Amazon: Jeff Bezos Leadership Playbook
How Amazon's Leadership Principles Shape the Company’s Culture
Amazon’s slogan sums up everything: Work hard. Have fun. Make history.
Amazon employees work really hard, not sure if they really have fun, but they definitely make history. The company is best known for its disruptiveness and innovation, and for good reason. Amazon innovated technologies and tools that people once thought were useless. Whether businesses want cloud computing services & data storage facilities, or book lovers want to read unlimited books digitally, Amazon has got their back.
So this begs the question: Do Amazon employees really have fun?
The question is worth asking because without having “Fun” it’s really hard to make history, as making history requires exceptional input with exceptional results. So when you are not really having fun—working late nights, sleep deprived, unproductive tasks, and low-performance activity—that yields poor results, and poor results don’t make history.
So I guess Amazon employees DO really have fun working.
This is where the exceptional, world-class leader, Jeff Bezos comes in. Since founding Amazon in 1994 and leading the company for more than two decades, he has built many amazing, powerful leadership principles that shaped the company’s work culture for the better. For example, in the following video, he talks about work-life balance, which he calls “Work-Life Harmony” and explains how personal life affects professional life and vice versa:
So you whisper in your head, “Jeff Bezos must be a great leader?” And the truth is: He truly is. Jeff Bezos is one of the greatest of the greatest leaders in the entire world. His leadership style inspires today’s generation of entrepreneurs, and why not? Because of his exceptional leadership style, Amazon single-handedly became the 5th largest company in the world with a total market cap of $2.2 trillion, which is pretty remarkable.
And for that reason, I think founders and leaders can benefit from studying Jeff Bezos’ leadership style and Amazon's leadership principles to build a valuable, successful company. If that sounds great, you are on the right page. In this week’s deep dive, I’m going to dissect Jeff Bezos and Amazon's leadership philosophy and how it shaped the company’s work culture.
Get your popcorn ready, and let’s dive in!
1. Customer-Centric Approach
Amazon’s mission is audacious: To be Earth’s most customer-centric company.
Anything and everything Amazon does is centered around making customers’ lives easier, better, and more efficient. But for Amazon, getting obsessed with customers isn’t something they started doing a few years ago, Nope! Amazon, since its founding, has always believed in “Putting customers at the center of everything they do.” In the Shareholder Letter of 1997, Jeff Bezos first emphasized the importance of customers, which goes like this:
Obsess Over Customers: From the beginning, our focus has been on offering our customers compelling value. We realized that the Web was, and still is, the World Wide Wait. Therefore, we set out to offer customers something they simply could not get any other way, and began serving them with books. We brought them much more selection than was possible in a physical store (our store would now occupy 6 football fields), and presented it in a useful, easy-to-search, and easy-to-browse format in a store open 365 days a year, 24 hours a day.
The founder and former CEO of Amazon, Jeff Bezos is so, so obsessed with customers that there isn’t a single shareholder letter, public interview, or podcast where “Customer” isn’t part of the conversation. That’s how obsessed Jeff has been with customers from the beginning. To drive this home, watch this five-minute video clip of Jeff giving an interview to CNBC, where Jeff Bezos’ center of the conversation again is “Obsess over customers.”
What’s interesting is, Amazon’s 90% of products, features, and services come from customer requests, the other 10% of innovations arise from needs that customers may not be articulating, but by remaining close to the customers and relentlessly focused on their needs, Amazon is able to read between the lines and invent on their behalf.
Long story short, the first leadership principle of Amazon is: Be customer-centric.
At Amazon, everything is centered around customer experience—from building and improving products to scaling to organizing meetings. This Jeff Bezos leadership approach helps Amazon build the following strong customer-centric work culture in the company.
#1: Working Backward: Do you know how Amazon builds products? By working backward. Before building a new product, Amazon first asks and surveys its customers about what they want and the features they wish. The company carefully listens and does internal press releases until the project gets clear on what the team needs to build. Once it's clear, the team starts building the product while getting feedback along the way. This customer-centric approach to building products allows Amazon to build “Exactly” what the customers have told them to. This is how Amazon builds exceptional products.
#2: The Empty Chair Strategy: You whisper in your head, “What the heck is this?” It’s an approach Jeff Bezos first introduced a few years after founding Amazon. Here’s how it works: In meetings (especially executive meetings) before starting the meeting, Jeff Bezos places an empty chair at the center of the conference room (however that fits!) so that the empty chair, which has been placed for the “Customer” should remind the participants that anything they talk, explain, and ask questions should be centered around the “customer.”
#3: Jeff Bezos sends “?”: When Jeff opens his email, Jeff@amazon.com and if he finds that customers are complaining about something, simply he forwards the email to the respective department just saying “?” and the leaders of the department know that something has gotten out of their way, and they need to fix it as soon as possible. This approach helps employees, leaders, and teams understand how important customers are for Amazon and Jeff Bezos.
And frankly, it helped the company grow rapidly, inventing some of the world-class, life-changing technologies—whether it’s AWS for providing cloud computing services to businesses of all sizes or Kindle to help book lovers read books digitally—Amazon has built all of them.
The customer obsession also helped Amazon improve its existing products, for example, Jeff Bezos launched Amazon Prime to let its customers buy unlimited products with two-day shipping for just $79 a year. As he did, investors and people didn’t understand why Jeff was doing it, and how the company was going to make a profit. And for that reason, Jeff was misunderstood by people for years. But he knew that the investment he was making would pay off in the long run, which profoundly did as Amazon grew.
Another customer obsession “Thing” Jeff did in the early days was letting customers drop reviews on the products they’d buy. People thought this was a terrific idea and would make the company go bankrupt. But no, it worked. Here’s how Jeff describes it:
Shortly after launching Amazon.com in 1995, we empowered customers to review products. While now a routine Amazon.com practice, at the time we received complaints from a few vendors, basically wondering if we understood our business: “You make money when you sell things—why would you allow negative reviews on your website?” Speaking as a focus group of one, I know I’ve sometimes changed my mind before making purchases on Amazon.com as a result of negative or lukewarm customer reviews. Though negative reviews cost us some sales in the short term, helping customers make better purchase decisions ultimately pays off for the company.
You see? So founders and leaders, this is your first leadership lesson from Jeff Bezos and Amazon—obsess over your customers. Ask them questions, know them well, and build products and services that your customers tell you to build. And if you do this well, you will become an exceptional company just like Amazon.
2. High Standard Bar
The CEO of Amazon, Andy Jassy believes: High expectations lead to better results.
There is no room for mediocrity at Amazon. Employees and teams are expected to deliver better results and high-standard outcomes. Jeff Bezos, since founding the company, has always believed in the “High Standard in Everything.” In the shareholder letter of 2018, Jeff wrote a line that I thought was fascinating:
“High standards are contagious. Bring a new person onto a high standards team, and they’ll quickly adapt. The opposite is also true.”
So…so good. At Amazon, employees are encouraged to seek out ways to build better products and improve services—no matter how small the improvement might seem. But this doesn't just apply to the product development side, the high standard bar at Amazon applies to every corner of the company.
Now here things get interesting.
Each and every department has this thing called “Service Level Agreement (SLA) that helps the company keep the standards really high for anything they do. SLA is a method that forces and reminds teams what they should aim for when building a new product or when improving an existing product or service. For example, if it has been agreed that the Amazon website page should not take more than 3 seconds to load on SLA, the team has to work really hard to make sure that the website is actually loading under three seconds.
Jeff Bezos hates mediocrity. He aims for high standards and always encourages the team members to aim for the same thing. The reason is valid because if Amazon doesn’t aim for a high standard of product & service and work culture, people won’t stick around—they’ll search for alternatives, which of course, Jeff and Amazon never want.
Here’s how this leadership principle shaped the company’s culture:
#1: The Bar Raiser Program: “Hire slow, fire fast” is real at Amazon. The company knows how important it is to bring in the most talented, smart employees. That’s why Amazon has a unique approach to hiring new employees. The Bar Raisers are Amazon’s “Trained interviewers” who go through the Bar Raiser Program, a program designed to train interviewers for hiring new employees at Amazon. This helps the interviewers “only” hire quality individuals who’d help the company grow. As Jeff Bezos said: “Every new hire should be considered not just as a replacement for an existing position but as someone who raises the bar for the entire team.”
#2: Two-Pizza Team Rule: Jeff and Amazon believe that if a team is too big, it loses its culture and quality—as it’s very hard for a large sum of employees to collab (not technically, but socially and mentally) And that’s why Amazon has this culture where no team should be bigger that it can’t be fed with two pizzas. This means Amazon believes in small team size, and it would rather divide the department into 10 different teams than having a giant one department. This helps Amazon’s employees collaborate effectively and be more productive.
#3: The Day 1 Philosophy: Day 1 Mentality is about constantly curious, nimble, and experimental. It means being brave enough to fail if it means that by applying lessons learned, Amazon can better surprise and delight customers in the future. Said differently, Day 1 Mentality helps Amazon’s employees build great products and services by keeping the standard high.
Here’s what the CEO of Amazon, Andy Jassy has to say about High Standard:
“Leaders have relentlessly high standards—many people may think these standards are unreasonably high. Leaders are continually raising the bar and drive 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 they stay fixed.”
3. Taking the Ownership
Leaders who think or act like owners approach every decision with a long-term perspective.
Jeff Bezos encourages its employees to not think and act like employees but like owners. He also uplifts employees to act and work for the company as if they have their own small businesses inside the company. So when employees work this way, they think long-term, take responsibility for things, and make decisions that benefit the company as a whole.
The CEO of Amazon Andy Jassy says: “Owners ensure the problems are owned, that they have a path to resolution and they drive it themselves as needed.” This works because Amazon incentivizes employees who do better jobs and make better decisions. But imagine an employee saying “Why would I do that…I don’t get anything for working hard, taking ownership, and responsibility.” That’d be a disaster for the company, isn’t it?
To drive this home let me show you a story that Jeff Bezos used in Amazon’s 2003 Shareholder Letter, and uses the same story when it comes to making people believe in taking ownership, here’s how he wrote it:
“Owners are different from tenants. I know of a couple who rented out their house, and the family who moved in nailed their Christmas tree to the hardwood floors instead of using a tree stand. Expedient, I suppose, and admittedly these were particularly bad tenants, but no owner would be so short-sighted.”
Would you have drilled the floor if you were the homeowner? Of course not. Because owners are owners, they don’t hurt their business and assets. And that’s why Jeff Bezos encourages Amazon’s team members to be and work like owners, not like employees.
A few more examples…
In the mid-2000s when Amazon started building AWS, the engineers involved in the project realized that they needed to build a cloud infrastructure for it, but you know what they did? Instead of waiting for weeks to get approval from Amazon’s leaders, they took full ownership and started working on the project without the leaders’ approval.
When Amazon launched Fire Phone in 2014, and it commercially flopped, the product team and engineer involved—didn’t hesitate to come in public and take responsibility. All the product team showed their responsibility and accepted the mistake they had made, which helped Amazon later build its next big products like Amazon Echo and Alexa.
You see? This powerful leadership style of Jeff Bezos helped the company form some of the best, strong work cultures, if you’re curious enough, here they are:
#1: Disagree and Commit: At Amazon, employees, leaders, and teams are allowed to disagree, and they can present their solutions and opinions. They can disagree with each other, and they can present a solution. But once the final decision has been made, they have to commit fully to the project. This is powerful because it allows Amazon to do what needs to be done, and employees to work together regardless of whether they agree or disagree, which I think is crucial for making progress and innovation.
#2: Think big and long term: This has really become a culture at Amazon where people and employees just think about what would be great for the company not two years from now but 10 years from now by taking the ownership. This leadership principle helps employees and team members avoid short-term gain over long-term sustainability and profitability. But truth be told, doing so is very very hard for most companies. Most companies get trapped chasing short-term profit over long-term vision, which is a huge mistake, but this isn’t the case with Amazon.
Here’s what Andy Jassy says about ownership:
Leaders are owners. They think long-term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say “that’s not my job.”
4. Six-Page Written Memos
Jeff Bezos famously banned PowerPoint at Amazon in 2004.
In the history of tech, I believe, Amazon is the first tech company that banned PowerPoint. And no doubt seeing this, many other tech companies like Stripe, Shopify, and Apple also banned PowerPoint. And there is a very clear reason why a valuable company would ban PowerPoint.
For any valuable company, communicating ideas is very, very important. The clearer the ideas are, the better and right decision the company makes. But the problem with PowerPoint Slides is that they look good, they look beautiful, and you make all the decoration—design, color, etc, but in reality, in the process of doing so, you forget to tell the truth—the main thing.
Said differently, PowerPoint hides the truth behind the curtain.
Plus, PowerPoint presentations feel more like a sales pitch, which is the least thing you want to do when you’re presenting your ideas to your team and people. Another problem with the PowerPoint “Way” of communicating ideas is that most of the time, the presenter presents the idea and the entire room listens, which doesn’t make the conversation engaging. And the reality is, it’s easy for the presenter to make the PowerPoint slides, but it’s hard for the audience to understand, which often wastes time, effort, and energy, not just for the presenter but for the whole meeting attendees.
So what’s the substitute? Written Memo.
Six-page written memo is what Amazon goes for. Because written memos do everything opposite of PowerPoint Presentations. However it takes longer and more effort to write a six-page memo, but it’s all worth it because written memos help communicate ideas clearly in a narrative style with full sentences and paragraphs while telling the truth.
And you know what? Amazon takes it to the next level, here’s how:
Meetings are organized in a totally different (better?) way at Amazon. Jeff Bezos, at the meeting, asks everyone in the room to read the six-page memo for 30 minutes before starting the discussion. The participants read the memo, take notes, and then Jeff starts the meeting asking everyone questions and letting them give them their opinions. He listens and speaks last. This way of meeting not only helps the meetings be more productive and responsible but also helps participants find unique approaches and ideas that they wouldn’t otherwise.
Here’s how Jeff Bezos explains the Six-Page Written Memo effects:
“I would like everybody to read these memos in advance. But the problem is people don’t have time to do that. And they end up coming to the meeting having only skimmed the memo or maybe not read it at all. And they’re trying to catch up. And they’re also bluffing like they were in college having pretended to do the reading.”“It’s better just to carve out the time for people. So now we’re all on the same page.”
This leadership style of Jeff Bezos is powerful because it helps the entire team, employees, and leaders at Amazon communicate ideas clearly and make no room for confusion and complexity. So stop fantasizing about PowerPoint and start prioritizing written memos.
5. Data-Driven Decision Making
Jeff Bezos says: Things don't improve unless they're measured.
Instead of following intuition, gut, or feeling to make decisions, Jeff Bezos believes in following data to make decisions at Amazon, and encourages all the team and employees to do the same. Because data doesn't lie, you know. But data-driven leadership style is meaningless without the support of CEO and executives, and their willingness to challenge assumptions.
Interestingly, Jeff Bezos, the company's founder, famously emphasized the "Day 1" mentality, where every decision is treated as if the company is still in its infancy. This mindset fosters an environment where Amazon constantly seeks new ways to use data to optimize its operations and systems.
On top of that, Amazon pushes itself to rely on data, quantifiable evidence, and real-time insights to improve every aspect of the business from improving website load page to delivering exceptional, high-standard AWS services. Moreover…Amazon has more data than it ever needs—coming from all across like AWS, customers giving their details, sellers, and people using the service and platform. This helps Amazon ruthlessly improve new and existing products & services.
But not all decisions are created equal.
Jeff Bezos defines two types of decisions at Amazon: One-way door and two-way doors decisions. One-way door decisions are difficult, hard, irreversible, and require critical thinking before making the decision. These are usually big decisions made by the head of the company like executives and leaders. Two-way door decisions are easy, simple, reversible, and can be made by anyone—employees and small-level teams at Amazon.
Here’s how Jeff Bezos describes it in this video:
There are a few examples of how Amazon uses data to improve its products and services:
#1: One of the best examples of data-driven decision-making at Amazon was the development of Amazon Go, the cashier-less convenience store that was inspired by customer frustration with long checkout lines. The team asked a simple question: "What if we could eliminate checkout lines altogether?" The data from customer emails validated that this was a significant pain point, which led to the creation of a revolutionary retail experience.
#2: Another example of data-driven decision-making is the scaling of Amazon Prime. When the service was first introduced in 2005, it was designed to increase customer loyalty and incentivize more frequent purchases. However, Amazon’s data-driven approach allowed the company to iterate on Prime over time and make it a worthwhile stand-alone service. Now Amazon Prime has 200+ million active subscriptions—making it one of the most successful subscription services in the world.
Data is powerful because they don’t lie. So if you’re not measuring data in your company, and not making decisions based on the data, I think you’re doing it all wrong. Build this leadership principle at your company and ask your team to make every decision based on the data and watch your company grow.
6. Innovative and Visionary
Thinking small is a self-fulfilling prophecy.
Benjamin Graham once said: “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” This is also true for building products and services. If you think short term and never try to look in the long-term view, you’ll never innovate, and when you don’t invent, your business doesn’t compound.
The fact that Amazon has built world-class, life-changing products like AWS, Alexa, Amazon Prime, Amazon Echo, and many others is because Amazon’s team and employees think in the long term, which helps them innovate technologies that will matter not in the next two years, but ten years. Jeff Bezos encourages teams and employees to think in the long term and innovate & simplify technologies to enhance customer experience.
However, innovation and being a visionary require critical thinking. You can’t just copy what’s already working, you have to “Think different” and come to a different conclusion or POV. The CEO of Amazon puts it very well, here’s how it goes: If you want to build a company that lasts over 100 years and outlasts all of us, you cannot run the same playbook for decades at the time.”
It’s true because if innovation and being a visionary were that easy, everyone would be inventing new technologies from their mom’s basement, but do they? It requires huge, huge resources (thinking, money, effort…you name it.) Here’s how Jeff Bezos thinks about Innovation and being a visionary:
This leadership style shapes Amazon’s culture in the following ways:
#1: Thinking Long Term: At Amazon, employees and teams are encouraged to think long-term. In a 2016 shareholder letter, Bezos wrote: “If we think long term, we can make better, more patient decisions that don’t have to be subject to quarterly earnings pressure.” This is really powerful because Amazon doesn't have to think about what’s trendy and hot. Instead, it focuses on the products and services that’d matter not tomorrow, but a decade later. But sadly, not many companies have the ability to think in the long term.
#2: Speed: Amazon's leadership principle encourages its team and employees to speed up everything they do—the product creation, the distribution system, and processes and systems. Speed matters at Amazon. Because the faster they do something, the faster they learn, and the faster they learn, the faster they can improve. Huge upsides.
#3: Experiment: Employees are encouraged to experiment and try different approaches and methods, and not hold them back from what conventional wisdom says for doing things. This works because it helps the team experiment with different approaches, systems, and methodologies freely and rapidly.
Jeff Bezos once said, “Experiment is innovation.”
7. Take Risks and Be Willing to Fail
If you want to be inventive, you have to be willing to fail.
It's really hard to be innovative if you’re not willing to take risks and fail. The prime example I can give you of this is about SpaceX. It was 2008, the company had already crashed its first two rockets, and Elon had only one chance to save the company. The time was rough, but Elon didn’t lose hope, he took the risk and built the third rocket. And guess what? The Falcon 1 (flight 3) successfully took off. It not only saved the company but also got a massive $1.6 billion worth of contracts from NASA. SpaceX now is one of the most successful, innovative aerospace companies in the world that builds reusable rockets, an idea that once people thought was impossible and couldn’t fathom.
But it became possible because Elon took the risk and was willing to fail.
Most people underestimate how powerful it is to take risks and be willing to fail. But the ones who do really change the world, just like Steve Jobs, Elon Musk, and Jeff Bezos. This becomes especially important when you’re building something for a mass audience. Because the broader the audience, the more people use it, and the more people use it, the more impacts you’re going to create in their lives.
So take risks and be willing to fail.
At least that’s what Jeff Bezos and Amazon encourage the executives, team members, and employees to do—to take risks and be willing to fail because they know that that's where innovation happens. Here’s what Jeff Bezos says about failure: “Amazon is not too big to fail. In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.”
But taking risks is risky, you know, as it comes with failure. So good decision-making is very important for that reason. But do you know how Jeff Bezos makes decisions, usually decisions that are tough to make? There is a framework he uses, which he calls “The Regret Minimization Framework.” The framework helps you know whether you regret making a decision or not by asking this simple question: “Will my 80-year-old not regret having tried this?” If the answer comes “No” say yes to the decision and if it says “Yes” say no to the decision.
So amazing, isn’t it?
Amazon's leadership principles are one of the best of the best among the companies around the world. Because these leadership principles helped Amazon build some of the most interesting, unique, and useful cultures that every company would crave. And that’s why I firmly believe building and having strong leadership principles is very very important for a company.
And no doubt, Jeff Bezos is one of the legendary leaders and thinkers of our time. Because of his leadership style and because of his unique approach, Amazon is reaching new highs every month, year, and decade. And I truly believe founders and leaders shouldn’t just learn about Amazon's leadership principle but also about how it operates, and how it thinks about building and scaling products, and by doing so, hopefully, you’ll learn a lot.
Thanks for reading, catch you on the next one.