“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” [1]
This quote from Jeff Bezos’s 2016 Amazon shareholder letter gives direct insight into the leadership strategy that underpins the growth of one of the world’s most successful companies. Capturing succinctly the importance of building and sustaining a culture of continual innovation.
For every person, across a vast and fast-growing business, to perpetually think and act like it is Day 1 requires building and maintaining a company culture that encourages and rewards innovation and experimentation. Successful businesses continually move forward, question, create, test, deliver, measure, report, iterate and repeat. They move fast, always challenging their own assumptions and accepting that failures on a road to eventual success are opportunities for learning and building better processes, not for recriminations and retreat from experimentation. Clear processes can help foster and sustain this culture.
Building the foundations of an innovative culture
During 12 years in development and project management roles at Amazon, I experienced first-hand many processes the business has developed that drive a culture of innovation. Fundamental to continued success has been the establishment of a clear set of Leadership Principles. [2]
These principles are not empty words or lip-service sloganeering, but real decision-making tools and frameworks that underpin the daily deliverables of everyone in the business. Not only do these principles provide guidance to help make everyday business decisions, but explicitly call out innovation as a basic business deliverable against which everyone will be constantly reviewed. The Amazon principle of Invent and Simplify requires innovation and invention and a focus on always finding ways to simplify.
Within the framework of clear leadership principles, everybody is equipped with a toolkit that empowers individual decision-making. Faced with multiple options in any business decision, everyone at Amazon looks directly to the leadership principles. Referencing the principles of Customer Obsession or Bias for Action for example can immediately provide clarity. What is the best option for customers? How easy would it be to roll back if needed? Suddenly the path forward is clearer, and decisions can be made without the need for additional approval when the decision-making framework is transparent for all. This optimises for speed of innovation.
Leadership principles are also the bedrock of the company recruitment process. This dovetails with the Amazon focus on inputs rather than outputs. Correct inputs leading to desired outputs. Candidates undertake two or more one-hour phone interviews followed by 5 or 6 in-person, one on one, hour-long interviews where they answer behavioural questions based on the leadership principles.
As a further check that the company continues to drive innovation and quality many interview loops include a Bar Raiser whose role is to ensure impartiality, challenge assumptions and ask recruiters whether candidates will raise the bar for the roles that they are interviewing for. Identifying people who can drive new thinking and challenge existing practices establishes a first building block for maximising future innovation.
Empowering teams to innovate using the Amazon process toolkit
Working Backwards, PRFAQs (Press Release with Frequently Asked Questions), six-page docs (no PowerPoint), meetings that are silent for the first 20 minutes as everybody reads a doc together, single-threaded leaders, two pizza teams. There are multiple techniques that Amazon teams use and pulling these together under the umbrella of driving innovation it becomes clear that the collective impact is greater than the sum of the parts with each initiative contributing to the communal mindset and driving a flywheel of innovation.
The benefits of this approach at Amazon are self-evident and these concepts can be applied in any business. Successful adoption, however, requires full commitment and potential re-engineering of existing practices. Senior leadership support is essential.
Working with these tools is liberating. Clear paths to follow for any new idea. Anybody can, and is encouraged to, write PRFAQ’s, and on any subject. You are not limited to your immediate area of operation. This working backwards process requires an author to articulate the impacts of a proposal in a Press Release format and to support this with an exhaustive list of questions and answers. Benefits are made clear and, should an idea or project be given the green light, investments are channelled into well-defined opportunities and this reduces the likelihood of scenarios such as building something and subsequently attempting, and perhaps failing, to find a market.
Success is of course not guaranteed as the failure of the Fire Phone clearly attests [3], but lessons learnt here contributed to the subsequent consumer take up of Amazon Alexa, with many of the same resources redeployed onto the new programme. This also highlights another key innovation strategy where a focus on timely data capture surfaces potential failures quickly and Amazon recognises when to fail fast, document and share lessons learnt and move on. A PRFAQ will go through many iterations but will result in a comprehensive first step that, should the idea be adopted, can form the basis for subsequent business requirements documentation.
Strategies for developing innovative ideas quickly
Reading documents together as the initial step of a meeting ensures everybody is assimilating the same information at the same time. Strange as it may feel to sit in a meeting room with senior leaders in complete silence for up to half the meeting, this optimises everybody’s time. Using a maximum 6-page format forces author focus and clear thinking and the document should capture in detail everything that a reader will require, something which could not be possible in a presentation format. The output is clarity on the subject under discussion, clear next steps and identified ownership. As tools for innovation the PRFAQ and six-page narrative docs are used daily across the Amazon business but, as with using any tools, they require training, practice, and discipline to be fully effective.
Providing space for innovation and tools to help new ideas surface must be supported by a focus on bringing the best ideas to fruition fast and Amazon uses the concept of Single Threaded Leaders to assign responsibility for driving new initiatives. Single threaded leaders are individuals charged with focusing entirely on a given project. Experience has shown that allocating important company initiatives to somebody who already has a full workload can stifle or even derail a project.
Amazon will take bold moves and allocate senior leaders, used to running large departments, to lead what may appear to be small start-up teams, but they have the experience and vision to be able to scale quickly.
Sustaining an innovative culture
Rewarding patent filings with much coveted puzzle pieces [4] and presenting Just Do It awards [5] to highlight new ideas are examples of how to help keep innovation top of mind, but most importantly, a final key component to the success of the innovation culture within Amazon is the remuneration structure. The mix of salary and stock options and a shared belief that continued innovation will drive stock value creates a common goal and everybody shares in the success of the company.
Following these processes Amazon has successfully built an innovation culture that is essentially devolved from requiring constant downward focus from the senior team and is self-perpetuating across the vast breadth of the company.
Each one of these strategies are regularly reviewed by the Amazon senior teams to ensure that, as inputs, they continue to drive the required outputs. It is good practice for all organisations to consistently reflect on their own organisational processes, test, iterate and implement changes with the aim of improving innovation in the workplace.
About the Author
Martin Gardner has worked at the forefront of digital change around the world for over 20 years. He was a member of the UK launch team for the Print on Demand company Lightning Source and worked on early ebook sales platforms. He joined Amazon in 2008 to negotiate content agreements for the Amazon Kindle and, over the following 12 years, worked in international business development and project management roles at Amazon on multiple game changing devices including the launches of Kindle in the UK, India and Australia and helping companies to add Alexa voice assistant functionality to their own hardware products.
