5 Ideas Behind Amazon’s Success that Every Entrepreneur Must Apply | Leader’s Reflection

Learnings from Amazon — Honest Reflection from an Ex-Amazon Leader photo by author

What is the Secret Sauce that makes Amazon so successful? Well, I am glad you asked. 😊 I have filtered learnings from my experience as an Ex-Amazon leader and am sharing honest reflection of these 5 amazing secrets behind Amazon’s success, which you can take inspiration from in your own businesses.

And over the next few minutes, you will have access to the key levers behind Amazon’s continued success (from my lens) which you can leverage to boost your business.

So let’s get started.

1. Leadership Principles @ Amazon

Every Amazon employee is expected to demonstrate the Leadership Principles, Every day! Whether it is in terms of behavior, decision making or problem solving — these principles are a way of life at Amazon. Even while hiring talent or performance reviews, these Leadership Principles are at the core of evaluation, and hence they have become ingrained in the Culture and helps the company operate so efficiently at scale.

Check out more about the 16 leadership principles at Amazon here.

“We use our Leadership Principles every day, whether we’re discussing ideas for new projects or deciding on the best approach to solving a problem. It is just one of the things that makes Amazon peculiar.” — Jeff Bezos

Did you know? Customer Obsession is one of the core Leadership Principles at Amazon. Jeff Bezos wants Amazon to be the most customer-centric company in the world, so they are determined that the best way to strategize is to consider what the customer wants and work backwards from there.

So, for all you Entrepreneurs out there, take inspiration from these Leadership Principles and reflect over these questions for your business:

What are the Key Values which I want my employees to live and breathe?

What are the Tenets our team can set, which can help us win (at speed) collectively?

How can I further create a delightful product/experience the customer?

Well, I will let you reflect on this for a moment, and let’s move to next powerful learning from Amazon.

2. Amazon Flywheel

This is one of my favorite aspects of Amazon culture. Let me share an interesting backstory I heard about — “Amazon’s founder Jeff bezos, had created this Flywheel on a Tissue Paper in one conversation, and it continues to remain true and core part of Amazon’s strategy even today!” What strikes me the most about this Flywheel is its simplicity and the virtuous cycle or network effects this creates for Amazon.

“We are comfortable planting seeds and waiting for them to grow into trees.” — Jeff Bezos

Now let’s decode the flywheel. Simply put, more sellers lead to more selection, which leads to better customer experience, which in turn drives greater customer footfalls (virtually) or traffic to Amazon. Also, as the base grows it leads to lower cost structure for the company leading to lower prices, which in turn enhances the customer experience and hence again powers the flywheel further, making Amazon grow and scale faster and faster!

To benefit from this learning, some questions you can ponder over:

What kind of Network Effects are in play for my business, which I can leverage?

How can I create a similar growth cycle for my business?

3. Decision Making — Reversible doors

As our teams and organization grows, lot of slowness can come in decision making, because of the dependencies and lower risk appetite. This principle at Amazon makes sure that teams make decisions fast, and it’s okay to fail and learn.

“If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that — they are changeable, reversible — they’re two-way doors.” — Jeff Bezos

This is a very effective way for Amazon to continue to grow fast, despite it’s huge size!

Think about these questions for your business, to move at speed and gain momentum:

What’s will happen if this doesn’t go as planned?

What impact can this create on my customers and business, if am moving ahead (or not)?

4. Getting Best Talent

There is very high rigor at Amazon in making sure that only the best talent gets hired. As a leader in Amazon, one of the things which has gotten etched in my hiring decisions is that when hiring new talent, I think about this critical decision-making factor — “Is this person going to be better than at least 50% of the team which they are joining?” This makes us continuously raise the bar for our team.

“I’d rather interview 50 people and not hire anyone than hire the wrong person.” — Jeff Bezos

When speaking about talent hiring, it is also important to understand the unique concept of Bar Raiser at Amazon.

The Bar Raiser at Amazon is focused on hiring well, rather than hiring quickly. It is just one example of why their hiring process is unique. A Bar Raiser is an interviewer at Amazon who is brought into the hiring process to be an objective third party and is able to evaluate the candidates on the leadership principles with a very unbiased lens. By bringing in somebody who’s not associated with the team, Amazon culture strives to make the best long-term decisions.

Here are a few questions you can think about, to get the best talent in your business:

Am I raising the bar, with every new person I hire in the team?

How can I bring more objectivity to my hiring process, to hire the best talent, every time?

5. Harnessing The Power Of Mechanisms

We see in small organizations, that as they continue to scale, a lot of chaos kicks in because they don’t have structured processes in place. One of the other things I learnt as a leader at Amazon was to create sustainable and self-powering mechanisms or processes, which reduce defects and standardize the processes, so the teams can operate at scale with great consistency.

One of the examples which comes to mind is the mechanism of Andon cord.

What is Andon cord? The Andon Cord a concept that empowers operators to detect abnormal conditions and immediately stop work. Andon cord was introduced by Toyota and is one of the most well-known examples of the concept at work.

Well, coming back to mechanisms, Amazon has a system of Andon cord, where if the relevant team spots a defect in the item, they can “pull the cord” and take out the item from site (and then resolve the issue), to protect the customer experience.

Try answering the questions below to identify if you have redundancies or inefficiencies in your business, and what can you do to resolve them:

What processes do I have in place to create a flawless customer experience?

For recurring processes or work items, how can I create a standardized or automated mechanism?

There is so much to pick from Amazon’s Culture for Entrepreneurs and Leaders, that this one article may not suffice. I have added 5 more powerful elements behind Amazon’s success in my blog, which you can check out here. I will continue to share more of my learnings and leadership experience on this blog, so do subscribe so you can stay tuned with the latest updates.