How Amazon Innovates
It’s not any one practice, but how its culture and practice are so deeply intertwined that makes the difference
PHOTO CREDIT: Getty Images
In 2014, Stephenie Landry was finishing up her one-year stint as Technical Advisor to Jeff Wilke, who oversees Amazon's worldwide consumer business. It's a mentor program for high potential executives to shadow a senior leader and learn first-hand. Her next assignment would define her career.
At most companies, an up-and-comer like Stephenie might be given a division to run or work on a big acquisition deal. Amazon, however, is a different kind of place. Landry wrote a memo outlining plans for a new service she'd been thinking about, Prime Now, which today offers one-hour delivery to customers in over 50 cities across 9 countries.
It's no secret that Amazon is one of the world's most innovative companies. Starting out as a niche service selling books online, it now is not only a dominant retailer, but has pioneered new categories such as cloud computing and smart speakers. The key to its success is not any one process, but how it integrates its customer obsession deep within its culture and practice.
Starting With the Customer and Working Back
At the heart of how Amazon innovates is its six-page memo, which is required at the start of new initiative. What makes it effective isn't so much the structure of the document itself, but how it is used to embed a fanatical focus on the customer from the day one. It's something that Amazon employees have impressed upon them early in their careers.
So the first step in developing Prime Now was to write a press release. Landry's document was not only a description of the service, but how hypothetical customers would react to it. How did the service affect them? What surprised them about it? What concerns did they want addressed? The exercise forced her to internalize how Amazon customers would think and feel about Prime Now from the very start.
Next she wrote a series of FAQ's anticipating concerns for both customers and for various stakeholders within the firm, like the CFO, operations people and the leadership of the Prime program. So Landry had to imagine what questions each would have, how any issues would be resolved and then explain things in clear, concise language.
All of this happens before the first meeting is held, a single line of code is written or an early prototype is built because the company strongly believes that until you internalize the customer's perspective, nothing else really matters. That's key to how the company operates.
A Deeply Embedded Writing Culture
It's no accident that the first step to develop a new product at Amazon is a memo rather than, say, a PowerPoint deck or a kickoff meeting. As Fareed Zakaria once put it, "Thinking and writing are inextricably intertwined. When I begin to write, I realize that my 'thoughts' are usually a jumble of half-baked, incoherent impulses strung together with gaping logical holes between them".
So the company focuses on building writing skills early in an executive's career. "Writing is a key part of our culture," Landry told me. "I started writing press releases for smaller features and projects. One of my first was actually about packaging for diamond rings. Over years of practice and coaching, I got better at it." Being able to write a good memo is also a key factor in advancement at Amazon. If you want to rise, you need to write and write well.
She also stressed to me the importance of brevity. "Keeping things concise and to the point forces you to think things through in a way that you wouldn't otherwise. You can't hide behind complexity, you actually have to work through it," Landry said. Or, as another Amazon leader put it, "Perfection is achieved when there is nothing left to remove."
Moreover, writing a memo isn't a solo effort, but a collaborative process. Typically, executives spend a week or more and sharing the document with colleagues, getting feedback, honing and tweaking it until every conceivable facet is deeply thought through.
Reinventing The Office Meeting
Another unique facet of Amazon's culture is how meetings are run. In recent years, a common complaint throughout the corporate world is how the number of meetings held has become so oppressive that it's hard to get any work done. Research from MIT shows that executives spend an average of nearly 23 hours a week in meetings, up from less than 10 hours in 1960.
At Amazon, however, the six-page memo cuts down on the number of meetings that are called. If you have to spend a week writing a memo, you don't just start sending out invites whenever the fancy strikes you. Similarly, the company's practice of limiting attendance to roughly the number of people that can share two pizzas also promotes restraint.
Each meeting starts out with a 30-60 minute reading period in which everybody digests the memo. From there, all attendees are asked to share gut reactions -- senior leaders typically speak last -- and then delve into what might be missing, ask probing questions and drill down into any potential issues that may arise.
Subsequent meetings follow the same pattern to review the financials, hone the concept and review mockups as the team further refines ideas and assumptions. It's usually not one big piece of feedback that you get," Landry stressed. "It is really all about the smaller questions, they help you get to a level of detail that really brings the idea to life."
All of this may seem terribly cumbersome to fast moving executives accustomed to zinging in and out of meetings all day, but you often need to go slow to move fast. In the case of Prime Now, the service took just 111 days to go from an idea on a piece of paper to a product launch in one zip code in Manhattan and expanded quickly from there.
Coevolving Culture And Practice
Every company innovates differently. Apple has a fanatical focus on design. IBM's commitment to deep scientific research has enabled it to stay on the cutting edge and compete long after most of its competitors have fallen by the wayside. Google integrates a number of innovation strategies into a seamless whole
What works for one company would likely not work for another, a fact that Amazon CEO Jeff Bezos highlighted in a recent letter to shareholders. "We never claim that our approach is the right one - just that it's ours - and over the last two decades, we've collected a large group of like-minded people. Folks who find our approach energizing and meaningful," he wrote.
The truth is that there is no one "true" path to innovation because innovation, at its core, is about solving problems and every enterprise chooses different problems to solve. While IBM might be happy to have its scientists work for decades on some arcane technology and Google gladly allows its employees to pursue pet projects, those things probably wouldn't fly at Amazon.
However, the one thing that all great innovators have in common is that culture and practice are deeply intertwined. That's what makes them so hard to copy. Anybody can write a six-page memo or start meetings with a reading period. It's not those specific practices, but the commitment to the values they reflect, that has driven Amazon's incredible success.