Working Backwards
I picked up the book “Working Backwards” after seeing Tyler Cowen’s recommendation on Twitter. Amazon fascinates me for the sheer scale at which they operate and the Day one mentality espoused by Jeff Bezos. So naturally, this book appealed to me.
The book is organized into two parts. In the first part, the authors (senior executives who worked directly with Bezos) describe the processes and principles that make Amazon unique. In the second part, they talk about some of the most innovative Amazon products - Prime, Kindle and Prime video, made possible by sticking to the these principles and processes.
When reading about a successful person or a successful company, a reader can often make the mistake of assuming that the prescribed philosophy or “recipe” is the best one out there and that it’s a “one size fits all” solution. That’s seldom the case. Like most things in life, being successful is very messy and nonlinear. The authors are quick to note this, while at the same time, confident of the wide applicability of these principles.
While there are many strands which could be unpacked, I’ll focus on 4 which made an impact on me.
Written narratives over PPTs
Every white-collar worker is no stranger to the ubiquity of PPTs. The problem with PPTs is, it is easy to make a “good” presentation by glossing over stuff without going too deep into the concrete details. For discussing something nuanced and complicated, a write-up almost always works better.
Amazon has internalized this to the extent of banning PPTs completely. Instead, at start of every meeting, the attendees read a 6-page narrative written by the host. Sure, writing a detailed narrative is much more time consuming than making a “great” PPT. But the gaps in thinking and the incorrect assumptions exposed in the process, make it worthwhile.
It took me a while to realize that writing makes you a better thinker. With this new found realization, this process makes all the more sense to me.
Working backwards with a PR/FAQ
This was another light bulb moment for me. This process is a reflection of the extent to which Amazon takes “customer obsession” seriously.
Whenever there is a new product launch, a company does a press release. By definition, you work on the press release once the product is built and ready to be released to the public.
But Amazon flips the timeline on its head. For every new product, the first step is to come up with a hypothetical press release. Here, you describe the the problem it is solving for the customer and the value addition it brings. Besides, there is also a FAQ section, which answers most of the questions that the new customer would have. The point of doing this pre-mortem is to put yourself in the shoes of the customer and think like one, when you read the hypothetical PR and the FAQ. This gives you valuable feedback about whether the company is building the right product and whether this is indeed a problem worth solving for the customer. The authors note that the final press release is very different from the initial one. A sign of the various refinements that the product goes through.
To give you a sense of this process, some of the questions that’ll be in the FAQ are
Why do you think this is the right/wrong product to build?
Why would the customer choose this over a competing product?
Why is the product priced this way?
What is the single biggest reason the customers might not buy this product?
These questions are not rocket science. Any well run company might be asking these questions in one form or other. But what’s impressive is Amazon formalizing this process.
Developing new skills and entering new markets
It is the early 2000s. Digital media and services are fast expanding. Amazon soon realizes that its position in the middle of the value chain is not going to cut it.
In one of the meetings, Bezos drew a diagram of the digital media value chain. The content creators (record labels and the big studios) on one end, followed by the distributors (which was Amazon’s role at that time) and the consumption on the other end (on devices like iPod, iPad). Bezos remarked that the creators and the consumption devices on either end dictated the terms. The famous smiling curve. Amazon had to do something about this.
This insight then led to Amazon foraying into devices (the Kindle) and creating content of their own (Amazon Studios). Both these domains were brand new territory for Amazon. But that didn’t stop them from developing new teams and making these ventures successful.
Bar raiser hiring process
I worked in a top semiconductor company long enough to realize that hiring is a hard problem. Even the best of companies can go completely wrong with some of their hiring decisions.
In his book “No rules rules”, Reed Hastings talks about how having a high talent density has been instrumental in Netflix’s success. Amazon tries to increase its talent density through its “bar raiser” hiring process. In this process, prospective employees are tested for two main things
Whether they embody Amazon’s 14 leadership principles
Whether their addition would improve the quality of the team (Bar raiser)
Unsurprisingly, feedback from interviewers has to be in a written format.
Another thing that caught me by surprise is, the base salary of almost all employees is capped at 160K USD. High performance is always rewarded in the form of equity. The base salary cap was a shocker to me. Having worked in the Bay Area, I have friends who have a much higher base salary early in their careers.
But again, this is Amazon preferring employees who believe in their unshakeable vision. "The long term interests of the shareholders are perfectly aligned with the interests of the customers". In other words, always do what’s right for the customer and the share price will take care of itself in the longer run.
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Again, there might be lots of similarities between Amazon’s practices and that of every successful company. But, what’s most impressive is the extent to which Amazon has formalized these processes and built a shared vocabulary around those. The long term results speak for themselves.