Issue No. 427 of Your Weekly Staff Meeting highlights a digital wake-up call in just 138 pages. Learn why frugality is an Amazon core value! And this reminder: click here to download free resources from the 20 management buckets (core competencies) and click here for my Top-10 books of 2019 and my Book-of-the-Year pick.
Two-Pizza Team Meetings!
Emergency alert! Bestselling business author Ram Charan says the disrupter is in the building—and its name is Amazon. “Our 21st century prevailing management systems are still largely inherited from the oldest forms of human organization, such as the military and the church,” he writes. Designed for “command and control” in the pre-Internet era, these hierarchical bureaucracies mimicked the only management systems they knew.
Until the digital age and Amazon.
Whew. This tightly written book, The Amazon Management System (just 138 pages plus helpful appendices), is a wake-up call for nonprofits, for-profits, and churches. If you’re wondering…
• …why your credit card bill is populated with Amazon purchases, read this book.
• …how to learn more about Amazon’s focused obsession on the customer, read this book.
• …how Amazon (online in 1995) was worth $1 trillion in 2018 (it goes up and down, of course), read this book.
In addition to the big ideas—and bold management risks—there’s plenty of fun stuff in this quick-reading book, with one-page bullet-point summaries for every chapter. For fun: Why did Jeff Bezos pick “Amazon” for his company name? According to Ram Charan and Julia Yang, Bezos had experimented and then rejected numerous other suggestions like:
• Awake.com
• Browse.com
• Bookmall.com
• Relentless.com
• Makeitso.com
• Cadabra.com
“Still searching, Bezos referred to the dictionary. Luckily the name hunt didn’t last long. Amazon jumped out at him. It was love at first sight. Amazon ‘is not only the largest river in the world. It’s many times larger than the next biggest river. It blows all the other rivers away,’ Bezos said.”
That’s just one interesting sidebar in this serious—but short—analysis of the Amazon management system. It’s a must-read assignment for every senior leader (and perhaps your board members).
The authors aren’t suggesting your organization becomes an Amazon clone—but, instead, “understand how it works and pick the valuable ingredients and inspirations for your own digital way.” And you will think differently about digital immediately. The digital future is scary, but brimming with opportunity. The book highlights six building blocks:
1. Customer-Obsessed Business Model
2. Continuous Bar-Raising Talent
3. AI-Powered Data and Metrics System
4. Ground-Breaking Invention Machine
5. High-Velocity and High-Quality Decision-Making
6. Forever Day-1 Culture
A very helpful one-page checklist of the Amazon Management System is on page 135. One page only! And—throughout this gem—it’s the rare page in my book that isn’t underlined. Examples:
• On Amazon’s relentless drive to invent, “Seek and build big ideas continuously [using a brilliant press release process]…and construct cross-functional full-time and co-located ‘two-pizza’ team with the right project leader.” Why? If two pizzas aren’t enough, the team is too big!
• On making high-velocity decisions: a brilliant segmentation and process for decision-making: Type 1 decisions (one-way doors) and Type 2 decisions (two-way doors). “For Type 2 decisions, speed matters. Let the metrics owner make the call. If approval required, one level only.”
• To create a “Forever Day-1 Culture,” Amazon does this: “Operationalize by observable behaviors, create forcing mechanisms, live and breathe them yourself, and invent memorable symbols and rewards. (See page 132 for the “Just Do It Award.” The authors add, “Given his constant reinforcement of frugality, Bezos came up with the totally unorthodox idea of having old sneakers, worn and torn, mounted and bronzed.” (It reminded me of my 2017 book-of-the-year, The Power of Moments.)
• “Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdotes differ.” Oh, to have observed an executive meeting when Bezos—skeptical when the head of the Customer Service Department said that customer wait times were “well under one minute” (without “offering any supporting evidence”)—used the meeting room speakerphone and dialed the call center’s 800 number. The wait time: four-and-a-half minutes. Yikes!
If you’re looking for weekly staff meeting topics, consider using the “Amazon 14 Leadership Principles” on pages 141-143. Succinct, with three to four lines of commentary, they include: 1) Customer Obsession (there was an empty seat at early meetings—representing the customer), 2) Ownership (leaders are owners), and 3) Invent and Simplify.
The fourth principle is noteworthy and arresting: 4) Are Right, A Lot. Amazon notes: “Leaders are right a lot. They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs.”
Others include: 5) Learn and Be Curious, 6) Hire and Develop the Best. “Leaders raise the performance bar with every hire and promotion.” 7) Insist on the Highest Standards, 8) Think Big. “Thinking small is a self-fulfilling prophecy.” And 9) Bias for Action.
When hiring, a designated “Bar Raiser,” independent of the team that is hiring, also interviews the applicant. Bar raisers are “meticulously trained to be the stewards of Amazon’s leadership principles.” (Read more here.)
The tenth principle is Frugality. “There are no extra points for growing headcount, budget size, or fixed expense.”
11) Earn Trust, 12) Dive Deep [no task is beneath a leader], 13) Have Backbone; Disagree and Commit. “Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting.” 14) Deliver Results.
Oh, my—there is SO much I should add to this review, like:
• Avoiding “the creep onto the treacherous slippery slope called ‘Day 2’”
• Amazon’s flywheel (per the Jim Collins concept)
• The amazing impact that Jeff Bezos’ grandfather had on his thinking
• “Nothing overcomes the wrong person. In the wrong hands, great ideas will not blossom.”
• “To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.” (See the 18 failed innovations on page 80.)
• Charlie Ward, the junior software engineer, who proposed the idea for Amazon prime in 2004. As of 2018, Amazon had over 100 million Prime Members!
• Start with the customer (see what questions to ask on page 86).
• “Eat your own dog food.”
• The Jeff Bezos 70-90 Rule (When you have 70% of the info—make the decision. “If you wait for 90%, in most cases, you’re probably being slow.”)
• Why Bezos resists “the overrated importance of harmony.”
• July 9, 2004: The day Amazon banned PowerPoint presentations at the core executive team level—and honed the “Six-Page Narratives” (sometimes two pages) approach. (See Bezos’ email on page 108!)
And finally, “A wrong decision may not be career-ending at Amazon, but Bezos will make sure the lesson is well learnt.” (Note: Read this book and it will be career-enhancing. Guaranteed.)
To order from Amazon, click on the title for The Amazon Management System: The Ultimate Digital Business Engine That Creates Extraordinary Value for Both Customers and Shareholders, by Ram Charan and Julia Yang.
Your Weekly Staff Meeting Questions:
1) The authors say that Amazon’s emphasis on Forever Day-1 is not rocket science. But organizations must notice the “usual suspects” to Day-2 thinking: “complacency, bureaucracy, and interdependency that blurs the lines of accountability.” What are the “usual suspects” that inhibit results in our organization?
#2. Originally, Amazon had five values, but those morphed into 14 Leadership Principles. Many “experts” would say 14 are too many—and can’t be remembered or lived out. But Amazon has “operationalized” their principles into daily life. Example: read the blog post, “What’s It Like to Interview at Amazon.” Pop Quiz! From memory, recite our core values—and share when you saw one value lived out in the last seven days.
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Ram Charan: Prolific Thinker!
Insights from Mastering the Management Buckets Workbook
One of the big ideas in the Drucker Bucket, Chapter 4, in Mastering the Management Buckets, is that you must be “a disciplined lifelong learner in the art of management.”
I’ve appreciated Ram Charan’s consistently helpful books on management, leadership, and board governance. In addition to The Amazon Management System (December 2019), check out my reviews of these Ram Charan books:
• Execution: The Discipline of Getting Things Done, by Larry Bossidy and Ram Charan (Read my review.)
• Confronting Reality: Doing What Matters to Get Things Done, by Larry Bossidy and Ram Charan (Read my review.)
• Leaders at All Levels: Deepening Your Talent Pool to Solve the Succession Crisis, by Ram Charan (Read my review.)
• Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Read my review.)
• The Talent Masters: Why Smart Leaders Put People Before Numbers, by Bill Conaty and Ram Charan (Read my review.)
• Boards That Lead: When to Take Charge, When to Partner, and When to Stay Out of the Way, by Ram Charan, Dennis Carey and Michael Useem (Read my review.)
• The Attacker’s Advantage: Turning Uncertainty Into Breakthrough Opportunities, by Ram Charan (Read my review.)
REMINDER: TO DOWNLOAD 3 LISTS OF 400+ BOOKS REVIEWED BY JOHN PEARSON, visit The Book Bucket (click here):
• List #1: Books by Management Buckets Categories
• List #2: Chronological List of 425 Issues of Your Weekly Staff Meeting (400+ books)
• List #3: John Pearson's Top-100 Books List (updated every 2 years)
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JASON PEARSON: UNEXPECTED CREATIVE. Are you leveraging the extraordinary power of visual media to inspire your members, clients, or customers? Check out the innovative work from Jason Pearson at Pearpod Media (branding, digital, print, and video), including the new book by Jason Pearson and Doug Fields, This. Customizable Journal: 52 Ways to Share Your World With Those You Love. (Read John’s review here.)
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