“If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunity on the table.” ~ Jeff Bezos
In 1994 Jeff Bezos had to make a decision – either stick with his lucrative day job at a New York City hedge fund, or quit and relocate to Seattle to try building an online bookstore with the domain rights to Amazon.com. Taking a long-range view of the excitement around the explosive growth of the Internet, the decision was easy and he formulated the business plan as he drove cross-country.
Unlike Facebook’s Mark Zuckerberg, no one has made a movie about Jeff Bezos. He’s not as wealthy as Microsoft’s Bill Gates (his net worth stands at $31 billion, whereas Gates’ is at $79 billion). He lacks the cult following that Apple’s highly charismatic Steve Jobs attracted. But the summa cum laude graduate of Princeton built a company from the ground up that employs more than 117,000 people.
He clearly knows a few things about leading and building a very successful business. Here are five of the most important lessons to learn from Jeff Bezos:
1. The Customer is…Everything
While many companies only pay lip service to the idea of being customer-centric, Jeff Bezos has made it the cornerstone of Amazon’s empire. What does this really mean in practice?
- It means free shipping on orders of $25 or more, a practice that loses money in the short-term but builds customer satisfaction and loyalty that pays off in the long run.
- It means that thousands of managers participate in two full days of call-center training every year so everyone truly understands the customer perspective.
- It means figuring out what customers really need and then working backwards from there to figure out how to make it happen.
- It means training a group of employees whose function is to represent the voice of customers in meetings to keep that perspective on everyone’s minds.
- It means making small process improvements that keep customers happy, driving word-of-mouth buzz.
- It means accepting on faith that whatever is best for the customer will ultimately be what’s best for the business.
This obsession with customers has clearly paid off. After all, Amazon has attracted 164 million of them.
2. Engage in Continuous, Experimental Innovation and Inventiveness
When it comes to early leaders of the dot-com boom that are still innovating today, Jeff Bezos is pretty much the last person standing. Google is known for its encouragement of experimentation through its Google Labs, but under Bezos, Amazon has been doing it continuously since 1994. It’s a part of the organizational DNA at Amazon.
Just look at the amazing number of products and services offered by Amazon. Go to its website and scroll to the very bottom to see the list. As of this writing, there are 34 items listed there (including Amazon Web Services, Zappos, and AmazonFresh). Just a year and a half ago, that same listing only contained 28 items.
When practicing continuous experimental innovation, you don’t have to fear failure (see the next lesson). Your only true fear is becoming stagnant. Bezos notes, “We are willing to go down a bunch of dark passageways, and occasionally we find something that really works.”
3. Embrace and Learn from Failure
One of many mantras continually repeated by Bezos is this: “If you want to be inventive, you have to be willing to fail.” The attempt to rival Google’s search engine with its own A9 search flopped, as did the attempt to simulate Ebay with Amazon Auctions.
In both cases, however, Amazon learned a valuable lesson: The company does not do well when it takes a “me-too” approach to developing new products and services. As Bezos himself now says, “Me-too companies have not done that well over time.” This is one lesson Amazon learned the hard way. Taking a me-too approach flies in the face of lesson #2 because it doesn’t invent anything new.
The only true failure is failing to learn from such occasional missteps.
4. Get the Right People on Board
In addition to leading Amazon, Bezos is also funding his own private aerospace company called Blue Origin with the aim of giving citizens private access to space. Think of your own company like a spaceship and you’ll quickly realize how critical it is to have the right people on board.
That’s the approach Bezos has taken with Amazon. You have to get the wrong people off the ship and get the right people on the ship. Then you also have to make sure that the people on the ship are in the right positions.
This takes real time and effort, but as Bezos has said, “I’d rather interview 50 people and not hire anyone than hire the wrong person.” When you take the time to hire the right people, you don’t have to fret about concepts like “buy-in” among employees or “company culture” because you only hire people who are clearly committed to the business.
5. Figure Out Your Competitive Advantage and Stick with It
Bezos has been careful to base Amazon’s fundamental strategies on things that won’t change. Although the particular mix of products and services at Amazon will obviously change over time, what won’t change are the company’s fundamental strategies of offering the widest possible selection, the lowest prices and the fastest, most reliable shipping.
Competing on price isn’t the right choice for every company, but it is one that Amazon has chosen and elevated to an art form. When it comes to reducing costs and operating more efficiently in order to pass savings on to customers, Amazon makes good on its claims.
This lesson is very straightforward: Figure out what sets your company apart from the competition, measure it and then shout it out from the rooftops for all to hear.
Jeff Bezos may not have the stature of some of the other world-class entrepreneurs you’ve read about, but just remember these facts about Amazon: World’s largest online retailer; employs more than 117,000 people; has more than 164 million customers; and the website’s Alexa ranking is 10 out of more than 30 million websites. And don’t forget that Bezos has achieved a net worth in excess of $31 billion. That’s more than enough evidence to take these five lessons from Jeff Bezos to heart.