The Amazon Way

"It's the strongest performance culture I've ever experienced, and it's tied directly to metrics."

— John Rossman

Rossman joined Amazon in 2002. Jeff Bezos tasked him with figuring out how to sell third-party products alongside Amazon's own inventory, and from there he launched and ran the third-party seller business, the Marketplace, which today is a central part of the company. He also managed the e-commerce services Amazon operated for companies like Target, Toys "R" Us and Marks & Spencer. The book explains, with first-hand anecdotes, the fourteen leadership principles Amazon had at the time.

The principles that look at the customer and the long term are:

• Customer obsession. Start from what the customer needs and work backward; watch the competition, but obsess over the customer.
• Ownership. Think long term, act on behalf of the whole company and never say "that's not my job."
• Invent and simplify. Look for ideas everywhere and accept that what's new will be misunderstood for a while.
• Think big. Propose a bold direction that inspires results.
• Frugality. Don't spend on what the customer doesn't value; constraints breed resourcefulness.

The principles on people and judgment are:

• Are right, a lot. Good judgment and good instincts, seeking diverse perspectives.
• Hire and develop the best. Raise the bar with every hire.
• Insist on the highest standards. Standards that others consider unreasonably high.
• Vocally self-critical. Benchmark against the best and acknowledge mistakes even when it's uncomfortable.
• Earn trust of others. Listen attentively, speak candidly and treat everyone with respect.

And the principles on execution are:

• Bias for action. Speed matters; many decisions are reversible and don't need extensive study.
• Dive deep. Know the details of the operation and be skeptical when the data doesn't match the story.
• Have backbone: disagree and commit. Respectfully challenge the decision you disagree with and, once it's made, commit fully.
• Deliver results. Focus on the key inputs of the business and deliver with the quality and timing promised.

Rossman insists the principles work because they're connected to the company's mechanisms. Annual reviews measure how much each person lived the principles, promotions require written documents with evidence, and teams are organized in small groups, the two-pizza teams, which operate like small companies with a clear owner.

One of the cases he tells illustrates customer obsession. One holiday season, Apple couldn't deliver on time some 4,000 pink iPods that Amazon had already sold. To keep its promise, Amazon bought them at retail price and repackaged them by hand, losing margin on every one.

The concept to master is that culture becomes an advantage when it becomes operational. The principles generate that advantage when they're used to decide whom to hire, whom to promote and which project to approve.

How to apply it? Write the five to eight principles your company already decides by, even if you've never put them in writing. For each, note a real example from recent months in which it was applied. Then add a question about each principle to your hiring interviews and to your next performance review.

As a founder it will help you turn your culture into something that can be taught and measured, and to scale the judgment you decide with as you stop being in every decision.