Working Backwards: Insights, Stories, and Secrets from Inside Amazon

Jeff Bezos, the founder of Amazon, saw the potential of the internet in 1994 when he read a report forecasting a 2,300% annual growth in internet usage. He decided to start an online bookstore, recognizing that books were ideal products for online sales due to their lightweight and uniform size and the ability to offer a vast selection through the use of an online platform. He combined the resources of book distributors, such as Ingram and Baker & Taylor, with the growing internet infrastructure to launch Amazon.com in July 1995.

From the beginning, Bezos instilled a customer-focused and high-standards approach into the company culture. To maintain this focus, Amazon established its leadership principles, which serve as the foundation for decision-making and guide the company's mission to prioritize customer satisfaction and long-term shareholder value.

In 2004, Amazon's leadership team, led by Mike George and Robin Andrulevich, created a leadership training program that aimed to define what leadership meant at Amazon. After months of discussions and debates, the team settled on ten principles, which have been growing since then. These principles serve as a consistent guide for all levels of the company and are used to evaluate new projects and solve problems.

Hiring with personal bias and urgency can have devastating consequences. Managers often hire individuals with similar characteristics to themselves, resulting in a lack of diversity and a narrow perspective in the workforce.

Moreover, urgency in hiring can cause shortcuts to be taken and important processes to be overlooked, leading to unfavorable outcomes. Startups and rapidly growing companies are particularly vulnerable to this problem, as they may hire new employees without a proper process in place. This can result in a loosely defined corporate culture.

In 1999, Amazon encountered the issue of lower talent levels among its newly hired software teams. To address this, the hiring team devised a process for hiring high-level talent that aligned with Amazon's culture. They came up with the “Bar Raiser” program and were fortunate to have the support of Jeff Bezos. The program was a success and was eventually adopted by other departments within the company. The Bar Raiser program has a simple goal in mind - to create a scalable, repeatable, and formal process for consistently making successful and appropriate hiring decisions. This is instrumental in reinforcing a key Amazon leadership principle: hire and develop the best.

One of the best things about this program is that it's easy to understand and can be taught to new employees. Additionally, it doesn't require scarce resources and has a feedback loop to ensure continuous improvement. By using the Bar Raiser program, Amazon can ensure that it consistently hires individuals who align with the company's culture and values.

As Amazon continued to grow, it faced challenges in coordination and productivity. To address these issues, the company decided to restructure its monolithic software architecture and organizational structures. Instead, it implemented systems designed to support rapid innovation, which is known as the single-threaded leadership model.

The idea behind this model is to reduce dependencies in order to increase speed and autonomy. To do this, Amazon created two-pizza teams, which are small, self-sufficient units led by a highly skilled and multidisciplinary leader. These teams have clear ownership over specific features or functions, and can drive innovations with minimal dependence or impact on others.

By breaking down the monolithic structures and implementing a new system that supports rapid innovation, Amazon has been able to address its challenges. They also continue growing at a pace that is both impressive and sustainable.

At Amazon, the senior team meetings underwent a major change in the way they were conducted. Previously, these meetings relied on PowerPoint presentations. But since they realized these presentations were often ineffective and prone to errors, they adopted a new approach based on Edward Tufte's essay.

In his essay, Tufte argued that the linear progression of slides in PowerPoint was not suitable for complex analysis, and that it could strip important nuance from discussions. He proposed using written narratives instead, which allowed for a more comprehensive and nuanced understanding of the information presented.

The adoption of written narratives helped to improve the quality of the senior team meetings at Amazon. The narrative structure of a memo required more careful thought and a better understanding of the importance of different ideas and how they were related. The use of written narratives instead of PowerPoint also allowed for nonlinear and interconnected arguments to develop naturally, which was crucial for business opportunities.

Moreover, the process of crafting a written narrative forces the writer to think more deeply and synthesize the information, leading to better-informed decisions and higher-quality feedback. The move away from PowerPoint was a game-changer for the senior team meetings at Amazon, leading to significant improvements in their efficiency and effectiveness.

Jeff Bezos and Colin Bryar developed the Working Backwards process to improve product team meetings. This process starts by defining the customer experience first until the team arrives at a clear understanding of what to build.

The key component of this process is the PR/FAQ, short for press release/frequently asked questions. This is a written narrative that embodies Amazon's customer-centric principle and allows for a flexible yet organized approach to documenting information. During the setup phase of meetings, the PR/FAQ enables teams to swiftly and accurately capture information, prioritize crucial topics, and chart a course for future progress.

To start the process, you first have to write a press release about your company's product which would help you agree on the features, cost, customer experience, and price. Then, work backwards to figure out what to build, thereby surfacing the challenges they would face in product development and manufacturing.

The Working Backwards process transitions from an internal company focus to a customer-centered perspective. It highlights the customer experience and addresses internal risks and challenges from various perspectives, including operations, technology, product, marketing, legal, business development, and finance.

Jeff Bezos, Amazon's CEO, was aware of the shift to digital media and wanted to capitalize on it. So, together with Steve Kessel, the leader of Amazon's digital team, they spent six months researching the digital media landscape and meeting with partners.

Despite challenges, the team was determined to create a thriving digital media business by investing in new services and devices that customers would love. With persistence and a long-term goal in mind, the digital effort eventually gained momentum and became a significant part of the business.

To succeed in the digital industry, it is essential to follow principles such as thinking big, focusing on the long term, prioritizing customer satisfaction, and being willing to deal with obstacles. The secret to staying ahead is to continually innovate, creating new products and services that stand out from the crowd. To do this, Amazon zeroed in on content, applications, and devices, and they made a conscious effort to provide top-notch customer service. Ultimately, their investment in the customer experience is what made the Kindle e-book business such a huge success.

In 2004, Amazon faced the challenge of slowing growth and the rapidly changing landscape of online commerce. To address this, the company leaned on its leadership principles, which emphasized the importance of meeting customer needs for price, selection, and convenience.

This paved the way for the launch of Amazon Prime. The goal was to not only satisfy customer needs but also generate free cash flow for Amazon. Despite considering other free shipping options, none of them met the crucial criterion of shipping speed, which was a key metric for the company.

The launch of Amazon Prime was a bold decision that ultimately transformed the company. By prioritizing customer needs and focusing on improving the shipping experience, Amazon transformed from a successful e-commerce player to a dominant force in the retail industry.

Fast forward to today, and the impact of Amazon Prime is undeniable. With over 100 million paid members globally, it has revolutionized the way people think about and experience online shopping, offering an alternative to the immediacy of brick-and-mortar stores.