Building the Forever Day-1 Culture at Amazon

December 10, 2019

Building the Forever Day-1 Culture at Amazon

Amazon, as an organization, is committed to building a Forever Day-1 culture that works 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.

From the day he launched his new venture, Jeff Bezos has been obsessed with customers. Throughout the history of Amazon, this relentless focus has informed every decision and appeared in virtually every communication or action. In everything from the empty seat at early meetings (to represent the customer) to the recurring theme in every annual letter, customers are the guiding light for Amazon.

What Is Day 1?

At the early stage of any start-up, the founder (or the small founding team) runs everything, from design to production, to sales, to delivery, and to bookkeeping. If luck is on their side, the business will soon outgrow the capacity of the founding team, and they will need to expand the team and build an organization.

Normally, in the beginning, the organization will still function with speed, nimbleness, and a risk-acceptance mentality, but as the business grows bigger, complexity starts increasing, and layers begin creeping in, the once-nimble start-ups inevitably fall into the trap of so called “large organizations,” characterized by slowness, rigidity, and risk aversion.

Bezos’s evocative and sticky model of “Day 1 vs. Day 2” has proved to be an immediate and useful way. This simple phrase captured Bezos’s aspiration for Amazon to grow aggressively in scale and scope while preserving the entrepreneurial vitality of a startup and building on the numerous advantages of a large company at the same time.

What does Day 2 look like in Bezos’s mind? “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

How to Fend Off Day 2?

There is no simple answer to this age-old problem that has been a source of trouble for almost every organization on the planet. There are many culprits and many traps that can lead to Day 2; some obvious, but some much more subtle and deeply imbedded in human nature. 

Bezos identified this challenge early on, and has put a great deal of thinking into finding a solution. In his 2016 Shareholder Letter, he offered a starter pack of essentials for Day 1 defense. It includes:

  • True customer obsession. People who are committed to delighting divinely discontent customers will be driven to continuously improve, innovate and invent on their behalf, and to make sure that organizational capability will rise faster than the ever-rising customer expectations.
  • Resist proxies. A common example is process as proxy. Processes are a means to an end, initially designed to make business operation more scalable. However, as a company grows bigger, processes actually can become an end by themselves, so complicated that most people don’t know how to navigate through them.
  • Embrace external trends. Most Day 2 companies lack the necessary vigilance to respond to key external changes. They are slow in detecting the early warning signals, slow in assessing the possible impact on existing business and new opportunities, and slow in making decisions to adjust resource allocation or team assignment to confront these new realities.
  • High-velocity decision-making. Not every decision needs to go all the way to the top, to wait for all the information, and to require lengthy approvals and the agreement of all.

The cumulative effect of these practices is to engrain a daily culture of setting ambitious, aspirational yet well-thought-through goals combined with a clearly defined set of metrics to monitor and learn from these experiments in order to continuously improve.

How to Build a Forever Day-1 Culture?

To build a Forever Day-1 organization, you need a corresponding corporate culture that reinforces the continued growth of this quality. Once established, like it or not, culture tends to become so rooted in the organization’s psyche, or so hardwired in the organization’s DNA, that it will be long, lasting and very hard to change. No one will deny the importance of the right culture. The real problem is how to define it and how to build it.

Culture is normally created during the entire life span of an organization, with the strongest foundation laid in the beginning by its founding members. Their day-to-day behavior, their decision-making principles, their choices on people selection, promotion and hire and fire, their enforcement of key principles, and their past success and failure are the essential shaping forces.

Today, Amazon uses a set of 14 Leadership Principles to define its corporate culture. This is defined by the Amazon leadership team, not by Bezos alone.

  1. Customer Obsession
  2. Ownership
  3. Invent and Simplify
  4. Are Right, A Lot
  5. Learn and Be Curious
  6. Hire and Develop the Best
  7. Insist on the Highest Standards
  8. Think Big
  9. Bias for Action
  10. Frugality
  11. Earn Trust
  12. Dive Deep
  13. Have Backbone; Disagree and Commit
  14. Deliver Results

For each leadership principle, Amazon specifies the expected behavior. For example, what does “Customer Obsession” really mean?

Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.

What does “Insist on the Highest Standards” really mean?

Leaders have relentlessly high standardsmany people may think these standards are unreasonably high. Leaders are continually raising the bar and driving their teams to deliver high-quality products, services, and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed so that they stay fixed.

These 2-3 sentences are of pivotal importance in what sets Amazon apart from others. Why? Because without this kind of detailed description, principles are abstract terms, lofty but impractical. Once you bring them down to clear and specific behaviors on the ground, they become operational, and everyone and anyone can start practicing them accordingly. This is what we call operationalizing the culture.

Create Forcing Mechanisms

So how can you ensure that your leadership principles will be consistently executed as your enterprise grows? One effective approach used at Amazon is the forcing mechanisms.

Amazon has created a system of simple but effective forcing mechanisms to ensure that everyone in the organization really lives and breathes the stated values and principles. Some examples include a weekly check-in, call-center training for managers, feedback tracking, and many others. 

Live and Breathe Them Yourself

In addition to the designs mentioned above to guide the organization daily, the most powerful forcing mechanism has to do with personally modelling the behavior expected from everyone.

On this front, Bezos is really a man of his word. His personal and persistent passion for prioritizing customers’ interests to meet and exceed his own unreasonably high standards has tremendously shaped Amazon DNA and elevated Amazon’s “customer obsession” to a whole new level.

Invent Memorable Symbols and Rewards

How to make values, cultures and principles memorable? How to reward people who demonstrate full embodiment of the core elements? Again Amazon has flared Bezos's relentless drive to invent by shaping an organization.

Amazon’s culture encourages, or in many ways, urges people at Amazon to continuously challenge the status quo for better, to ceaselessly seek new ideas, big and unique, to relentlessly invent, experiment, start over, rinse and repeat again and again. No matter how small the initial seed is, such undying Day-1 spirit will make it big. All these endeavors will in turn reinforce the conviction in the Forever Day-1 culture.

The Authors: 

Excerpted from The Amazon Management System: The Ultimate Digital Business Engine That Creates Extraordinary Value for Both Customers and Shareholders by Ram Charan and Julia Yang with permission from Idea Press.

 

Ram Charan is the author of 27 books, including Execution, which spent 150 weeks on the New York Times bestseller list. 

 

Julia Yang is an advisor to entrepreneurs, founders, CEOs and executives and serves on the faculty of the joint MIT-Tsinghua MBA program.