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Thursday 2 October 2014

How Amazon has stuck to its guns on leadership principles

Brad Stone

Published 19/06/2014 | 02:30

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SEATTLE, WA - JUNE 18: Amazon.com founder and CEO Jeff Bezos presents the company's first smartphone, the Fire Phone, on June 18, 2014 in Seattle, Washington. The much-anticipated device is available for pre-order today and is available exclusively with AT&T service.  (Photo by David Ryder/Getty Images)
SEATTLE, WA - JUNE 18: Amazon.com founder and CEO Jeff Bezos presents the company's first smartphone, the Fire Phone, on June 18, 2014 in Seattle, Washington. The much-anticipated device is available for pre-order today and is available exclusively with AT&T service. (Photo by David Ryder/Getty Images)
The Amazon Way book cover

A decade ago, retail consultant John Rossman spent almost four years in the belly of the beast as an executive at Amazon. Rossman managed the third-party marketplace and worked with then-partners such as Target and Toys R Us. He also sat in Amazon's inner sanctum while chief executive Jeff Bezos was trying to recover from the dot-com bust and build a sustainable future for the company.

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Rossman has self-published a book called 'The Amazon Way: 14 Leadership Principles Behind the World's Most Disruptive Company'. It comes at an interesting time: Amazon is battling with book publishers such as Hachette and preparing to expand into product categories (groceries) and release new hardware (a smartphone).

I sat down with Rossman to discuss Amazon, its unique and sometimes unforgiving corporate culture, and some of the controversies at the company.

Lots of firms have leadership principles and internal values. They are often inspirational hokum. Why do Amazon's 14 leadership values matter?

"Amazon's leadership principles are different for a few reasons," says Rossman. "First, they are usable at a practical level. Amazon's can be employed in most situations where trade-offs, prioritisation, strategy development, or key scenarios are being developed. Second," he adds, "Amazon's are authentic and represent who the company really is. Most companies' principles are watered down, not used to make hard decisions, and are not well understood by employees."

One of Amazon's values is customer obsession. Does the phrase mean more at Amazon?

"Most companies don't truly obsess about anything – they think about it, they may even act on it, but they are not obsessed," Rossman says. "Look at the history of features and advancements Amazon has made, and they truly do work to make a great customer experience."

In your book you describe the significant, systematic turnover at the company and suggest that this is deliberate.

"Amazon's culture is intentional about expecting high performance and results," Rossman explains. "One of the downside risks of Amazon's growth is that it is easy for teams and people to get complacent. Many people are not right for high expectations like that, and that creates systematic turnover. It is a fun and demanding place to work."

Meetings at Amazon begin with everyone reading in silence written documents called "narratives." I know of a few former Amazon execs who failed to implement that at their next job. Can Amazon processes like this one work elsewhere?

"Absolutely, in the right doses and with the right leadership and patience," insists Rossman. "Don't try to boil the ocean and drive a change like this in a broad manner. Make sure it is the right approach for the situation," he points out.

"If leaders don't buy in and truly work to find the value in a change, then you are just putting lipstick on a pig, and no value is being created."

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