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04-11-2013, 11:32 AM
Sharing an article. It shows that copying a proven model might be not as straight-forward as we thought. We need to know the rationales behind it, and adapt it, instead copy wholesale...
How Jeff Bezos makes decisions
Over the past 19 years, Amazon.com has revolutionised the way we shop. Brad Stone, a senior writer at Bloomberg Businessweek, recently published The Everything Store: Jeff Bezos and the Age of Amazon. This is a condensed version of a conversation on Bezos’ evolution as a decision-maker:
In the course of your reporting, what did you observe about Bezos’ decision-making style?
Two factors come to mind. The first is an observation made by Rick Dalzell, his right-hand guy. He says that Jeff does two things better than anyone else. One is that he tries to find the best truth at the time. That may sound obvious, but Rick says that, while a lot of people know what the truth is, they don’t engage their thinking about how the truth may change.
Second, Rick says that Jeff refuses to accept the conventional wisdom about the way things are typically done. He thinks about reinventing everything — even small things. Recently, for instance, Amazon introduced the new Kindle Fire tablets. Ordinarily when tech companies do this, they hold a big press conference.
Instead, Jeff brought about two dozen reporters in to see him in small groups. He did all the product demos himself. Everyone left feeling like they had a special session with this dynamic CEO, and Amazon received great press coverage. It’s a small example of how he tries to reinvent how things are done.
Your book describes Bezos berating and belittling employees and overruling a lot of their decisions, even if he has less information than they do. Why does he behave that way?
It’s partly because he demands such excellence out of everyone around him and he’s always the smartest guy in the room. He really wants people to think big — that’s a frequent phrase around Amazon. When people aren’t exhibiting that we’re-going-to-conquer-the-world mentality, he gets frustrated. But in fairness, a lot of the examples in the book of him behaving that way are older ones, and I think he’s got better over time. He has modulated this behaviour.
You spoke with an educational researcher who spent time with Bezos when he was 12 and attending a gifted-and-talented school. Do you think growing up as the smartest kid in school led Bezos to be overconfident in his decision-making skills?
Well, his confidence does backfire sometimes, and Amazon has made mistakes. In the 1990s, he was convinced the Internet was going to change everything and he raced ahead without hesitation. He borrowed billions to expand, and it came back to bite him: He thought the runway was longer than it was and he spent five years (being punished by investors) for that.
So there are times when he can be too optimistic. That’s why he bought The Washington Post — he’s optimistic he can create these new businesses on the Internet (even as) the old incumbents are going away.
You describe Bezos as surrounded by a group of high-level “Jeff-Bots” who mimic his behaviour and sayings. Do they serve as yes-men or can they push back?
The term Jeff-Bot does connote a bit of mimicry, but it’s also about loyalty. Jeff’s leadership style is infectious. The people who do the best at Amazon are the people who absorb his principles. I don’t think the Jeff-Bots are yes-men — they just have internalised the way Jeff thinks.
Amazon is fairly decentralised, and some of these executives run their own businesses and make their own decisions. A great example is Andy Jassy, who was the first official “shadow” at Amazon. For two years, his job was to follow Bezos around as his chief of staff, attending every meeting with him. Andy became an accomplished executive — now he runs Amazon Web Services, which is an incredible business.
Bezos shows a remarkable ability to disregard Wall Street when making decisions. How is he able to do this when so many CEOs can’t?
This wasn’t always the case — really, it’s the pay-off for being right. In the late 1990s, the Street trusted Bezos — then for five years, it didn’t (after he’d grown Amazon too quickly). But during this time, Amazon called its shots predictably and consistently. Bezos ended up basically recruiting a base of shareholders who trusted him and believed his story. They saw him operating the company with discipline and they recognised that Amazon was a profitable business but that there were phases where they’d be investing in a new capability (that would hurt profits).
So it’s the credibility of the founder that made the difference. Once you’ve proven that you have the right mix of visionary insight and operating capabilities, Wall Street lets you get away with a lot.
Amazon uses some unique decision-making tools: Instead of PowerPoint, meetings begin with everyone reading a six-page memo outlining the issue to be discussed. They have an elaborate system to decide whether to promote people. Would these tools work well at other companies?
Probably not. They’re so highly tuned to the ways that Jeff Bezos processes information. In the book, I write that the entire company is really a scaffolding built around Jeff’s brain. It’s set up as if there’s a series of chess boards positioned, so Jeff can play all these games at the same time in a highly efficient manner.
Groupon, which has a lot of former Amazon people, tried some of these techniques, and it’s a tough sell. Starting a meeting with 20 minutes of silence so everyone can read a memo just isn’t the way most businesses operate, and it’s hard to adjust to that.
© 2013 Harvard Business School Publishing Corp
http://www.todayonline.com/business/mana...-decisions
How Jeff Bezos makes decisions
Over the past 19 years, Amazon.com has revolutionised the way we shop. Brad Stone, a senior writer at Bloomberg Businessweek, recently published The Everything Store: Jeff Bezos and the Age of Amazon. This is a condensed version of a conversation on Bezos’ evolution as a decision-maker:
In the course of your reporting, what did you observe about Bezos’ decision-making style?
Two factors come to mind. The first is an observation made by Rick Dalzell, his right-hand guy. He says that Jeff does two things better than anyone else. One is that he tries to find the best truth at the time. That may sound obvious, but Rick says that, while a lot of people know what the truth is, they don’t engage their thinking about how the truth may change.
Second, Rick says that Jeff refuses to accept the conventional wisdom about the way things are typically done. He thinks about reinventing everything — even small things. Recently, for instance, Amazon introduced the new Kindle Fire tablets. Ordinarily when tech companies do this, they hold a big press conference.
Instead, Jeff brought about two dozen reporters in to see him in small groups. He did all the product demos himself. Everyone left feeling like they had a special session with this dynamic CEO, and Amazon received great press coverage. It’s a small example of how he tries to reinvent how things are done.
Your book describes Bezos berating and belittling employees and overruling a lot of their decisions, even if he has less information than they do. Why does he behave that way?
It’s partly because he demands such excellence out of everyone around him and he’s always the smartest guy in the room. He really wants people to think big — that’s a frequent phrase around Amazon. When people aren’t exhibiting that we’re-going-to-conquer-the-world mentality, he gets frustrated. But in fairness, a lot of the examples in the book of him behaving that way are older ones, and I think he’s got better over time. He has modulated this behaviour.
You spoke with an educational researcher who spent time with Bezos when he was 12 and attending a gifted-and-talented school. Do you think growing up as the smartest kid in school led Bezos to be overconfident in his decision-making skills?
Well, his confidence does backfire sometimes, and Amazon has made mistakes. In the 1990s, he was convinced the Internet was going to change everything and he raced ahead without hesitation. He borrowed billions to expand, and it came back to bite him: He thought the runway was longer than it was and he spent five years (being punished by investors) for that.
So there are times when he can be too optimistic. That’s why he bought The Washington Post — he’s optimistic he can create these new businesses on the Internet (even as) the old incumbents are going away.
You describe Bezos as surrounded by a group of high-level “Jeff-Bots” who mimic his behaviour and sayings. Do they serve as yes-men or can they push back?
The term Jeff-Bot does connote a bit of mimicry, but it’s also about loyalty. Jeff’s leadership style is infectious. The people who do the best at Amazon are the people who absorb his principles. I don’t think the Jeff-Bots are yes-men — they just have internalised the way Jeff thinks.
Amazon is fairly decentralised, and some of these executives run their own businesses and make their own decisions. A great example is Andy Jassy, who was the first official “shadow” at Amazon. For two years, his job was to follow Bezos around as his chief of staff, attending every meeting with him. Andy became an accomplished executive — now he runs Amazon Web Services, which is an incredible business.
Bezos shows a remarkable ability to disregard Wall Street when making decisions. How is he able to do this when so many CEOs can’t?
This wasn’t always the case — really, it’s the pay-off for being right. In the late 1990s, the Street trusted Bezos — then for five years, it didn’t (after he’d grown Amazon too quickly). But during this time, Amazon called its shots predictably and consistently. Bezos ended up basically recruiting a base of shareholders who trusted him and believed his story. They saw him operating the company with discipline and they recognised that Amazon was a profitable business but that there were phases where they’d be investing in a new capability (that would hurt profits).
So it’s the credibility of the founder that made the difference. Once you’ve proven that you have the right mix of visionary insight and operating capabilities, Wall Street lets you get away with a lot.
Amazon uses some unique decision-making tools: Instead of PowerPoint, meetings begin with everyone reading a six-page memo outlining the issue to be discussed. They have an elaborate system to decide whether to promote people. Would these tools work well at other companies?
Probably not. They’re so highly tuned to the ways that Jeff Bezos processes information. In the book, I write that the entire company is really a scaffolding built around Jeff’s brain. It’s set up as if there’s a series of chess boards positioned, so Jeff can play all these games at the same time in a highly efficient manner.
Groupon, which has a lot of former Amazon people, tried some of these techniques, and it’s a tough sell. Starting a meeting with 20 minutes of silence so everyone can read a memo just isn’t the way most businesses operate, and it’s hard to adjust to that.
© 2013 Harvard Business School Publishing Corp
http://www.todayonline.com/business/mana...-decisions
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