In an article on Innovation Excellence, Braden Kelley shares a letter written by one the most well-known innovators on the planet, Amazon CEO Jeff Bezos.
In the letter, Bezos gives shareholders a glimpse into Amazon’s DNA as a company and where he puts the most value when it comes to operating the business.
Here’s what innovation leaders can learn from the brilliant mind of Jeff Bezos.
Always be innovating no matter how large your company is
In the letter, Bezos makes a reference to Day 1, which is the name of the building where his original office was located. But the name has a much deeper meaning. So deep that when he moved to a new building he brought it with him.
In Bezos’ words, “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” In other words, Day 1 represents the energy that flows in a company that’s challenging the status quo and moving fast. Day 2 represents a company who maintains the status quo (stuck in stasis) only to become irrelevant due to the inability to move with or be ahead of the market.
Innovation leaders, no matter what industry or geographical location, need to have a Day 1 mindset. This sense of energy and freshness is the breeding ground for breakthrough ideas that ultimately impact business.
Customer experience should be an obsession
“There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.”
In Bezos’ mind customer experience is not only a significant differentiator, it’s core to transformation and innovation in today’s market.
Why should customer experience be an obsession? Two reasons.
First, the balance of power has tipped to the side of customers. They now have a tremendous amount of leverage, which means the experience companies give customers isn’t just important it’s critical to the health and longevity of a business.
Research by Accenture found that in the U.S. the estimated cost of customers switching to a competing company due to poor service is $1.6 Trillion. Companies are losing money at alarming rates because the customer experience is far from optimal.
Second, as Bezos eloquently puts it, “Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.”
When you’re obsessed with delighting customers, you instinctively want to provide a remarkable experience at every stage of the customer journey – from products to support. This, at the end of the day, is what separates successful companies from the ones that are out of business…or about to go out of business.
Make quick yet quality decisions
“Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions.”
Large companies are notorious for making slow decisions, which is why smaller startups tend to disrupt them out of nowhere. Look no further than the rise of fintech companies for a great example of this.
Bezos stresses the importance of making high-quality decisions fast. In other words, make quick decisions that aren’t done out of randomness and supported with the right data. He goes on to say, “Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow.”
Now, not every company is in an industry that rewards speed. Some have to navigate a seemingly endless web of regulations and obstacles before a decision can be implemented. However, Bezos’ words still ring true. You don’t need to wait until you have 90% or even 100% of the information to make a decision.
What sets companies like Amazon apart from the rest is in their willingness to just decide. And from there make the necessary adjustments through feedback and analysis.
Embrace the future, don’t fight it
It’s easy to fall into the trap of maintaining the status quo. Change is hard, which is why people avoid it. But in order to thrive as a business, you have to embrace what’s happening in the marketplace, make adjustments, and identify ways you can use it to your advantage.
Whether it’s artificial intelligence, virtual reality, or a future trend that hasn’t happened yet, companies that roll with the punches will outlast the ones that stay stagnant.
It’s fascinating how businesses brush aside trends as if there’s nothing to worry about. If you’re embracing external trends, as Bezos puts it in his letter, you’re giving yourself an opportunity to transform along with the market rather than being left behind.
The bottom line here is that no matter how insignificant something appears, never dismiss it outright. Remember when the CEO of Blackberry dismissed the iPhone? Well, we know how that ended.
The reality is, the market is the market. No matter how hard you fight, it will do what it wants to do. So, you can either embrace it or allow it to steamroll you.
Whether it’s growing Amazon’s business from an online bookstore to an e-commerce and cloud computing behemoth, or exploring space through Blue Origin, Jeff Bezos is one of the most innovative minds in the world.
The letter he wrote to shareholders gives remarkable insight into what drives Amazon as one of the most valuable companies in the world.