It is always Day One when you look at the 10,000 year “Clock of Long Now” — Lessons from Jeff Bezos’

First, do not expect any new content from the book. “Invent and Wander” is a sequential collection of Bezos’ annual shareholder letters between 1999–2019, and transcripts of few speeches and interviews. In the introduction Isaacson summarizes, what he thinks, the key themes in Bezos’ leadership playbook and compares him with the “genius traits” observed in Leonardo, Ben Franklin, Einstein and Jobs.

Second, do not expect significant intellectual or strategic thinking heft. That is replaced by rather clear writing and a consistent set of principles. It is perhaps no wonder that at the end Bezos essentially runs a giant logistics shop undergirded by digital infrastructure — consistency is the winning culture there.

Third, you will get a clear, succinct and precise idea of “what” and “how” behind Amazon from reading the letters for the past twenty years. Like all good leaders, Jeff is a brilliant communicator and fully affirms the conviction behind “repetition does not ruin the prayer”. As for the “why”, the transcript of the Blue Origin (Space Venture) lecture likely will stand out as the best answer. He deeply, passionately believes there will be a trillion-plus earthlings someday and we gotta be prepared to move!

The biggest takeaway from the book is to be able to unpack Jeff Bezos “leadership principles”, the core foundation of which is unshakeable and proved wildly successful with time.

Three Key themes, or “Whats” -

Think Long-Term — why Bezos emphasized cash flow as a key metric over profit right from the start. For genuine long-term success, one needs to invest. While investments in business, e.g., a large acquisition, a big machine etc., could be hidden from earnings, they are transparent with cash flow. On the execution side, thinking really long-term — over quarterly- or annually-, makes today, or tomorrow, an infinitesimal part of the game. Thus “it is always Day 1” culture. Bezos was rightly described as “patiently exuberant and exuberantly patient”.

Customers First — it is not just great to have unhappy customers, but if we start from customers and walk backward, we will never be wrong. Every customer wants to pay less, get better quality in faster time. In the rare occasions where customers don’t have any idea of what they want (e.g., Amazon Echo), start from skills and walk toward the customer. Essentially, Amazon is in customer-service business.

Big Decisions — As leaders, “we are paid to take a handful big, high-quality decisions”, not many small decisions. From this “what”, comes the “how” of experimentation culture. Many big decisions are against conventional wisdom. Therefore it suffers from two challenges — One, there is usually inadequate data — one needs to rely on intuition as well. Two, Conventional wisdom is usually right — so there is also high likelihood of failure. Therefore, Bezos envisions Amazon to be the world’s safest place to “experiment and fail” (fast!). An example could be Amazon Fire MayDay button. Bezos himself launched it with much fanfare. It was shut down a couple of years ago as it proved to be too expensive (and therefore ultimately hurting customers by impeding operational excellence).

Some ideas, opinions and tips from the book -

• “We are fortunate to benefit from a business model that is cash-favored and capital efficient”.
• Three key hiring questions -

Will you admire this person?

Will this person raise average effectiveness?

Where is this person a superstar? (Bezos cites an example of a National Spelling Bee (1978) winner working in Amazon)

• The current online experience is the worst it will ever be.
• “We have a market-size unconstrained opportunity in an area where the underlying foundational technology improves every day. That is not normal”
• Amazon online retail is built on three pillars of customer experience — Selection, Convenience and Relentlessly Lowering Prices. Why “eliminating errors” (incidents, mistakes etc) ultimately results into lower price -

• Long-term thinking is BOTH a requirement and an outcome of true ownership. Investors are effectively short-term tenants, really renting the stocks that they think they “own”.
• “Our” customer satisfaction score is so high that ACSI said “if they go any higher, they will get a nosebleed”. “We are working on that”.
• “Our” ultimate financial measure is “free cash flow per share”. Earnings, over cashflow, could be a bad proxy if the “capital investments needed for growth exceed the present value of the cash flow derived from these investments”. There are, however, implied duality between earnings and cash flows.
• Two types of decisions -

One, can be made with data — favorite kinds! Heavy lifting is done by math.

Two, can only be made with some assumptions and, primarily, judgment. In such decisions, often we go AGAINST the math. These decisions resist quantification. This paper walks through the “Structure of Unstructured Decision Processes”

• Math-based decisions command wide agreement. Judgment-based decisions are rightly debated and often controversial. If you want to avoid controversy, limit yourself to decisions of the first type.
• Fulfillment by Amazon is essentially a set of APIs that turns “our 12M square foot center network into a gigantic and sophisticated computer peripheral”.
• Anytime you make something simpler and lower friction, you get more of it.
• We humans coevolve with our tools.
• Muda (eliminating waste in Japanese manufacturing): “Why are you cleaning? Why don’t you just eliminate the source of dirt?”
• “Focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time.”
• “Listen to customers, but don’t just listen to them — also invent on their behalf.”
• Innovative, large-scale platforms are not zero-sum.
• Even well-meaning gatekeepers slow innovation.
• Amazon comes from the “desire to impress customers rather than the zeal to best competitors”.
• Customer-driven focus aids a certain type of proactivity. “When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services.”
• “Take a long-term view, and the interests of customers and shareholders align”.
• “Pay to quit” program — invented by Zappos. Once a year associates get an offer to quit. First year, $2K, then it goes up by $1000 a year to a maximum of $5K.
• Decentralized innovation is the only way to get robust, high-throughput innovation.
• Mayday tech advisors have received thirty-five marriage proposals from customers.
• A dreamy business has at least four characteristics — customers love it, it can grow very large, has strong returns on capital and it is durable in time — at least for decades. When you find one, “don’t just swipe right, get married”.
• While most big tech companies are competitor focused, Amazon’s “usual tools” are customer obsession rather than competitor focus, heartfelt passion for invention, commitment to operational excellence and willingness to think long-term.
• AWS is market-size unconstrained.
• Luck plays an outsized role in every endeavor.
• To invent, you experiment. If you know in advance what will work, it is not an experiment.
• Baseball has a truncated outcome distribution. Businesses don’t!
• Two types of decisions based on outcomes -

Type 1 — one-way doors. Irreversible.

Type 2 — two-way doors. Changeable. Should be made quickly by high judgment individuals or small groups.

As orgs get larger there is a tendency to use a heavy-weight Type 1 decision-making process to use for making Type 2 decisions. The result is slowness, extreme risk aversion, failure to experiment enough and — ultimately — less invention. Similarly, any company that habitually uses the Type 2 framework to make Type 1 decisions would — by definition — get extinct real fast!

• What does Day 2 look like? “Statis, followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

Day 1 defense kit -

• Customer Obsession — customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. So, invent on their behalf.
• Skeptical view of proxies — e.g., process as proxy. Often the process becomes the proxy for the result you want. We stop looking at outcomes and just focus on the process. The process is not THE thing.
• Eager adoption of external trends — fighting it is fighting the future. Embrace them to have a tailwind. E.g., Machine Learning (on AWS).
• High-velocity decision making -

Never use a one-size fits all decision making process. See, Type 1 vs, Type 2 decisions

Most decisions should be taken with about 70% of the information you wish you had.

Disagree-and-commit — to move along when there is no consensus.

Recognize true misalignment early and escalate them immediately. Otherwise, whoever has more stamina carries the decision.’You’ve worn me down’ is a terrible decision-making process.

• Yesterday’s “wow” quickly becomes today’s “ordinary”.
• “Trying perfect headstand in 2 weeks, when it typically takes 6 months” — Unrealistic beliefs on scope — hidden and undiscussed-kill high standards. Form and proactively communicate realistic beliefs about how hard something is going to be.
• Six-page narratives rather than powerpoint slides. Great memos get written and then re-written.
• In Amazon, authors’ names never appear on the memos- the memo is from the whole team.
• People are drawn to high standards-they help with recruiting and retention. High standards is often about the “work that no one sees”.
• Amazon Go started with a simple mission — Get rid of the worst thing about physical retail: checkout lines. No one likes to wait in line. And then “we” tried to do it in a way where the technology worked so well that it simply receded into the background, invisible.
• Typical single-company data centers operate at about 20% server utilization.
• “When something bad happens you have three choices. You can either let it define you, let it destroy you, or you can let it strengthen you.”
• Difference between gift and choices — cleverness is a gift; kindness is a choice. Choices can be hard. In life story, most meaningful ones are the series of choices we make. We are our choices.
• Let kids play with sharp knives — “much rather have a kid with nine fingers than a resourceless kids”.
• Stock is not the company, company is not the stock.
• “I like to do my high-IQ meetings before lunch”.
• “You get paid to make a small number of high-quality decisions”. Warren Buffet says he’s good if he makes three good decisions a year.
• When you pioneer, if you’re lucky, you get a two-year head start. Nobody gets a seven year head start.
• “Is this person a missionary or mercenary? The mercenaries are trying to flip stocks. Missionaries love their product or service and their customers. At the end, missionaries make more money.”

The way you earn trust, the way you develop a reputation is by doing hard things well over and over and over.

• “Work-life balance is misleading. I like the phrase “work-life harmony”. It’s a flywheel, a circle, not a balance. Why the popular metaphor is dangerous — it implies a strict trade-off.
• Zero-sum games are unbelievably rare.
• Most important factor for nimbleness is decision-making speed. The second-most important factor is being willing to be experimental.
• Two types of failures -

Experimental Failure — Good!

Operational Failure — Bad.

• When it comes to competition, being one of the best is not good enough. “Do you want to plan for a future in which you might have to fight with somebody who is just as good as you are? I wouldn’t.”
• Organically, humans use 97 watts of power. As members of the developed world, we use 10K watts of power per person!
• We have all been planet chauvinists. “Is a planetary surface the best place for humans to expand into the solar system?” No. O’Neill’s idea of manufactured worlds with artificial gravity — “O’Neill Colonies” to replicate earth cities with no more than a day’s time to go to another place — what Blue Origin is striving for.
• Reason aviation is so safe today is because we have so much practice. We need to have more missions/practice with space journeys.
• Amazon has both the scope and capabilities of a large company and the spirit and heart of a small one.
• Customer trust is hard to win and easy to lose.