Subba’s Serendipitous moments

April 25, 2008

Management lessons from Jeff Bezos

Of the many CEOs that I hold in awe and respect Jeff Bezos is very high on the list. It is not that he has become successful and continues to remain the poster child of the Internet economy when other stars from the dot com era have either faded away or have been just one trick pony. The few things that amazes me are:

How Jeff continuously proved all the skeptics in the Wall Street and outside observers continuously wrong by being true to his vision, values and strategies.

How he managed to scale the company from selling books to groceries and everything in between and become the world’s largest E-tailer.

How he turned conventional wisdom on its head by combining and integrating 3 widely different customer value disciplines: operational excellence, customer intimacy and product leadership constantly when it is generally believed and recommended by Michael Tracy and Fred Wiersema in their book: The Discipline of Market Leaders.

How he has managed to not just radically alter business models and paradigms around retailing, but also transformed his company from a retailing firm to a high technology firm through continuous innovation.

Finally how he has turned conventional thinking on advertising, innovation and customer service on its head and created new approaches.

Well, a lot could be said of him, but I would just limit myself to some of the management nuggets that’s worth considering:

The right way to build a brand is by delivering great service.

We (Amazon.com) take those funds that might otherwise be used to shout about our service and put that into customer service.

We work hard being customer-obsessed and expressing it through innovation

Our two very strong cultural attributes are innovation and customer obsession.

Frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.

Companies get skills-focused, instead of customer-needs focused. When [companies] think about extending their business into some new area, the first question is “why should we do that—we don’t have any skills in that area.

I’ll tell people that if the stock is up 30% this month, please don’t feel you are 30% smarter. Because when the stock is down 30% a month from now, it’s not going to feel that good to feel 30% dumber.

I’ve taken plenty of criticism, but it’s always been about our stock price and never about our customer experience. After the bubble burst, I would sit down with our harshest critics, and at the end of the meeting they would say, “I’m a huge customer.” You know that when your harshest critics are among your best customers, you can’t be doing that badly.

For the full interview where he discusses his views on branding and his approach to branding see here and here.

Not many people know that amazon.com’s Web services is considered the industry benchmark. Jeff virtually invented cloud computing with his Elastic compute cloud EC2 and storage services S3 services offering giving thousands of developers a scalable infrastructure at perhaps the cheapest price on the planet. To see how he explains the offerings and the candid way he handles all the Q&A, see his lecture that he gave at MIT recently.

His latest innovation — the Kindle a e-book reader priced at $400. The sweetener is that it comes with free wireless broadband which is unprecedented in the industry so as to facilitate instant download. His vision — to have every printed book on earth available for instant download and at a price that cost less than half of what printed books would cost. Compelling and daring — the typical Amazon way. Guess, the Kindle is out to revolutionize our reading habit as much as the ipod did to listening music.

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