The Bezos Letters review

Have you ever wondered how Amazon managed to grow from the first online bookstore to a global technology leader in just 20 years?

Risk and growth expert Steve Anderson along with author and director Karen Anderson identify specific Cycles of Growth and 14 “Growth Principles” based on patterns they observed within shareholder letters written by Jeff Bezos between 1997 and 2018.

Learn how these same growth principles can be applied to any business and help you get into the same mindset that made Amazon a trillion-dollar company.

TOP 20 INSIGHTS

1. Leaders should see business risk as an investment rather than something to be avoided. Bezos often takes risks based on what he observes to be future opportunities rather than a sure bet, such as emerging technologies.
2. Take advantage of existing infrastructures to facilitate growth. Amazon would not have been able to offer fast, two-day shipping if FedEx hadn’t already led the way with an efficient delivery network decades before.
3. Utilize A/B testing and invent on behalf of the customer so that you alway drive your industry forward. This is a low-risk way to test new ideas. You may find that you know what customers want before they do.
4. Identify what your company is known for, then experiment with advances in that marketplace. For example, this is how Amazon attracted authors to its Amazon Publishing platform — the company paid royalties monthly, rather just twice a year (which was a common practice at the time).
5. Companies can repeat a series of growth cycles: Test (Experiment, learn from mistakes and maintain a culture of innovation), Build (Use long-term thinking and stay true to core principles), Accelerate (Streamline, make quick decisions, utilize technology and promote ownership within the company) and Scale (Do it right and do it consistently). This will help to not only achieve, but continue growth.
6. Encourage “successful failure” within the company. Most businesses view failure as a risk to be avoided. Bezos encourages employees to try new things and turn any failures into valuable lessons. Amazon lost $178 million on its failed Fire Phone, but used what it learned to launch the Kindle.
7. Bet on big ideas, but start small. Free shipping for orders over $25 encouraged Amazon customers to fill up their carts with multiple items. When that proved successful, Amazon Prime was launched on the back of lessons learned.
8. No one knows their job better than a person who does it every day. Inspire each level of the company to experiment with new, faster or easier ways to do the work, then reward success. If an experiment fails, have the employee evaluate what can be learned rather than punish them for failure.
9. Obsess over customers. This might sound obvious, but your customers are your fuel for growth; not competitors, overhead costs or how many locations you have. As Amazon says, “Leaders start with the customer and work backwards.”
10. Apply long-term thinking to every facet of your business. Even though Bezos originally came from the world of Wall Street, he made investment decisions for Amazon that were based on “long-term market leadership considerations” rather than short-term Wall Street reactions.
11. Elements of your business should work as cogs on a wheel — each adding momentum to your central goal or “Flywheel.” Amazon’s flywheel has growth at the center of it and each element from customer experience to higher selection turns the wheel. With enough momentum, the wheel begins to turn itself.
12. Meaningful growth is stymied by poor decision-making. Amazon teaches its leaders to distinguish between major, business-changing decisions and more flexible ones so that time is not wasted on unnecessarily long research or debate. Major decisions at Amazon require an extensive, six-page memo so that informed decisions happen quickly. This memo can also be used as a debrief should the idea fail.
13. Make complexity simple — identify and eliminate pain points for the customer. One example of this is Amazon’s “frustration-free” packaging, which offers incentives to manufacturers that eliminate complicated elements designed for in-store retail. Technology allows us to rethink many established methods that can be improved upon.
14. Be intentional when you use technology to grow your business. Stay on the cutting edge, adopt or invent new technologies. Amazon created Web Services to power its own business and then turned it into a revenue stream.
15. Encourage everyone in the company from the janitor to the CEO to think like an owner. It’s much easier to think long-term and consider risks when you are invested. That’s why Amazon gives stock to all its employees and calls its shareholders “shareowners.”
16. To maintain your culture, focus on personal leadership as well as constant and continuous growth. Reconnect with or reinforce that entrepreneurial spirit and encourage it in all levels of the business.
17. No matter how large your company becomes, focus on high standards, raise the bar and don’t allow yourself to become complicit. Amazon rewards its employees and gives preferential treatment to third-party merchants who consistently strive for the best.
18. Measure what matters, question what’s measured and trust your gut. Ensure that you gather data on the most useful information and upon review, trust your instincts. Concentrate your data gathering on information that drives your business’ core values. In this case of Amazon, that is always customer experience.
19. Believe it’s always day one of your business. As soon as you no longer push hard to be the best, your growth stops. To maintain the habits of an entrepreneur, stay up to date on trends, competition and consumer habits and take advantage of emerging technologies.
20. Adopt and maintain a risk and growth mindset. Sometimes it is riskier for a business not to take enough risks. Amazon took a risk when it allowed third-party merchants, meaning competitors to sell on its platform. As of 2018, third-party sales accounted for 58% of physical gross merchandise sold on Amazon.

SUMMARY

Right out of the gate, Bezos identified growth as the most important focus for the company. Ever since, this decision has provided Amazon leaders with a compass that guides all strategy. Inside his annual letters to shareholders, Bezos left a trail of innovative mindsets, leadership techniques and company priorities that allowed Amazon to become the trillion-dollar behemoth it is today. Take advantage of these growth principles and help your business discover and implement new avenues of meaningful growth.