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Jeff Bezos, the founder of Amazon, got the idea to start the internet enterprise Amazon in 1994 after he began to see the internet revolution take place (Entrepreneur.com, 2008). He instantly recognized the extensive possibilities of selling products online and set up his own internet business in the garage of his home (Entrepreneur.com, 2008). During an interview at the George W. Bush Presidential Center’s Forum on Leadership, Bezos credits four principles for Amazon’s success along with his day one mantra (Tabaka, 2019). According to Bezos, ‘Day one’ means that Amazon will always act like a startup company that requires employees to practice these four principles: customer obsession, eagerness to invent, long-term thinking, and operational excellence (Tabaka, 2019).
Four Key Principles
Listed first as the most important of the four principles is customer obsession. Customer obsession merely means customers are number one. Amazon lives up to this principle by knowing the wants and needs of their customers. They do this by collecting data, imaging what customers want, and giving it to them. Amazon does this all while keeping prices low, making deliveries fast, and having a vast selection of products. However, this is not to be confused with competitor obsession, where you are more concerned with competition than your customers’ needs and wants. Bezos stated that if you are competitor obsessed, then you wait around until there is a competitor to do something (Tabaka, 2019). Being customer-obsessed, on the other hand, allows innovativeness because companies will always be looking for new ways to satisfy consumers regardless of what the competition is doing (Tabaka, 2019).
The next principle is Amazon’s eagerness to please its customers, which goes together with customer obsession. According to Bezos, customers are always unsatisfied, even though they think they are happy (Woods, 2017). Amazon continues to be different and unique, all while giving the consumer something that they will like (Tabaka, 2019). Customers are not responsible for designing and inventing the things they want. Amazon’s obsession with their customers allows them to listen to feedback and create on their behalf (Wood, 2017). This principle is not only making those employed at Amazon inventors but also pioneers for the people.
The third key to Amazon’s list of principles is long-term thinking. With this principle, Bezos encourages his employees to think in 5-7-year timeframes instead of 2-3. This principle gives Amazon the upper hand because most companies seem to operate on a 2-3-year timetable, which means more competition. However, Amazon only competes against a fraction of competitors this way (Stewart, 2011). Not only that, Amazon benefits in two significant ways: they enjoy the kind of economies of scale enjoyed by Wal-Mart as well as eliminating or weakening competitors (Stewart, 2017). In return, Amazon can continue to dominate the e-commerce arena.
Lastly, is operational excellence, which means that Amazon standards are high. Their systems are well thought out, tested, and updated periodically (Tabaka, 2019). According to Smartsheet.com, operational excellence is a framework for businesses to concentrate on growth and strategies better than their competitors. This principle allows Amazon to detect problems that may arise in the beginning and correct them before any crucial dilemmas surface (Tabaka, 2019). Systemization for Amazon saves them time, money, and, ultimately, its reputation (Tabaka, 2019). Operational excellence enables Amazon to do more through better employee interaction and streamline processes. By not having a process or system in place, the more difficult changes will become, and the slower training will be for new employees.
Other strategies used by Amazon to boost the success include having high standards, setting clear and realistic expectations, and staying involved with the people you serve. Bezos states that high standards are contagious and that if you operate with high standards, new employees will be able to adapt quickly (Field, 2018). The same goes for companies that work with low standards. Employees will operate in the same manner without even knowing (Field, 2018). Not only does Amazon run on high standards, but they also set clear and realistic expectations for its team and how much work it will take for them to achieve the level of quality that they have been delivering the last 26 years (Field, 2018).
Most importantly, is staying in touch with customers. Regardless of what you are selling, it is a good idea to never lose touch with the people in which you serve. Bezos states that he still reads emails from his public-inbox to stay in touch with his customers (Field, 2018). He believes that staying more focused on customers and what they have to say is way more important than focusing on what the competition is doing. Listening to customer feedback and comparing it with data allows Amazon to see where the two misalign (Field, 2018e). ‘When the anecdote and the data disagree, the anecdotes are usually right , states Bezos (Field, 2018).
Even with all their success Amazon still had their share of missteps. For instance, their expensive Fire phone that flopped and the controversy surrounding its Echo device and Alexa Al assistant (Shulevitz, 2018). Customers believe that the company was invading their privacy, and Alexa was recording private conversations as it did with one family without them instructing Alexa to do so (Shulevitz, 2018). Other than those missteps, Amazon has proven to be a powerhouse.
Conclusion
Jeff Bezos took those four fundamental principles and created an internet company that was able to satisfy the wants and needs of customers by being obsessed with them. Amazon has also been able to take that same customer obsession and eagerly invent products and services for customers way before they even know what they want. For instance, the prime membership, who Bezos said customers never asked for but now love (Field, 2018). The framework of Amazon’s business plan has allowed them to work and operate on a 5-7-year timeframe that puts them on the same scale as Wal-Mart, all while continuing to put their customers first. Last, they have high standards and operational excellence, which allows them to see problems right off and correct them. All of this is done by interacting with their employees and listening to their feedback. Despite Amazon’s missteps, the company itself and those responsible for its success are innovators and pioneers creating for the future.
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