The True Meaning Of Bezos

That was some surprise. Amazon founder and CEO Jeff Bezos announced today that he would be stepping down to become executive chairman of the company.

There’s already been plenty of coverage of what’s happening and why, and what it may mean for the company, which clocked $386.1 billion in revenue in 2020, up 38% from 2019 and probably shipped a package to your front door today.

Those numbers are impressive as hell, no doubt. But Bezos’s real achievement was developing and adapting a suite of groundbreaking business practices which utterly disrupted global commerce.

“Invention is the root of our success,” Bezos said to his employees in a note announcing his move. “We’ve done crazy things together, and then made them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive.”

How do they do it? Our good friend Ram Charan does a great job detailing those practices in his recent book The Amazon Management System. For anyone piloting an organization through our age of digitalization, it’s required reading. So what ideas hath Bezos wrought in creating Amazon? Charan says there are six core building blocks:

• The Customer-Centric Business Model, “continuously-expanding, built on novel concepts of platform, ecosystem and infrastructure, able to defy traditional rules of diminishing returns, and actually delivers increasing cash flows and higher returns on investment.”
• A Ground-Breaking Invention Machine, built on using consumer data to build “game-changing and behavior-shaping inventions that create new market spaces of massive magnitude.”

• Very High-Velocity Decision Making. As we detailed in this Chief Executive cover story by Charan, “Amazon’s decision-making is high-quality, high-velocity, and follows a set of clearly articulated principles and uniquely designed toolsets with striking consistency across the entire organization.”

• The Forever-Day-1 Organization. “Amazon, as an organization, is committed to fight entropy and to be forever day 1, that is, to combine the size and scale advantages of a big company, the speed and agility of a startup, and the continuous upgrade of organizational capabilities.”

• The Ever-Rising Talent Pool. “Amazon’s talent pool is carefully defined, meticulously documented, and rigorously chosen, coupled with complete end-to-end tracking and feedbacks to ensure continuous rising of the bar, both for the talent pool itself and for the mechanism of talent acquisition and retention.”
• AI-Empowered Data and Metrics System. “Amazon’s data and metrics system is ultra-detailed, cross-silo, cross-layer, end-to-end, real-time, input-oriented and AI-empowered, therefore everything can be tracked, measured, and analyzed with insights generated and routine decisions automated.”

The development and implementation of these practices are Bezos’ true legacy. The gaudy array of commas and zeros that accompany each Amazon earnings report are just a byproduct.

Because somewhere along the way to becoming one of the richest men in the world, Jeff Bezos also became the most influential and inventive business thinker of our time. Thankfully, that’s a success we can all study and share. Read Ram Charan’s Article On How Amazon Makes Decisions >