Working Backwards

1. Amazon's Leadership Principles drive its unique culture and success

"We love to be pioneers, it's in the DNA of the company, and it's a good thing, too, because we'll need that pioneering spirit to succeed."

Customer obsession. At the core of Amazon's culture is an unwavering focus on the customer. This principle drives decision-making at all levels, from product development to customer service. Amazon believes that by prioritizing customer needs, long-term shareholder value will naturally follow.

Long-term thinking. Amazon is willing to be misunderstood for long periods while pursuing innovative ideas. This approach allows the company to invest in projects that may not show immediate returns but have the potential for significant future impact.

Innovation and operational excellence. The company encourages employees to think big and take calculated risks. At the same time, Amazon maintains a focus on operational excellence, continuously improving processes and systems to deliver better customer experiences.

2. The Bar Raiser hiring process ensures consistent high-quality talent acquisition

"If you're good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure."

Consistent standards. The Bar Raiser process involves a specially trained employee who participates in every interview loop to ensure hiring standards are maintained as the company grows rapidly.

Behavioral interviewing. Candidates are assessed based on how well their past behavior aligns with Amazon's Leadership Principles. This approach provides more reliable predictions of future performance than traditional interview techniques.

Veto power. Bar Raisers have the authority to veto any hire, even if it means overriding the hiring manager. This ensures that only candidates who truly meet or exceed the company's standards are brought on board.

3. Single-threaded leadership enables rapid innovation and autonomous teams

"The best way to fail at inventing something is by making it somebody's part-time job."

Focused leadership. Single-threaded leaders are dedicated to one specific initiative or project, allowing them to give their full attention and resources to its success.

Autonomous teams. These leaders oversee separable, largely autonomous teams that can work independently with minimal dependencies on other parts of the organization.

Rapid innovation. By reducing coordination overhead and empowering teams to make decisions quickly, this structure allows Amazon to innovate at a much faster pace than traditional organizational models.

4. Written narratives replace PowerPoint for more effective communication

"PowerPoint becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of PowerPoint makes it easier for us to have foolish thoughts."

Six-page narratives. Instead of PowerPoint presentations, Amazon uses detailed written narratives to communicate complex ideas and proposals. These documents force clearer thinking and more thorough analysis.

Silent reading. Meetings begin with attendees silently reading the narrative, ensuring everyone has the same baseline of information before discussion begins.

Deeper understanding. This approach allows for more nuanced exploration of ideas and encourages critical thinking among all participants.

5. Working Backwards process starts with the customer experience

"We want Prime to be such a good value, you'd be irresponsible to not be a member."

Press Release and FAQ. The process begins by writing a hypothetical press release and FAQ for the proposed product or service, forcing teams to clearly articulate the customer benefit and potential challenges.

Customer-centric innovation. By starting with the desired customer experience, Amazon ensures that new products and services are designed to meet real customer needs rather than internal preferences.

Iterative refinement. Teams revise and refine their PR/FAQ documents multiple times, often meeting with senior leadership to discuss and improve the concept before any development work begins.

6. Focus on controllable input metrics rather than output metrics

"Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion."

Leading indicators. Amazon prioritizes input metrics (e.g., selection, price, convenience) that can be directly influenced, rather than focusing solely on output metrics like revenue or profit.

Flywheel effect. By improving these input metrics, Amazon creates a virtuous cycle that drives growth and customer satisfaction.

• Better customer experience leads to more traffic
• More traffic attracts more sellers
• More sellers lead to wider selection
• Wider selection enhances customer experience
• Growth drives lower cost structure
• Lower costs lead to lower prices

Data-driven decision making. Regular business reviews focus on analyzing these metrics and taking action to improve them, ensuring continuous progress towards company goals.

7. Kindle: Inventing the future of reading through customer obsession

"If we can identify a customer need and if we can further develop conviction that that need is meaningful and durable, our approach permits us to work patiently for multiple years to deliver a solution."

Long-term vision. Despite having no experience in hardware development, Amazon committed to creating an e-reader device to shape the future of digital reading.

Customer-centric design. Features like the E Ink display and Whispernet wireless connectivity were chosen to prioritize the reading experience and ease of use for customers.

Overcoming challenges. Amazon faced numerous obstacles, including negotiations with publishers and developing new technical capabilities, but persevered due to its conviction in the long-term potential of e-books.

8. Amazon Prime: A bold bet on long-term customer value

"We had to change the expected payback period of our decision from the next quarter or two to five or even seven years ahead."

Transformative shipping benefit. Prime's free two-day shipping fundamentally changed customer expectations for online shopping convenience.

Long-term thinking. Despite initial skepticism and high costs, Amazon committed to Prime based on the belief that it would drive significant long-term customer value and loyalty.

Continuous improvement. Over time, Amazon has expanded Prime benefits to include streaming video, music, and other services, further increasing its value proposition to customers.

9. Prime Video: Evolving through failures to create a streaming powerhouse

"We learned a lot from what went wrong with the launch of Unbox, and I was able to share my knowledge with others at Amazon."

Learning from failure. Amazon's first attempt at digital video, Unbox, was a failure due to poor user experience and technical limitations. However, the company used these lessons to improve future offerings.

Adapting to market changes. As streaming became dominant, Amazon pivoted its strategy to focus on Prime Video as a benefit for Prime members and invested in original content production.

Vertical integration. By developing its own devices (Fire TV) and creating original content (Amazon Studios), Amazon gained more control over the customer experience and differentiated its offering.

10. AWS: Pioneering cloud computing through customer-centric innovation

"We want the student in a dorm room to have access to the same world-class computing infrastructure as any Amazon software engineer."

Identifying customer needs. AWS grew out of Amazon's recognition that developers needed easier access to scalable computing resources.

Iterative development. Through the Working Backwards process, Amazon refined its cloud service offerings to better meet customer needs, such as adopting usage-based pricing for S3 storage.

Transformative impact. By making enterprise-level computing resources accessible and affordable, AWS has revolutionized the technology industry and become a major driver of Amazon's growth and profitability.

Last updated: August 28, 2024