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  • Tulsa World: Former Amazon executive highlights principles that drive the company

    John Rossman, Tulsa World: Former Amazon executive highlights principles that drive the company

    Tulsa World: Former Amazon executive highlights principles that drive the company
    John Rossman talks about his book ‘The Amazon Way’ on company’s principles, practices
    By Casey Smith Tulsa World

    Since its launch in 1994, Amazon has grown from an online bookseller to a mega-retailer, with lines of business that also include cloud computing, crowd-sourcing and streaming services. In 2015 it became the fastest company ever to reach $100 billion in annual sales, and since the beginning of this year stock has stayed between $750 and nearly $850 per share.

    John Rossman, a former company executive who launched and scaled the Amazon Marketplace business and was responsible for the enterprise services business while he was there from 2002 to 2005, says part of the company’s success can be attributed to looking at its 14 leadership principles, which he outlines in his book “The Amazon Way.”

    Rossman spoke in Tulsa on Wednesday at Tulsa Business Forums, presented annually by Oklahoma State University’s Spears School of Business. Before the lecture, Rossman sat down with the Tulsa World for a Q&A.

    What is “The Amazon Way”?

    The Amazon Way is really about the company’s culture and their leadership principles and how they go about getting the results that they get, which are both world-class operators and systematic innovators. They run a worldwide conglomerate business today. Amazon is in so many different businesses, way beyond retail.

    I think it really is those leadership principles, which is really an articulation of “How do we make decisions,” that allows them to make good decisions, consistent decisions and keep the organization running fast and in a low bureaucratic manner.

    The Amazon Way is about all those principles around being obsessed with your customer and taking ownership for results and thinking big. All those ways together are The Amazon Way.

    Is that something that you think other companies should be doing?

    I don’t either believe or advise that anybody should take these principles and make them their own.

    The key, though, is most companies are trying to think through “What’s the digital opportunity in our business?” or “Where could somebody new, a nonincumbent, disrupt our business?” And figuring out how do I act in an agile manner, or how do I both manage my large legacy business and start new things and to take more bets — that’s kind of the universal challenge for management teams.

    So at a minimum thinking through: how do we make decisions and how do we create an environment that fosters appropriate risk-taking and how do we put our customer first and our organization second behind that.

    This is how Amazon does it, and you can learn and draw things from that, but I think a leadership team really needs to think about how do we go about making that work for our team and how we want to run our business and our culture and our heritage.

    Were you part of putting together these leadership principles or were they already established when you came to Amazon?

    The principles weren’t codified at that point, so they weren’t written down, but you worked them every single day. You used them in meetings, and they were referred to and you talked about them. It was sometime after I left that they wrote them down.

    But I was there at a period in time when we got clear about Amazon essentially being two types of businesses — one is being a retailer, and the other is being a platform business that offers core capabilities that both Amazon the retailer can use and other businesses can use.

    Amazon Web Services is a good example of a platform business. The business I ran there — the Marketplace business — is a good example of a platform business.

    And so those were kind of the formational days of really what started to expand Amazon well beyond being an internet retailer.

    Tell me about the first leadership principle, customer obsession. What does that mean and how did you guys carry that out?

    What it means first and foremost is that your customer is not present, and you need to have great empathy and great insights in understanding the customers’ needs, or maybe opportunities that they don’t even recognize today. And you need to be willing to do hard things in order to achieve that kind of customer experience that you envision.

    They use the word obsession pretty purposefully, meaning it’s easy to say you’re “customer focused,” but when you’re obsessed about something, you’re kind of irrational and you’re willing to do very hard things and you’re willing to stick with it.

    A lot of where Amazon’s innovations come from is that deep customer understanding and looking upstream and downstream … saying where is there a bad customer experience and how might Amazon help improve or fix that customer experience, and that’s lead them to a lot of new businesses.

    Are there any other leadership principles you want to highlight?

    There’s a leadership principle called “invent and simplify.” It is No. 3. Amazon has always defined itself as a technology company and as innovators and explorers, and retail was the first business model that they focused on.

    I think that that willingness to apply resources and being curious and being willing to invent on behalf of your customer or on behalf of driving operational improvements has been a key force to help them innovate. It’s just part of their ethos to look for new opportunities and to solve problems that may have not been solved yet.

    There’s a lot of very visible examples of that, but I think the drones are a very clear one where they’re on the absolute leading edge of building that capability. There’s going to be a lot of trial and error, but if you have a longterm perspective of the market and you have the opportunity then the investment makes sense. If you have a short term perspective on the opportunity of your business then an investment like that will never make sense.

    How have the principles benefited the company?

    I think the primary benefit is just that as an organization they make decisions in a consistent manner. They can scale decision-making but still get consistent decisions made. It’s a way of articulating their strategy. And it helps them recruit, so they specifically are looking for people that demonstrate these types of values, they evaluate talent relative to living up to these principles. So there’s a lot of benefits, but I think it’s primarily about moving fast and smartly.

    Does Amazon have a culture that discourages employees from getting too comfortable in their roles?

    I don’t know if it’s that they don’t want them to get too comfortable. I would express it as more of every function, every role, every cost has an opportunity to be improved. Amazon’s original name was And so just that relentlessness of everything can always be improved, you’re never done, I think is really the culture of continuous improvement.

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