14 Amazon Leadership Principles that changed my life and can help your startup succeed!
Amazon considers every employee to be a Leader and the Amazon Leadership principles are applicable to everyone but I am focussing this article for the Founders of startups to help them succeed. I believe that these leadership principles are the ones that helped Amazon become the Trillion dollar company and I feel it can give the key ingredients for startup success as well.
Customer Obsession is at the heart of Amazon and it has always been about customers. Many startups focus too much on their product or technology or get distracted by VCs/valuations or the next shiny thing in the market and forget that it’s about the customer. Your startup is better off thinking about customers all the time. Your whole reason for being is to serve the customers, so focus on solving customer painpoints everyday.
Ownership In a startup, you need to wear multiple hats. Many times, when startups are in a growth phase and hire a lot of subject matter experts quickly, they suffer from the disease that ails big companies — “Its not my job” syndrome. Adopting the simple philosophy of “If there is no owner, I am going to be the owner and I will drive it. If there is an owner, I will help them by reviewing their work, provide constructive feedback to solve customer problems faster and show empathy for the challenges they face”, can help promote a positive work culture in your startup.
Dive Deep Startup Founders must know as many details about their business as possible. While SMEs and other leaders can step in at the right time, ultimately, you are accountable for every aspect of your business. Many startups fail because the founders didnt dive deep into their marketing/sales plans, or did not understand why their engineering teams werent delivering products on time or did not understand how discount rates on financial projections work.
Invent and Simplify The Invent part comes naturally for more startups since that may have been one of the reasons you decided to do a startup in the first place. There is a lot of value in “simplifying” life for customers. Everytime, you identify a painpoint, there is an opportunity for you to come up with an idea, invent a new solution or simplify it. AWS itself came out of addressing the painpoint of having to buy so many servers to handle peak traffic and keeping it idle during the rest of the year.
Frugality Though Frugality comes naturally to startups because they inherently have very limited resources, sometimes Founders forget to value all of their resources(cash, stocks, bonds, time/productivity of the employees) as frugally as they value cash. This is also probably misunderstood by startups and sometimes makes them take “Frupid ‘’ decisions. Amazon Leaders clarified the LP to “we will not spend resources on things that dont matter to customers”. To hire Engineers in this market, it costs a lot of money with FAANG companies offering big paychecks never seen before, but losing key engineers purely because of compensation can hurt startups, so be flexible and weigh the pros and cons of spending your limited resources on the right things that matter to your customers.
Hire and Develop the Best As a startup founder, you need to hire the best people. Especially the early employees tend to define the DNA of the company and their leadership style/attitude is critical to the success of the company. Amazon always hired the best and brightest who raised the bar. Raising the bar that started out in hiring became the core philosophy of the company. The concept of raising the bar is quite simple. One of my managers at Amazon told a hypothetical to visualize it. Lets say you have a 2-people startup and you earn $20 for your company and your partner earns $10 for the company. Together, as a company, you made $30 and if the value is equally distributed, each of you made $15. Now, if you want to add a new partner, how much do you want that person to make? $5? $12? $25? Anything below $15 reduces the amount of money each of you made, and thats the point. You want each new hire to be better than atleast half of the employees at that role and level so that the bar raises. Never settle for mediocre employees in the early stages of the company or for that matter, any stage of the company.
Bias For Action You would think startups would always move fast. Many a time, they dont, because there are lots of distractions in the form of raising capital, finding it hard to hire, lack of alignment within the leadership team, lack of traction of the initial product, operational issues, running out of money etc., Amazon encourages teams to always move fast. As a startup, you can easily pivot to selling a completely different product if your initial product has no traction. A simple framework that Amazon uses to move fast is to identify 2-way door decisions, decisions that can be reversed. If a decision is 2-way door, you dont need to get approvals. You would also empower teams to take their own 2-way door decisions. By moving fast, you also avoid analysis-paralysis. “Dont let perfect be the enemy of the good” is a great mantra. I have seen many startups fail because they took too much time trying to build the perfectly polished product. On the contrary, startups like Alibaba focussed on delivering the best value for customers as fast as they could, though their offering might feel they are quite rough and became multi-billion dollar startups.
Learn and Be Curious At startups, you have the opportunity to learn, learn and learn all the time. The learning would probably come from different angles. For Tech founders, the amount of learning they get from business, legal and marketing is hard for a big company to offer. Since you are probably solving problems that are probably cutting-edge, it is critical that you keep yourself up to date on the latest industry developments. At Amazon, I was able to learn Machine Learning from Amazon Machine Learning University and later on even became an Instructor.
Think Big Startups start out thinking really big but get bogged down when faced with the challenges of execution. Multiple stakeholders would push you to think small but it is a self-fulfilling prophecy. Henry Ford’s quote of “Whether you think you can, or you think you can’t — you’re right” is most applicable for startups. Thinking Big doesn’t mean you don’t settle for a MVP, or sell to a niche segment at first, or position yourself as a particular type of company. Remember, Amazon was only a book selling website for 4+ years, but was not only able to expand to selling everything under the sky, but also launched AWS, Kindle/Alexa devices and a lot more because the leaders always encouraged the team to Think Big.
Earn Trust As Founders, you need to earn the trust of customers. To earn trust, you have to meet the commitments that you make to your customers and when you are not able to, you should be honest about it and correct the situation to the best of your abilities. Amazon Return policy is a great example of earning trust with customers. I still vividly remember by first return of a book in Amazon.com. The “no-questions-asked”, immediate credit to my credit card way back in 2001 was kind of like a culture-shock to me given that I come from a culture where returns are not accepted the moment product leaves the store. When Customer Obsession blends with relentlessly earning trust of customers, startups can become a powerful force like Amazon.
Have Backbone, Disagree and Commit As a mild-mannered person coming from India, I have always found it hard to show backbone in the face of authority. For startup founders, this is an important skill to develop. In many situations, people tend to be quiet just to be socially appropriate even when they disagree. But this can be really harmful for startups. If you dont agree, speak up, brainstorm and reason the pros/cons and fully commit when a decision is taken. Lots of dissatisfaction of big companies come when it is quite clear for everyone else except the management that the wrong decision is taken. What I learnt from Amazon is that you can be super-polite and still disagree. In a startup, it is super-important to encourage a culture of disagreements with right reasoning and align the entire team on the thought-process behind key decisions before they are taken. If the decisions are simply communicated to employees after the decision is taken, it is hard to get their perspectives. Startups can afford to discuss a lot more issues transparently with their employees than big companies, so use it.
Deliver Results At the end of the day, the startup needs to deliver results for customers. You, as Founders and co-founders need to deliver results for the customers as well as the entire company. Results are in the form of customer adoption, revenues, profitability, hiring, quality of hires and team happiness. Success breeds success and encouraging/recognizing delivery of results consistently is a key to the success of the entire company.
Insist on Highest Standards While building scrappily is a key success factor for a startup in its early years given the limited resources, the long term success of a startup really depends on whether the team holds themselves to the highest standards and are perceived as providing the best quality products and services by the customers. Amazon encourages a culture of raising the bar in its systems, products and processes. Keep moving the needle and relentlessly insist on highest standards regardless of how tiring it can be.
Are Right, A lot Successful startup founders know that they have been wrong a lot. Having the self-awareness of when they were wrong and developing good judgment helped them to succeed. Amazon requires its leaders to work hard to disconfirm their beliefs. To take luck out of the equation, you need to work hard to get the relevant data and rely on data to take decisions. The good news is that your instincts are probably right but you need to know when they are wrong as well and the data-driven decision making framework helps take emotions away.
PS: I am skipping the 2 new LPs that were introduced last year since they dont even feel like leadership principles and more of “good intentions” intended to get positive PR given Amazon has become a Trillion dollar company with 1.6+ million employees(as of 2021). Maybe your startup could simply incorporate them into the “Earn Trust” LP to earn trust of employees by being fully transparent and earn trust of the environment by being responsible about their environmental choices.