“Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs. To be clear, we take these financial outputs seriously, but we believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time. . . . Our goal-setting sessions are lengthy, spirited, and detail-oriented. We have a high bar for the experience our customers deserve and a sense of urgency to improve that experience.”
When you’re setting goals for a business or a product, focus on controllable inputs, not on financial outputs.
Over the long term, investing your effort in the parts of the customer experience that you can control is what generates success for your company financially.
The majority of large, public companies benchmark success by quarterly and annual financial results. They know their boards will assess them using these numbers, so they focus their teams on hitting financial goals. The problem is that incentivizing a team to hit certain numbers doesn’t always incentivize them to do the right things for their customers.
Instead of setting goals and judging your company’s efforts using financial outputs, work on perfecting your inputs, and trust that the outputs will handle themselves.
In this letter, Bezos mentions several key inputs he and his team assessed throughout 2009, including:
- The # of reviews added to Amazon products
- The # of new product categories available
- The # of different items available for immediate shipment on Amazon PrimE
1. The more reviews added to Amazon products, the better a new customer’s understanding of whether that product is worth buying or not, and the more trust they can place in the platform.
2. The more product categories and products available the more likely customers are to use amazon as go-to retailer.
3. The more items available for immediate shipment on Prime, the more choice a customer has, and the less likely they are to go somewhere else to find an item the next time.
If you can choose inputs that correlate with a great experience for your customers, then working on those will likely bring financial outputs up over the long-term.
Jeff Bezos letter to shareholders
Jeff Bezos has been writing a letter to shareholders since 1997 and looking at all if them gives an insight to the organisation and a masterclass in leadership. This is a series of short blogs that gives you a snap shot / key takes outs of each letter, along with links to them all.
link to all letters to shareholders
- 1997: Bring on shareholders who align with your values
Jeff Bezos Letter to Shareholders 1997
- 1998: Stay terrified of your customers
Jeff Bezos Letter to Shareholders 1998
- 1999: Build on top of infrastructure that’s improving on its own
Jeff Bezos Letter to Shareholders 1999
- 2000: In lean times, build a cash moat
Jeff Bezos Letter to Shareholders 2000
- 2001: Measure your company by your free cash flow
Jeff Bezos Letter to Shareholders 2001
- 2002: Build your business on your fixed costs
Jeff Bezos Letter to Shareholders 2002
- 2003: Long-term thinking is rooted in ownership
Jeff Bezos Letter to Shareholders 2003
- 2004: Free cash flow enables more innovation
Jeff Bezos Letter to Shareholders 2004
- 2005: Don’t get fixated on short-term numbers
Jeff Bezos Letter to Shareholders 2005
- 2006: Nurture your seedlings to build big lines of business
Jeff Bezos Letter to Shareholders 2006
- 2007: Missionaries build better products
Jeff Bezos Letter to Shareholders 2007
- 2008: Work backwards from customer needs to know what to build next
Jeff Bezos Letter to Shareholders 2008
- 2009: Focus on inputs — the outputs will take care of themselves
Jeff Bezos Letter to Shareholders 2009
- 2010: R&D should pervade every department
Jeff Bezos Letter to Shareholders 2010
- 2011: Self-service platforms unlock innovation
Jeff Bezos Letter to Shareholders 2011
- 2012: Surprise and delight your customers to build long-term trust
Jeff Bezos Letter to Shareholders 2012
- 2013: Decentralize decision-making to generate innovation
Jeff Bezos Letter to Shareholders 2013
- 2014: Bet on ideas that have unlimited upside
Jeff Bezos Letter to Shareholders 2014
- 2015: Don’t deliberate over easily reversible decisions
Jeff Bezos Letter to Shareholders 2015
- 2016: Move fast and focus on outcomes
Jeff Bezos Letter to Shareholders 2016
- 2017: Build high standards into company culture
Jeff Bezos Letter to Shareholders 2017
- 2018: Wandering is an essential counterbalance to efficiency