Missionaries build better products- the kindle story

Missionaries build better products- the kindle story

Jeff Bezos letter to shareholders 2007 

Key message 10/22

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.

“We started by setting ourselves the admittedly audacious goal of improving upon the physical book. We did not choose that goal lightly. Anything that has persisted in roughly the same form and resisted change for 500 years is unlikely to be improved easily. At the beginning of our design process, we identified what we believe is the book’s most important feature. It disappears. When you read a book, you don’t notice the paper and the ink and the glue and the stitching. All of that dissolves, and what remains is the author’s world.”

Takeaway

When you’re trying to build something totally new, hire missionaries.

Missionaries — people who are passionate and empathetic about products — are always going to be better equipped to disrupt existing incumbents.

Challenge

Many everyday products and systems we take for granted are, in one way or another, “good enough.” Physical books, taxi cabs, hotels — they get the job done, even if they can be seen as outmoded, archaic institutions.

With these kinds of institutions, inertia sets in. Getting people to adopt a new habit or start using a new product when they’re accustomed to using something “good enough” is a very difficult task.

Solution

Missionaries are people who understand the appeal of the old ways. They understand why the “good enough” product is “good enough,” and because of that, no one else is better positioned to disrupt that business than them.

Bezos calls back to the original launch of Amazon, when people believed an online bookstore needed to have all the features of a physical book stores. Critics asked him how they would do “electric book signings.”

Barnes & Noble’s stock price. 

The Amazon team didn’t know. They did know that they could provide far greater value than physical bookstores in at least one area, by offering millions of different titles and thousands of different customer-submitted reviews.

With the Kindle, the team of missionaries at Amazon knew that the sentimentality of the book was strong. After all, books have been around in the same form for hundreds of years. In trying to build a “better book,” they knew they had to emulate the best aspects of the book.

One of the best aspects of a physical book, they realized, was that books get “out of the way.” The Kindle’s e-ink screen and fast page switching emerged directly from the realization that they needed to make sure the interface got out of the way and let readers focus on their books. With missionaries building the product, Bezos said he believed the Kindle, would “‘start a fire’ and improve the world of reading.”

Amazon didn’t wipe Barnes & Noble’s off the map — as Amazon didn’t (and couldn’t) replace everything B&N does. Amazon could just do (and did) an exponentially better job at one of their more profitable core functionalities.

amazon kindle 2

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

Jeff Bezos Letter to Shareholders 2018

The best way to find out if you can trust somebody is to trust them.

ernest-hemingway-trust-quotes

Trust Is Even More Important When You’re Working Remotely

Leadership Tip of the Week # 120

adapted from HBR

Leaders who suddenly have found themselves managing a fully remote team may be wondering how to measure employee productivity and quality of work from a distance.

The key ingredient is trust.

You may not be able to see what people are doing, but you can still equip them with the information they need, assign them tasks, and check on them like you always have.

  1. give them the right equipment
  2. give them rituals for the day
  3. find new ways to keep the coffee machine conversations
  4. be open in conversations ( the easy and the difficult ones)

Since you can’t monitor process in the same way, your review will have to be based on outcomes.

Of course, there’s no reason to believe that, in this new environment, people won’t do the work they’ve been assigned. Remote work has been around for a very long time, and today we have been learning to use that technology to not only do our own work but also to successfully collaborate.

So as a manager, your main job is to heed Ernest Hemingway’s advice: “The best way to find out if you can trust somebody is to trust them.”

This tip is adapted from 15 Questions About Remote Work, Answered,” by Tsedal Neeley

Nurture your seedlings to build big lines of business

Nurture your seedlings to build big lines of business

Jeff Bezos letter to shareholders 2006 

Key message 9/22

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.

“In some large companies, it might be difficult to grow new businesses from tiny seeds because of the patience and nurturing required. In my view, Amazon’s culture is unusually supportive of small businesses with big potential, and I believe that’s a source of competitive advantage.”

Takeaway

New business lines start out as seedlings. Often, they won’t meaningfully contribute to revenue for many years. But if you have the patience to nurture those seedlings, you can end up with powerful new revenue lines.

Challenge

Making long-term investments in small internal businesses can be difficult in a fast-paced corporate environment.

Large corporations are good at executing on predetermined strategies, but they struggle to slow down and give new business lines time to develop.

Public markets judge performance on a quarterly basis, and salaries, promotions, and layoffs also based on these figures. It is difficult to go against the grain and accept projects that might not see returns for some time (or at all).

Solution

While you need concrete insights and metrics to bet on a new idea, you also need patience and nurturing to make it thrive.

At Amazon, Bezos emphasizes that even if a new business enjoys runaway success, it will only begin to contribute meaningfully to company economics in three to seven years. Accepting that kind of time-frame as normal is the first step to building new innovative businesses inside your company.

Fulfillment by Amazon and AWS, for example — now major winners for Amazon — began as seed investments.

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

Jeff Bezos Letter to Shareholders 2018

don’t get fixated on short term numbers

don’t get fixated on short term numbers

Jeff Bezos letter to shareholders 2005

Key message 9/22

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.

Look to  the Customer Experience improvement to help make decisions.

“Math-based decisions command wide agreement, whereas judgment-based decisions are rightly debated and often controversial, at least until put into practice and demonstrated. Any institution unwilling to endure controversy must limit itself to decisions of the first type. In our view, doing so would not only limit controversy — it would also significantly limit innovation and long-term value creation.”

Takeaway

Some decisions can be made with data, but many of the important business decisions can only be made with judgment.

Many opportunities with fantastic upside won’t make sense in the short-term — to identify these, you have to think about what makes the most sense for your customers.

Challenge

When opening a new fulfillment center or deciding how much of a product to hold in inventory, you can always look a existing data to figure out the option that will most improve the customer experience.

But huge, business-making improvements — like Amazon’s decision to create Amazon Prime — often don’t have clean math behind them. According to the models Amazon had at the time, Prime actually seemed like a terrible idea. Often, your best decisions will.

Solution

When trying to weigh personal instincts versus quantitative models, use the customer experience to tip the scales.

Decisions that make sense on paper but don’t improve the customer experience may have limited upside. Decisions that undeniably benefit your customers can have significant upside, and sometimes the potential upside is so big that it’s worth risking the numbers not working out.

When Amazon first considered a free shipping service like Prime, quantitative models pointed to raising prices on shipping, not to making shipping free. If it raised prices, the models said, the company probably wouldn’t lose that many customers and it would make a lot more money.

If Amazon had focused just on that data when deciding whether or not to introduce Prime, it would not have rolled out the service. But the team’s judgment was simple: if they kept lowering prices, it would lead to a greater volume of purchases, and ultimately that would mean greater customer loyalty over the long term. That bet paid off.

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

Jeff Bezos Letter to Shareholders 2018

Stay Positive to Help Yourself — and Others — Through This Stressful Time

stay positive

Stay Positive to Help Yourself, and Others

Through This Stressful Time

Leadership Tip of the week #121

adapted from HBR

During stressful and uncertain times, it’s normal to feel anxious and scared. Chances are, most people around you feel it, too. It’s easy to infect each other with anxiety and fear, but we can take steps to protect ourselves from these emotional contagions.

  1. To start, cut down on how often you engage in venues where fear feeds on itself, such as social media, cable news, and frenzied conversations with friends and coworkers.
  2. Do your best to distinguish between people who are speculating and those who have sound information.
  3. Also, take care of your mental health. This means exercising, practicing mindfulness and meditation, volunteering, and seeking out positive, high-quality connections with others — even if they’re virtual.

Simple wellness practices like these will help you build resilience and positivity, and maybe pass some along to the people in your life.

This tip is adapted from The Contagion We Can Control,” by Sigal Barsade

Free cash flow enables more innovation

free cash flow innovationFree cash flow enables more innovation

Jeff Bezos letter to shareholders 2004 

Key message 8/22

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.

“Though some may find it counter-intuitive, a company can actually impair shareholder value in certain circumstances by growing earnings. This happens when the capital investments required for growth exceed the present value of the cash flow derived from those investments.”

Takeaway

Prioritizing free cash flow will allow you to experiment and innovate quickly, as capital won’t be tied up in investments that could be irrelevant by the time they’re paid off. In today’s fast-moving business environment, this is essential to keep from falling behind.

Challenge

Many public companies prioritize metrics like earnings per share or earnings growth when benchmarking their performance. Media coverage, analyst reports, and public opinion all play a role in developing this focus, but it can be ultimately counterproductive for a large enterprise to concentrate on increasing its earnings, even when its primary obligation is to its shareholders.

As Bezos reminds us, “Earnings don’t directly translate into cash flows, and shares are worth only the present value of their future cash flows.”

Solution

The solution to building a financially durable and growth-ready company is to focus less on earnings, and more on free cash flow.

If you build a business with earnings growth but no free cash flow, it’s often a poor investment over the long term.

Structuring your business to prioritize free cash flow will look different from industry to industry, but Amazon does it in a few key ways:

  • The company turns over inventory quickly
  • It collects payments from customers before payments to suppliers are due
  • It minimizes its investment in its own inventory

Amazon maintains a cash generative operating cycle and can keep its investments in fixed assets low, at only 4% of all sales in 2004.

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

Jeff Bezos Letter to Shareholders 2018

Protect your non-work time

smiley post it note on corkboard happiness versus depression concept
smiley cartoon face expression on yellow post it note surrounded by sad and depressed faces on cork message board in happiness versus depression and smile against adversity concept

Protect your non-work time

Leadership tip of the week #113

adapted from HBR

As more people are adapting to working from home, we are all learning to adapt:  jobs used to have very clear lines between when you’re “on” and when you’re “off.” But when you working from home — it’s important to protect your non-work time.

  • If you feel like work is taking over most of your waking hours, start by clearly defining what “after hours” means for you.
  • Take into account the number of hours you’re expected to work each week, as well as personal commitments like homeschooling kids , exercise, family and some me-time
  • When do you need to start and stop to put in the appropriate amount of work time?
  • Then, develop mental clarity about what needs to get done and when you will do it.
  • Keep track of your tasks and plan them out.
  • Make sure you block off time for an end-of-workday wrap-up, where you review and make sure you did everything you needed to do for the day. Even have a collective end of week drink with colleagues on a zoom call.
  • Lastly, communicate with your colleagues about how (or if) you want to be contacted during your off hours.

Really guard your time. If you don’t, you won’t get the mental break that everyone needs

 

 

Helping customers make better purchase decisions

long term thinking

Helping customers make better purchase decisions

Jeff Bezos letter to shareholders 2002

Key message 7/22

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.

“Long-term thinking is both a requirement and an outcome of true ownership. Owners are different from tenants. I know of a couple who rented out their house, and the family who moved in nailed their Christmas tree to the hardwood floors instead of using a tree stand. Expedient, I suppose, and admittedly these were particularly bad tenants, but no owner would be so short-sighted. Similarly, many investors are effectively short-term tenants, turning their portfolios so quickly they are really just renting the stocks that they temporarily ‘own.’”

Takeaway

If you want to build a successful company for the long term, build a company of owners.

With the mentality of a service provider, you will seek short-term gains and sacrifice future growth.

With the mentality of an owner, you will always act in the best interests of your customers and your team. In the end, the work you do acting as an owner will coincide with the interests of your shareholders.

Challenge

It can be difficult to take a long-term view when Wall Street and other stakeholders tend to look for fast results. Doing the best thing for the long-term needs of your company doesn’t always coincide with the most expedient or profitable thing in the short term.

That’s because “many investors are effectively short-term tenants,” Bezos writes. Many investors are not looking for long-term success — they want dividends tomorrow.

But it’s not just a problem for investors: the short-term focus also tends to infect the people who run companies.

Thinking long term and building a successful growth company means getting out of that short-term investor mindset and thinking like an owner.

Solution

Taking a long-term view often requires deep consideration of your business model, and it doesn’t always make everyone happy.

When Amazon first started allowing customers to review their products, they got angry feedback from some vendors who asked why they allowed negative reviews on a site where profit came from sales.

For Bezos and the rest of Amazon, customer reviews were built with a long term goal in mind: that customers would trust Amazon to provide them with quality products and transparent information.  Though negative reviews cost sales in the short term,” he writes, “helping customers make better purchase decisions ultimately pays off for the company.”

The same goes for Amazon’s pricing: “Our pricing strategy does not attempt to maximize margin percentages,” he writes, “but instead seeks to drive maximum value for customers and thereby create a much larger bottom line.”

Every decision that gets made at Amazon gets made through “the context of the customer experience.” They design it with long-term owners in mind. And in the end, they trust — and ask that their shareholders trust — that it will ultimately pay off.

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

Jeff Bezos Letter to Shareholders 2018

Reign in Video Call Ramblers

D1D3659B-D47C-447C-B687-2A8A01365C61

Reign in Video-call Ramblers

Remember when videoconferencing software was a nice-to-have? Oh, how times have changed. Such technology has become a lifeline for British workers, many of whom had never even heard of Zoom or Google Meet just a few weeks ago—and it shows. As is the case with most things in life, practice makes perfect, but only if you’re aware of the pitfalls.

To make your virtual meetings as productive as possible, start by reigning in the ramblers. Discussions that turn into digressions aren’t unique to videoconferences, but they’re a lot harder to get a handle on when you’re remote. Regain control of the conversation by taking one of these three steps:

1. Ask the speaker to summarize his or her point for the meeting notes.

2. Ask the speakers to continue their conversation offline.

3. Establish a subtle signal (think, a hand raise) that participants can use if and when they feel the discussion is getting off track.

How to adjust to working from home

working_from_home

How to adjust to working from home

Leadership Tip of the week #113

adapted from HBR

When you aren’t accustomed to working remotely, it can be hard to adjust psychologically.

To make the transition, take a disciplined approach to managing your day and develop a few rituals.

  1. Schedule a start and an end time for work.
  2. Take a shower, get dressed — even if it’s not your usual office attire — then get started on the day’s activities. If you typically move around a lot at work, build that into your day by taking brief walks outside or even around the house.
  3. If you’re an extrovert and accustomed to a lot of social contact, make sure that still happens. Ask yourself: “How will I protect myself from feeling lonely or isolated?” and make a plan.
  4. Focus on the positives. Think about what you enjoy about working from home, for example, playing music or being more flexible with your time. Remind yourself that even if it’s not your choice right now, working from home can be fun.

This tip is adapted from 15 Questions About Remote Work, Answered,” by Tsedal Neeley

Build your business on your fixed costs

Build your business on your fixed costs

Jeff Bezos letter to shareholders 2001 

Key message 6/22

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.

“One of our most exciting peculiarities is poorly understood. People see that we’re determined to offer both world-leading customer experience and the lowest possible prices, but to some this dual goal seems paradoxical if not downright quixotic. Traditional stores face a time-tested tradeoff between offering high-touch customer experience on the one hand and the lowest possible prices on the other. How can Amazon.com be trying to do both?”

Takeaway

Companies driven by technology have an incredible advantage because much of their value hinges on fixed costs.

If you want to provide the best possible customer experience and the lowest possible prices in your industry, it’s only possible if you can make much of your customer experience expenses fixed.

Challenge

Traditionally, you have a trade-off between customer experience and price. Sell your products at a higher price and you reap enough money to hire and train more people to provide a better experience. Sell at a lower price and the customer experience will take a hit.

Achieving both low prices and a great customer experience would seem to be a contradiction.

Solution

To achieve both low prices and a great customer experience, harness the power of fixed costs.

Amazon turned their customer experience — their recommendations engine, personalization, etc. — into a fixed cost. It is based on technology that it built and now only pay to maintain, which means it doesn’t get (much) more expensive over time.

That allows the cost of running Amazon to actually shrink over time as a percentage of the revenue that Amazon makes.

Remaining disciplined while keeping its operating cash flow steady was one of the tactics that brought Amazon through the dot-com bust in 2000. Not only was the company continuing to generate sales, but it didn’t spend much on its platform. Being relatively low-cost to begin with, the platform was able to continue functioning on a low budget. While competitors folded, Amazon survived, took a leading market position, and was able to invent and grow.

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

Jeff Bezos Letter to Shareholders 2018

what do customers want in this crisis?

IMG_2416 1

Customers want companies to act in 3 broad ways in this crisis

leadership tip week #111

adapted from HBR

In a fast-moving crisis, it’s important for leaders to communicate with empathy and honesty — not just internally, but externally as well. Of course, customers require a different approach than employees.

Recent research by Kantar was clear that customers wanted organisations to communicate how they act in three broad areas :

  1. For their customers
  2. For their colleagues
  3. For their wider community

 

1.For their customers

In the current crisis Asda CEO Roger Burnley and Sainsbury’s CEO Mike Coupe recently sent out a note to customers describing how they were acting in all three areas and have gained widespread plaudits, whereas Tim Martin Wetherspoons CEO has come under high levels of criticism for the video message he sent to his colleagues suggesting they take their skills to Tesco!

2. For their Colleagues

Grocery Retailers are focusing on protecting  colleagues with social distancing, perspex screens at check-outs, in-store cleaning procedures , increase limit on contactless to £45 and supporting colleagues with sick pay and Asda even committing to a bonus in June.

3. For their wider community

Coop are doing some great work supporting Food Banks with a guaranteed donation of Food. Iceland, Sainsbury’s and Asda have led by opening shops specifically at times for older customers or NHS workers , and many online retailers are prioritising delivery slots for older or vulnerable customers. M&S and Coop even starting local delivery services to vulnerable people.

Overall the focus that is working to build trust is

  • Focus on empathy rather than trying to create sales opportunities.
  • Deliver great Basics in store.
  • Rethink advertising and promotion strategies to be more in line with what’s happening in the world otherwise you risk sounding tone-deaf and alienating your customers ( removing multi-buys) or Coles in Australia shot an ad with their brand spokesperson encouraging its customers to stay safe
  • Look at your messaging from the perspective of your audience, and let your compassion drive your communications, rather than fear of doing the wrong thing

 

This tip is adapted from Communicating Through the Coronavirus Crisis,” by Paul A. Argenti

Bezos measures amazon by free cash flow

Measure your company by your free cash flow

Jeff Bezos letter to shareholders 2001 

Key message 5/22

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.

2001 : “Why focus on cash flows? Because a share of stock is a share of a company’s future cash flows, and, as a result, cash flows, more than any other single variable, seem to do the best job of explaining a company’s stock price over the long term.”

Takeaway

Because “a share of stock represents a share of that company’s future cash flows,” free cash flow is the best possible metric for understanding financial success as a business.

Free cash flow should be prioritized because it is pegged to your company’s value both today and in the future.

Challenge

It can be hard to prioritize free cash flow when public sentiment (especially stock prices) usually moves in line with revenues and profits. Few CEOs are able to hold their ground against the pressure of quarterly earnings results.

Communication is a critical (and often undervalued) way to highlight progress. While press releases and MD&A sections in SEC filings add some color to numeric results, they don’t usually allow much space for subtleties outside of their templates.

Solution

In Bezos’s original 1997 letter (discussed below), he made it clear to his new investors exactly how Amazon thought about free cash flow vs. GAAP accounting.

With each subsequent letter, he has enclosed a copy of that original letter to remind shareholders of Amazon’s outlook on this question.

For Bezos, focusing on free cash flow provides a clear method of valuing Amazon for internal planning purposes, as well as for investors.

The metric represents how much value each individual share of stock in a company has today and stands to have in the future.

“Ultimately, your determination of cash flow per share will be a strong indicator of the price you might be willing to pay for a share of ownership in any company,” he writes.

Over the years, Bezos’s constant advocacy for the idea of focusing on free cash flows has turned the idea into a more common and accepted view.

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

Jeff Bezos Letter to Shareholders 2018

Reassure Your Team During Uncertainty

london coronavirus 2

Reassure Your Team During Uncertainty

Leadership tip of the week #109

adapted from HBR

This has been a week like no other in the world. Health Crisis. Economic Crisis.

When the news is scary and the future is uncertain, many colleagues will look to leaders for reassurance — even though you might not have the answers yourself.

You can help by first finding your own sense of focus.

  1. Before you start communicating, take a minute to pause and breathe. Then put yourself in your audience’s shoes. What are their concerns, questions, or interests? What do they need an immediate answer to? You might use language such as, “I know many of you may be thinking…” The quicker you can address what’s on their minds, the more likely you’ll be able to calm them down.
  2. Seek out credible sources of information, and read fully before distilling it into clear, concise language. You can confidently express doubt or uncertainty, while still maintaining authority. You might say, “Reports are still coming in, but what we understand so far is…”
  3. Communicate frequently, even if you don’t have news to report, so that people know you are actively following the issue.
  4. And provide tangible action items. Use language such as, “Here are the steps we are taking,” or “Here’s what you can do,” to demonstrate action.

stay safe everyone…

This tip is adapted from How to Reassure Your Team When the News Is Scary,” by Allison Shapira

communicate communicate communicate

people10

Communicate with Your Team During a Rapidly Evolving Crisis

leadership tip of week #110

adapted from HBR

Keeping your employees informed during a crisis should be one of your top priorities as a leader, and this is the crisis of the century.

  1. It’s your responsibility to stay on top of events as they unfold — especially if they’re evolving as fast as they are right now.
  2. At the same time, beware of hype. News outlets often focus on what’s new, rather than the big picture, and they sometimes don’t distinguish between hard facts, soft facts, and speculation.
  3. Think critically about the source of the information before acting on it.
  4. Of course, colleagues have direct access to many sources of information too — but don’t assume they’re fully informed. It’s far better to create and widely share a regularly updated summary of facts and implications so you’re all on the same page.
  5. And constantly re-frame your understanding of what’s happening.
  6. Don’t hold off on disseminating plans just because they might change.
  7. Create a living document, with a time-stamped “best current view,” and update it regularly, highlighting critical changes.

This tip is adapted from Lead Your Business Through the Coronavirus Crisis,” by Martin Reeves, Nikolaus Lang, and Philipp Carlsson-Szlezak

In lean times, build a cash moat

In lean times, build a cash moat

Jeff Bezos letter to shareholders 2000 
Key message 4/22

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.

“The year 2001 will be an important one in our development. Like 2000, this year will be a year of focus and execution. As a first step, we’ve set the goal of achieving a pro forma operating profit in the fourth quarter. While we have a tremendous amount of work to do and there can be no guarantees, we have a plan to get there, it’s our top priority, and every person in this company is committed to helping with that goal. I look forward to reporting to you our progress in the coming year.”

Takeaway

Focusing on free cash flow or otherwise giving your business some form of cash moat (whether through outside equity, debt stakes, or tight operations) will help ride out difficult times when customers aren’t buying and/or financing has dried up.

If you’re able to maintain composure while others fall, you have the opportunity to come out ahead and capture a much bigger market share.

Challenge

The dot-com bubble took down a slew of internet companies, including Pets.com and fashion site Boo.com. Amazon, too, nearly went bankrupt.

Between 1995 and 2000, the NASDAQ rose from under 1,000 to over 5,000. Following its peak at 5,048, panic ensued, and the index lost trillions within the year.

While the majority of tech upstarts folded during the crash, Amazon stayed afloat. Since March 2000, the company has grown about 20x in market value.

Solution

One reason that Amazon was able to ride out the downturn was the tight cash conversion cycle.

While some companies left inventory in stock for long periods of time, Amazon was always focused on minimizing this to a few days at most, and collecting payments from customers before paying suppliers. This avoided lag times and ensured that Amazon continued to have cash coming in while others were bleeding dry.

Prioritizing free cash flow and being extremely disciplined with their operating cash flows gave Amazon a sound foundation they could use to ride out tough times and ultimately come out ahead.

4 steps to get buy-in

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4 Steps to Get Buy-in 

Leadership Tip of week #109

adapted from HBR

Everyone wants innovation in their organisation, but getting a new idea implemented can be a challenge, especially when office politics are in play. When you’re trying to get approval for your latest innovation, follow these four steps.

1. anticipate resistance. If you know what people might object to, you can plan how you’ll address those concerns.

2. understand what objections are truly about. For example, someone might say they object because of a publicly acceptable reason — say, the project is too costly — when their real concern is political, like they’re afraid their team will lose influence.

3. find a champion for the project. This should be a senior executive whose clout and expertise can help you move the project forward.

4. gather a critical mass of supporters. If you have a group of people who believe in the innovation enough to try it, you’ll have social proof that the idea is a good one.

Adapted from “How to Navigate the Politics of an Innovation Project,” by Brian Uzzi

Build on top of infrastructure that’s improving on its own

Bezos masterclass in management through shareholder letters 1999 #3/22

The current online shopping experience is the worst it will ever be. It’s good enough today to attract 17 million customers, but it will get so much better. Increased bandwidth will result in faster page views and richer content. Further improvements will lead to ‘always-on access’ (which I expect will be a strong boost to online shopping at home, as opposed to the office) and we’ll see significant growth in non-PC devices and wireless access. Moreover, it’s great to be participating in what is a multi-trillion dollar global market, in which we are so very, very tiny. We are doubly-blessed. We have a market-size unconstrained opportunity in an area where the underlying foundational technology we employ improves every day. That is not normal.”

Takeaway

  • The biggest opportunities in tech are platform-driven.
  • When you build on an infrastructure that’s beginning to quickly develop and modernize, you reap the benefits of not just your own growth but also the growth of the infrastructure you’re building on.

Challenge

  • Building on established platforms is the easiest and most expedient route, but one with the least upside.
  • Established platforms offer the most integration, often have low barriers to entry, and have plenty of accumulated wisdom around them.
  • At the same time, their growth potential is often limited due to the high pace of technological innovation across industries.

Solution

  • With the rise of internet connectivity in the late 1990s, an increasing divide began to appear between industries. E-commerce, gaming, online financial services were industries where a strong footing established early could set the stage for huge growth.
  • While Bezos was helped by growth in the e-commerce field specifically, and in access to high-bandwidth connections more generally, he didn’t find himself there unexpectedly. Before Amazon, Bezos was vice president at the hedge fund D. E. Shaw & Co, where he saw the rise of the internet firsthand.
  • Bezos knew he wanted to build a technology company, and he consciously looked to hire the most talented infrastructure engineers he could find to build new solutions where none existed.
  • Building on a high-growth platform like Amazon did require a much higher degree of upfront investment in engineering and research, but on the long timeframe of technological improvement, it gives you a much higher chance of building a huge, long-term business.

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

Jeff Bezos Letter to Shareholders 2018

Meeting Managing & Exceeding Expectations

hands
Meeting Managing & Exceeding Expectations

Leadership Tip if the week #107 

adapted from HBR

If a brand is a promise, then the expectations people have of the brand are created by the promises we make. Meeting expectations is about the alignment of words and deeds.

Disappointment occurs when we don’t do what we say we’re going to do.

When we promise more than we can deliver or pretend to be something we’re not.

Ironically, we are the ones who are most disappointed when we don’t meet the standards we set. We have the power to change this, by prioritising building trust over making an impression and only setting the expectations we’re willing to live up to.

Easy to say. Harder to do.

That’s why it’s worth the effort.

Stay terrified of your customers

Bezos masterclass in management through shareholder letters 1998 #2/22

2. be afraid of your customers

 

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 that gives you a snap shot / key takes outs of each letter.

“I constantly remind our employees to be afraid, to wake up every morning terrified. Not of our competition, but of our customers. Our customers have made our business what it is, they are the ones with whom we have a relationship, and they are the ones to whom we owe a great obligation. And we consider them to be loyal to us — right up until the second that someone else offers them a better service.”

Takeaway

  • In business, the most important thing isn’t what your competition is doing. If you’re expending effort trying to follow your rivals’ every move, you’re losing the big picture.
  • Keeping pace with your customers is what will keep you informed, relevant, and competitive.

Challenge

  • Companies are usually wary of their competition.
  • Understanding where they stack up against rivals, particularly if they’re public and continually judged on relative value multiples like price to earnings (PE), is a key pillar of their business strategy. If they can come in top of class, it’s easier to attract investment.
  • But the issue with thinking like your rivals is that you start to make similar moves. In fast food, for example, McDonald’s, Burger King, Wendy’s, Chick-fil-A all start to blend together. The only ways to differentiate is to narrow down to price and brand. As competition heats up in these crowded areas, it’s increasingly difficult to gain an advantage.

Solution

  • Flip the focus inward and hone in on your customers. Obsess over their preferences, their shopping behaviors, the quality of their reviews. This will allow you to optimize product features and overall product mixes. You’ll be able to double down on what works and eliminate what doesn’t. If you have a self-service platform like Kindle, find out everything users are creating and where they’re hitting roadblocks.
  • This granular focus on your true partners will allow you to invent in ways you (and your peers) didn’t anticipate. You’ll begin to develop away from your rivals and stand apart from the pack. This is a core tenet of Bezos’ philosophy.
  • If you don’t do everything in your power to align with customers’ shifting needs, and instead allow yourself to be distracted by competitors, you’ll quickly lose them.

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

Jeff Bezos Letter to Shareholders 2018

Amazon Go accelerates in size and confidence

 

Amazon Go Grocery, an expanded version of the walk in, select and walk out Amazon Go format, has been open since end February and it is different from the much smaller stores that preceded it and which have been making inroads in cities across the US.

Rather than being sub 2,000 sq ft, this is a 10,400 sq ft concern, putting it firmly in the small neighbourhood supermarket or super-sized convenience store category.

As such, the offer is substantially different from the Amazon Go norm where the focus has been on snacks, prepared and packaged foods and perhaps a cup of coffee from a machine while the shopper is at it. In Amazon Go Grocery there is a much greater fresh offer and it now becomes possible to shop for the evening meal or even to stock the larder. Yet the look and feel of the store is nearly identical to an Amazon Go with the difference being the mechanics of allowing customers to have a ‘bigger’ shop with trolleys, reusable bright green bags and suchlike.


There are also elements of the Amazon-owned Whole Foods Market about what has been done with products from suppliers to that chain being used to boost the Go Grocery offer, although prices are generally lower than in the sister enterprise.
this still doesn’t break even with the economics but they look more and more likely to be able to develop that in the future . There will be a limit to how many they will launch but when they do sort out economics beware 7-11 in USA and TESCO Sainsbury’s in UK.

This may all still represent small change for Amazon, but increasingly the app-based walk in walk out food shop at scale looks a realistic possibility. UK retailers need to take note.

check out other Blogs on Amazon and on creating fast check-outs

1. Bezos masterclass in management through shareholder letters #1 /22

2. Zig while amazon zags

3. Amazon-Go leading the way

4. Robots make stores Better Simpler Cheaper

5. Frictionless C-Stores

 

 

Aligning around True North at Shopper Insights Conference

IMG_0144

I’ve just spent the day at Shopper Insights and Behaviours conference chairing the afternoon session and speaking in the morning session.

Theme of my presentation:
If organisations are going to transform using data , they need to be clear, unambiguous and aligned around an agreed vision , strategy and execution plan to be successful. All pointing together towards True North.

1. I laid out the what and how of transformation.
2. I talked through examples of how organisation have delivered transformational improvements to The Customer Experience , Customer Communication and Understanding of the Customer.
3. I then talked through my experience of how to deliver transformation in retailers, and how suppliers and retailers can work together to drive change. 

Other Key out-takes from the sessions :

Great case studies on solving strategic problems from

  1. Gary Seaman (RB) on developing environmental brands in cleaning.
  2. Chris Wrighton and Daniella Basain (Premier Foods)on turning around a declining MrKipling Brand
  3. Gizem Donmez (Nelsons) on starting with customer understanding in developing an omnichannel approach for Rescue Remedy
  4. Scott McPherson (Nairn’s) and Giorgio s Argyropoulos (Pepsi) on How Insights around missions need to be applied in the Convenience channel.

Panel Discussions with James Brett (Twinings) Maxime Dassonville (BIC) Neil Bellamy (General Mills) Sean McKee (Schuh) Daniella Bassein (Premier Foods) Dev Mukherji (PostOffice)  David Harrison (Coop) Caroline Walsh (Musgrave)

IMG_0111

Key uptakes from the sessions and the panels

A. Deep understanding of shopper Needs: many techniques exist to deliver a deep understanding of customers ( with lots of technical suppliers in Martech specs). Nothing really beats watching customers first hand in stores , but using all the different techniques starting it’s important to start with clarity on the problem you are trying to solve first.

B.Technology Suppliers know their stuff but aren’t clear what problem their product solve – they don’t know how to sell or make it easy to buy. “There is a myriad of Tech companies but there is no technology to help me understand customers in store” James Brett.

C. Insights being split into two types of work: Strategic and tactical.

  1. Strategic deep view of understanding customers : longer term projects where spend time thinking about the problem as well as how to solve it. Look at triangulation or longer term trends, qual, quant.
  2. Tactical view quick response using panels, Skype groups, observations in store.

D. Insight Leaders becoming agnostic about mechanic, bigger focus on understanding the problem and then working on the solution. There needs to more of a focus on howdo you get clear on problem you are trying to solve. There is a recognition that retailers aren’t totally clear and aligned on the problems, and there isn’t alignment between suppliers and retailers.

Really understanding the problem and creating alignment around a solution is the challenge

F. Insight into Action: insight leaders need to be commercial as well as customer to align the organisation around change.

G. Understanding Retailers and Partnering with them. There was a consistent message from many speakers and participants that this was a key issue for suppliers: Understanding How CPG work with retailers to grow categories was an interesting panel session Good case studies and discussions from Premier Food (Chris & Dani) Dev & Giorgos  and David from Coop. Neil Bellamy From General Mills recommendation was to get clear on a message and identify and work with multiple stakeholders in retailer. Dani recommendation was to start with customer and see how that also aligns with retailers’ strategies Dev suggested focusing on Missions and integrating from prestore to purchase.

Building a consistent story and presentation that drives sales was a challenge many suppliers had with retailers: best solved by having a supplier and retailer perspective underpinned with a razor like focus on a commercial customer focus.

Protect your non-work time

smiley post it note on corkboard happiness versus depression concept
smiley cartoon face expression on yellow post it note surrounded by sad and depressed faces on cork message board in happiness versus depression and smile against adversity concept

Protect your non-work time

Leadership tip of the week #111

adapted from HBR

As more people are adapting to working from home, we are all learning to adapt:  jobs used to have very clear lines between when you’re “on” and when you’re “off.” But when you working from home — it’s important to protect your non-work time.

  • If you feel like work is taking over most of your waking hours, start by clearly defining what “after hours” means for you.
  • Take into account the number of hours you’re expected to work each week, as well as personal commitments like taking your kids, family and some me-time
  • When do you need to start and stop to put in the appropriate amount of work time?
  • Then, develop mental clarity about what needs to get done and when you will do it.
  • Keep track of your tasks and plan them out.
  • Make sure you block off time for an end-of-workday wrap-up, where you review and make sure you did everything you needed to do for the day.
  • Lastly, communicate with your colleagues about how (or if) you want to be contacted during your off hours.

Really guard your time. If you don’t, you won’t get the mental break that everyone needs

bring on shareholders who align with your values

Jeff Bezos letter to shareholders 1997: 

Key message 1/22 :

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.

“We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise. Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies.”

Takeaway

  • Don’t let short-term success, including going public, distract from the long-term focus. Amazon’s focus is market leadership, customer growth, retention, and brand — even if these come at the expense of near-term profits or the risk of negative “Wall Street reactions.”
  • Key to this growth has been Bezos’ clear, consistent message. Each year, it helps attract investors who share the company’s vision and maintains their financial support even when Amazon is at odds with the norm.

Challenge

  • Building an e-commerce company in the early days of the internet meant building on the precipice of huge growth, in terms of infrastructure and huge changes in consumer behavior. Taking advantage of these opportunities meant investing all available cash into growing and delivering value to customers.
  • Bezos explained Amazon would never focus on profits or shareholder returns directly, but would focus 100% of its energy on building value for its customers.
  • When his first letter to shareholders was composed in 1997, Amazon was already a successful company by some metrics — 838% year-over-year growth had recently brought the online bookstore’s revenues to $148M. But much of Wall Street was skeptical of the still-unprofitable company that had just gone public, didn’t pay dividends, and didn’t seem to care about becoming profitable.
  • In that first letter, Bezos didn’t try to convince investors that Amazon was profitable — instead, he explained why profitability was the wrong metric by which to judge a company like Amazon.

Solution

  • Amazon’s real strength is scale. As a company grows, if it’s smart about its costs, these can be minimized while sales increase. Margin expansion follows, and a team suddenly has a chance to grow at a faster and faster rate. More customers also mean more data, which leads to even greater decision-making power.
  • Shareholders who understand this can reap exponential gains.

 

  • Bezos ended his 1997 letter by reminding Amazon’s shareholders that it was their responsibility to decide whether this was a thesis worth investing in. In the opinions of many analysts of the time, it was not. Many were proved wrong. He still talks about every day being Day 1 and those who invested with a similar goal of inventing each and every day have been rewarded.

Jeff Bezos Letter to Shareholders 1997

links to all letters

  • 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

Jeff Bezos Letter to Shareholders 2018

Move Beyond Your Ego with Meditation

 

3E865480-66D1-4B6B-B325-0039AA4D4363Move Beyond Your Ego with Meditation

Leadership Tip of week #108

adapted from HBR

Ego can stand in the way of good leadership.

When our egos are threatened, we hold on to past decisions for too long, we react defensively to negative feedback, and we get emotional when we need to be rational. Fortunately, mindfulness meditation can serve as an antidote, allowing you to see things more objectively and to form deeper relationships. Commit to meditating for a short time each day.

Find a quiet place, sit comfortably on a chair or cushion, and set a timer for anywhere between five and 25 minutes. Then simply start observing your breath. Allow the mind to detach from your thoughts and to experience a sense of openness.

Then use what you gain from this practice throughout your workday. You might quiet your mind with a few conscious breaths before you enter a meeting or open your email. Or practice in the moment: For example, while you’re sitting in a meeting, turn your focus to your breath, and simply notice if your mind has started to take things personally. Even just taking a few breaths in and out can help lessen your ego’s grip.

This tip is adapted from What Meditation Can Do for Your Leadership,” by Matthias Birk