Amazon went from nothing to $150 billion in market cap in just 20 years. What can you learn from its success and apply to your own firm?
Brad Stone's new book, "The Everything Store" (Little, Brown & Co., 2013), chronicles the rise, fall and rise again of that behemoth of technology that is Amazon.
Mr. Stone did a phenomenal job of getting inside the company and the head of founder Jeff Bezos. The result is a gripping tale of maniacal focus that led to the creation of one of the world's pre-eminent brands.
But it came at a tremendous cost to employees, vendors, competitors and mom-and-pop businesses around the country.
If Mr. Stone's portrayal is accurate, Mr. Bezos is a remorseless taskmaster who seems to be missing an empathy gene. Of course, Mr. Bezos' wife begs to differ.
Despite the seemingly barbaric culture, Amazon became a $150 billion market cap company in just 20 years. Hard to argue with success.Even though I'm not cut out of the Mr. Bezos model of belittling employees in front of their peers or squeezing every last penny out of suppliers, there are some good lessons to be learned from him.
Here are 7 lessons I gleaned from “The Everything Store,” that you can use to build your company.
1. Set high expectations
Mr. Bezos is a superachiever and he expected the people around him to aspire to superachieverdom too — and that's appropriate. He makes the “impossible” seem possible by setting unrealistic expectations and expecting people to come up with inventive ways to meet them. Unfortunately, when his acolytes fell short, he had no filter and ripped into them. This caused massive staff turnover and very low morale.
Lesson: Set high expectations but when someone falls short, discuss how they can do better next time. Be firm but fair, encouraging, not discouraging.
2. Think and act disruptively
Mr. Bezos is a disruptive thinker. He sees around the corner. He moves three steps ahead of the crowd. He knew that what got Amazon from nothing to its first billion in sales was not the same thing that would skyrocket it to its next $10 billion in sales. They had to reinvent continually.
Lesson: You won't run away from the crowd unless you create your own crowd. Reimagine the way things are done in your firm. Take a day during each quarter to get offsite and dream about ways to blow up the status quo, so you can create better ways to be useful to your clients.
3. Think and act big
Mr. Bezos has no problem in this department. He knew from the beginning that he was on a mission to create “the Everything Store.” The trick was to convince and inspire his team to believe along with him.
Lesson: Small thinkers stay small. Rather than trying to grow your business by 15% this year, take your current revenue and add a zero to it. This 10x thinking will require you to develop a new strategy so you can grow by an order of magnitude instead of just incrementally.
4. Continually raise the hiring bar
Amazon touts the idea of hiring and developing the best people. By doing this, you'll gain a huge competitive advantage as you outsmart and outhustle the competition. Unfortunately, Amazon's workplace reputation and relatively stingy compensation plan and perks didn't exactly encourage the best people to knock on the company's door.
Lesson: Practice what you preach. Create a work environment that is attractive to high achievers and pull out all the stops to bring them on board, and keep them continually challenged and refreshed. And, pay your best people well. As my wife says, “If you want to become a billionaire, you better spawn a bunch of multimillionaires along the way.”
5. Have a bias for taking action.
As Amazon says, “Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.” The key word here is “calculated.” Taking action just for the sake of trying to move fast will backfire.
Lesson: Hire smart people, give them room to run and don't trash them when one of their ideas fails. If an employee fears the consequences of failure, they'll never take calculated risks and your business will flatline.
6. Be frugal, to a point
Frugality breeds creativity as you have to come up with inventive ways to get things done on a limited budget. Unfortunately, Amazon took this to an extreme. Employees had to pay for parking. Executives had to fly coach. Desks were made out of doors. There was no free cafeteria food. These things, while seemingly small, made it difficult for Amazon to recruit top employees because its competitors such as Google and Facebook offered perks galore.
Lesson: A culture of frugality can be a competitive advantage as long as you are frugal in the right areas (think Southwest Airlines). Skimping on employee perks or creating an uninviting work environment will exclude you from getting top talent. Conversely, eliminating waste and developing creative ways to solve problems and build new products with frugal budgets can lead to massive innovation. Remember, Facebook was started out of a dorm room.
7. Be obsessive about the customer
Amazon usually did a good job taking care of its customers and making the shopping experience easy. As a result, sales grew rapidly. To drive home its point about obsessing over the customer, the company often left an empty chair at the table in important meetings. Why? Because that chair represented the customer and Mr. Bezos didn't want anybody to forget who they were serving.
Lesson: Reimagine how you can serve your clients better, faster, deeper and with greater care. How can you dramatically improve their experience in working with you? How can you make their life simpler, easier and more profitable?
Dramatically growing your business takes hard work. And frankly, many advisers are fine growing a few percent per year. But if you're that one out of 20 advisers who is committed to warp speed growth, then implement these ideas and reap the rewards.
Steve Sanduski is president of Belay Advisor. His firm designs, builds and delivers comprehensive business solutions for companies that want to make a profound impact in people's lives. Follow him on Twitter @SteveStanduski or connect on Linkedin.