that are still growing or trying to drive profitability higher, Amazon is now investing in initiatives that won't pay off for years, if ever.

The acquisition of PillPack by Amazon in June 2018 is an example that "even more attack is the best attack". PillPack delivers precisely dosed medication to the customer's doorstep, creating a customer-centered approach both in packaging and in delivery. For those who depend on a lot of medication and either do not want to go to the pharmacy or physically cannot, PillPack is a huge improvement over other pharmacies. Amazon doesn't have to enter the healthcare market now, but they are taking this relatively small step and feeling their way into this industry. You will find out how you can expand the potential of PillPack and what legal requirements there are for the delivery of pharmaceutical products (potential for pharmacies in Whole Foods branches?). All of this is part of an overall strategy with many niches and business models.

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Why should I "think like Amazon"?

Amazon Web Services, AWS, is the largest cloud-based on-demand company. It was also the first. However, this business model did not result from a disruptive strategy of destruction by putting an end to the traditional model of hardware, software and licenses. This strategy came later. This business model arose from the need for the retail company Amazon to adapt its data processing infrastructure.

And so it came about: During the 2003 vacation season, we had problems with the reliability of the website during the busiest and most important time of the year. Not good. After we somehow muddled through this holiday period, a task force was immediately formed to take care of the scaling and reliability of the website. This team decided to centralize the data processing infrastructure. We should serve internal customers. Then it was found that there was no demand from internal customers, only from external customers. This led to the instruction to reverse the infrastructure and offer it to external customers. We soon find out that the developers loved the on-demand capabilities. And by the way, that's how the AWS strategy developed.

Amazon's leadership principles

Just think about how many business areas Amazon is active in today: retail in almost every imaginable category, in every market, cloud technology, film and television production, publishing, smart speakers, devices such as Echo, Kindle or doorbells, logistics and supply chain , Groceries, over 80 private labels, and healthcare. Amazon is a corporate conglomerate that can proudly claim to be entrepreneurial, customer-centric and not very bureaucratic. Each of its business units has external customers and could conceptually be an independent company serving other Amazon entities, as well as other companies and customers. Amazon manages to do this without getting bogged down in countless layers of bureaucracy, mainly because of its

Of course, “Amazon thinking” is not just about innovation. The whole thing is backed by a fanatical world class operational division. Relentless.com was the name Bezos had registered for his start-up, and the web address still leads to Amazon.com. Amazon's attitude toward excellent operational processes is tireless. Amazon is one of five companies that the research and consulting firm Gartner lists as a "master" in supply chain operations. Gartner explains that Amazon is a "bimodal" supply chain company, unique in its ability to adapt to new business models as well as to develop innovations.

Getting the best out of the company: 3 tips

In 2016 Amazon had over 80 patents in the supply chain alone! The ability to both work in a world-class manner and be a systematic innovator who is passionate about serving customers - isn't that exactly what every CEO wants? This is precisely why it is so important to "think like Amazon". How to read Mach's Like Amazon I have packed 50 ½ ideas into this book. I don't believe in massive transformation programs that much. The path of digitization leads through changes in the company as well as through changes in the individual. You need to develop your own path, approach change with method, and develop new behaviors.

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At the same time, you need to be patient and have a sense of urgency. You need to be willing to get the most out of yourself and your organization. There are various ways of developing innovations with the help of this text.

  1. Read it as a manager and bring the ideas to your team where they are needed.
  2. Promote team building by reading these texts in your department and discussing a thought from it for a while each week.
  3. Or discuss what ideas from this could be applied.

Set the clock to zero - your path will not be a shortcut or a straight line

"Not all who hike are lost," JRR Tolkien once wrote. If you leave aside the headlines around the world that are highly effective in advertising - what is the "competition" between cities about the location of Amazon's second headquarters? The "HQ2" initiative is unique in economic history. I took part in an interview on CNBC about the characteristics of the different cities that were applying for HQ2. The other two participants in the discussion talked about which location would be the most attractive for the »Selfie« generation, I argued against it that the main focus here was on the long-term risk of Amazon and how one can manage to attract the best technology talents Set and hold the world.

Companies have relocated their headquarters before. Boeing moved its headquarters from Seattle to Chicago in 2001. Some time after that, GE moved its headquarters from Connecticut to Boston, Massachusetts. Before that, companies from cities and states had obtained offers of tax breaks for the construction of a new location and the creation of jobs. But never before has the combination of potential jobs and publicly known offers received such echo in the media. Remember, the city that wins the Amazon race is getting a far more valuable prize than Chicago when Boeing moved there from Seattle. HQ2 holds the prospect of a $ 5 billion investment, 50 well-paying jobs, expected growth, and the immediate prestige of the world's leading digital technology location.

Think and plan for the long term

By making your strategy and evaluation of your plans longer term, you will be able to make investments and "bets" that other companies cannot. Find out the long-term risks and constraints on your business. You may find a strategic solution to this if you tackle it early on. What problem is Amazon trying to solve now? Is it about the growing concerns of some factions in Seattle about the local impact of Amazon? Is it about the tensions with the city of Seattle and Washington state? Are you worried about the hazy weather at Puget Sound Bay at Amazon? Why do you take all the effort? The question “What is Amazon's real motivation for the HQ2?” Calls for a further question: “What is holding back Amazon's growth in the long term?” I think this is exactly the question they asked themselves at Amazon, and the most important answer to it was this Opportunity to attract, bring and retain talent in the Seattle area, especially world class talent in technology.

Seattle is a wonderful place, but not for everyone. It is far from many places in the world, the time difference for most of Europe is ten hours, and it is not centrally located in relation to the rest of the United States. The cost of living in Seattle has skyrocketed. According to a report by the NW Reporter, the average price of a house in Seattle has skyrocketed to $ 777000 In short, a normal Seattle home costs about $ 1 more than a year ago. Between 100 and 000, the number of employees at Amazon grew from just over 2015 to 2017. At its headquarters in Seattle, Amazon estimates this number at around 200000. And it is assumed that this staggering growth will be maintained or even accelerated (uff!).

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Find the right people

How do you think you will recruit and retain employees while maintaining a high standard of living? What would most managers and companies do in these circumstances? Some would not even realize the long-term risk that loomed like a gloomy iceberg the night before their personal Titanic. Many would recognize it and quietly and cautiously seek short-term solutions. Why not just kick the can down to the end of the street, to the next generation in corporate management? Why should they take the hassle, bad PR, and painstaking management when they've only been in their position for five or ten years anyway? It's a common question in chief and senior management. The second leadership principle at Amazon is ownership, and it states that Amazon executives never sacrifice long-term values ​​for short-term results. The HQ2 is all about this long-term thinking, about tackling an issue with an approach that has many other benefits - instead of waiting for the controls to go down to zero. With such long-term problem areas of the company, you don't just kick the can to the end of the road.

What I would be happy about is that my text triggered in-depth discussions and important thoughts in you, that it helped you and your team to face the competition in a new way, and that you enjoyed it. But always be aware: This is a collection of ideas, not a master plan for a strategy or the process of change. You have to develop it yourself, using the unique features of your situation, constraints and opportunities as well as your own talents and ideas.

The 14 leadership principles from Amazon

Amazon has 14 leadership principles. When I was at Amazon, they weren't a formal set of rules; we talked about them every day and applied them when we made decisions. Sometime after I left in 2005, the leadership principles were put in place. The LPs (Leadership Principles), as they are called internally, play a central role at Amazon, because they ensure an even distribution of speed, responsibility, risk and result orientation. You have to be careful not to rely too heavily on just one leadership principle and neglect the others, and you have to apply it carefully.

  1. Customer Obsession - 100 percent customer-oriented
  2. Ownership - entrepreneurship: taking responsibility
  3. Invent and Simplify - invent and simplify
  4. Are Right, A Lot - Make the Right Decision
  5. Learn and Be Curious - stay curious and constantly learn new things
  6. Hire and Develop the Best - hire and develop the best people
  7. Insist on the Highest Standards - apply the highest standards
  8. Think big - think big
  9. Bias for action - act actively
  10. Frugality - cost awareness / targeted use of resources
  11. Earn Trust - build and earn trust
  12. Dive Deep - get to the bottom of things
  13. Have Backbone, Disagree and Commit - clearly communicate disagreement and still support joint decisions
  14. Deliver Results

How Jeff Bezos sees the world: a question of perspective

Jeff Bezos judges things in a timeframe that allows him to invest for the long term. Sometimes really long term. It is common knowledge that Bezos has close ties with a foundation called The Long Now Foundation. This foundation deals with the increasingly short-term perspective of society. They built a clock that ticks once a year on a property owned by Bezos in western Texas. The century hand advances every 100 years and the cuckoo only comes out every millennium for the next 10 years.

Needless to say, Jeff loves symbols. The 10000 year clock symbolizes his will to always think big and plan for the long term - as a company, as a culture and as a world. He once said:

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“If everything you do has to work within three years, then you are in competition with a great many others. But if you are ready to invest over a seven year horizon, you have a fraction of the competition because very few companies are willing to do that. Simply stretching the time frame allows you to do things that you otherwise could never do. At Amazon, we want something to work in five to seven years. We are ready to plant the seed and let it grow - and we are very persistent. "

What is a digital company?

How can you apply this to your digitization strategy and competition in the digital age? To do this, we first have to answer the question: "What is digital?"

Most organizations are under pressure to be innovative and digital. That's why I usually start from this fundamental question. So what does it mean to "be a digital company"? Many companies believe that this is about investing in mobile communication channels, mobile devices and e-commerce. Others say it's about cloud technology, on-demand capabilities and APIs. These are all important tools, but that doesn't mean you're a digital company. On closer inspection, being digital means two things: speed and agility - towards your customers and the market as well as when working within the company. More precisely, speed and agility, packaged in new business models, innovation and the collection and use of significantly more data. Speed ​​is characterized by a very precise and repeated procedure. This means an extremely efficient and precise movement in a certain direction. Operational excellence in data scaling is the business equivalent of speed.

The role of agility

Agility, on the other hand, is the ability to perceive key factors, indicators and market shifts and to make changes and adjustments quickly. Agility is the engine for innovation in your company, the ability to bring about change on a small and large scale. Amazon's DNA is determined by these two characteristics - speed and agility. But how do you manage to be world-class in the operational area and data scaling at the same time and to be systematically innovative year after year? And that doesn't happen just once or by accident. For most organizations, it would be like juggling chainsaws on ice skates.

But Amazon created the world's best system of speed and agility by leveraging many of the ideas presented in this book that are written in their leadership principles. If your business is to become a digital company, you need to build these traits in your company and compete in other ways.

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Forget quarterly figures

Developing these traits in your own organization is not a single project. It is difficult to come up with a custom way of forecasting the results, and it will all be difficult to predict. But you have to believe - in the transformative powers of data, technology, innovation and the pursuit of perfection - applied to every work area.

Planning for the long term is vital if you are to succeed. Constant quarterly thinking, over-the-knee actions that are typical of most American businesses, are not only inefficient, they are toxic to your culture. Free yourself from this thinking! If you consider digitization to be a short-term measure or believe that you will benefit from it within a very short time and get the corresponding results, then you have not understood which path you have taken here, and you do not have the patience and support to walk it until it bears fruit.

A question of passion: mercenary or missionary - what drives you

Your most important task as an entrepreneur: Develop a strategic and authentic obsession "Man is made in such a way that when his soul burns for something, nothing is impossible", wrote Jean de La Fontaine. In first grade I had a friend who knew he wanted to be a surgeon. Not just a doctor, no, a surgeon. And he became one. I was always jealous of the security and clarity with which he pursued his mission. How do you create passion and develop a mission if the path is not clear from the start? I asked myself this question and I ask it to executives. I then tell them, maybe the art of leadership is discovering each individual's passion and finding ways to use each individual's strengths for the organization's mission and create value from it.

A colleague of mine once defined a mercenary as someone who works like a slot machine. By that he meant that the only thing mercenaries care about is money. That is a bit negative. If you want to build a strong culture, you probably aren't looking for a bunch of mercenaries. Ultimately, financial profit and sales are earnings numbers. As a manager, you have no direct control over it. They are the result of many other things that you do. But what you do have under control is the input. To be successful in the digital economy, you have to be closely connected to your customers and users, because this is where the knowledge lies.

Surviving dry spells through passion

We start our development towards speed and agility by talking about customer obsession. That's what Amazon started with. The most important key questions are:

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  1. What are the long-term risks for your industry and your company?
  2. What does the term "digital company" mean for you?
  3. Is this definition also represented at the management level of your company and is it the basis for the strategy?

When I look back on my own career, it becomes clear that my main interest has been in improving company performance through three approaches:

  1. Efficiency, that is, creating processes that produce better quality at lower cost,
  2. Integration of processes, data, systems and ecosystems to enable seamless work, and
  3. developing new business models and skills that will set the company apart from the competition.

Finally, let me give you this: You will survive dry spells if you stand behind the cause and the customer with passion. Constant communication of the corporate mission will pick up the "moderately interested" majority of employees in most organizations and turn them into fans of your company for success and for the mission. It's okay to have other priorities like being able to pursue personal passions, gaining power and influence, or financial security. For many business models, professional careers and life plans, these things are probably the proof of success.


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