Amazon’s culture of scaling, agility and innovation is the secret to its phenomenal growth.
When you look at Amazon’s record performance in 2020, with annual revenue up 38% to $386 billion, a yearly increase of over $100 billion, and net profit up to 84% for the year compared to the previous year, it’s difficult for most business leaders to comprehend how they have been able to to do it. How have they been able to scale and maintain their culture of agility and innovation?
Amazon has enabled continuous transformation, innovation, and agility and scaled to an organisation of over 1 million employees. What can we learn from Amazon about their combination of culture, ways of working and technology that has enabled them to continue to scale and innovate?
Here are some insights about Amazon’s ongoing transformation journey of all its different businesses.
A favourite quote from Jeff Bezos is:
“Agility is the only sustainable advantage because everything else people can copy; they can replicate it. Nothing else is sustainable.”
And that belief really was what drove him when he started building and scaling Amazon. He intentionally designed an organisation of small, empowered teams in all the different businesses. These teams are driven by a culture of innovation and agility that is centred on the customer. Amazon’s mission is to be the earth’s most customer-centric business.
The aim is always to get to market quickly with what they think customers need, expose the product or service to the customers, get feedback and then iterate. Basically, it’s reinventing with customers. This whole culture of customer-centricity is a key part of how Amazon has developed and scaled.
Innovating by failing fast
Amazon’s culture and their ways of working promote constant innovation, and constant failure. Amazon sees failure as the necessary flip side of innovation. If you’re not failing, you’re not pushing the boundary. If all experiments succeed, they are not really experiments.
This is quite revealing because most companies don’t talk about failing. When you think about your own company culture, think about whether it encourages or punishes failure?
Building with customers
Every single employee in every part of the business at Amazon is expected to be innovative and agile. Amazon very carefully hires what they call ‘builders,’ people who work backward from the customer. They aim to hire builders not just for the immediate role but for the long-term talent pool that they believe can work in many different businesses and functions in the group.
Each Amazon business is always focused on time to value of a new capability. Amazon creates a new product or service to address a customer need, expecting that the first instance will be roughly right. But then continually iterates it based on customer feedback.
Amazon in effect crowdsources, iterating and quickly reinventing with customers. If you remember what the original Kindle was like, you’ll see it’s changed out of all recognition from that first model.
Small, empowered teams
Every business function is also expected to be innovative and agile, and each function is treated like a customer. Take Amazon finance, as an example.
Amazon finance is expected to work backward from its internal customers and reinvent. To enable this Amazon aligns technology teams within finance to build solutions for the internal customers of the finance function.
Treating internal functions as customers and applying the same strategies used for external customers allows Amazon to keep evolving their processes and business functions to drive efficiencies. This is how Amazon has been able to scale so quickly and maintain innovation.
This internal alignment strengthens the company culture and ways of working and ultimately benefits the external customer.
Customers at the centre
The key learning here is the relentless focus on putting the customer at the centre of everything. This culture and way of working fosters innovation close to the customer rather than driving behaviour by cascading strategy and objectives down the organisation structure.
In conclusion, their small, empowered, customer-centric teams with access to technology can then continually iterate the products and services to maintain business agility.