‘If you want to get to the truth about what makes us different, it’s this. We are genuinely customer-centric, we are genuinely long-term-oriented and we genuinely like to invent. Most companies are not those things.’
Jeff Bezos, 20136
Amazon is clearly not the first retailer in the world to obsess over its customers. In fact, one might argue that inspiration was taken from the late Sam Walton, founder of Walmart, who genuinely embraced the ‘customer is king’ mantra and once famously said, ‘There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.’7
What sets Amazon apart, however, is their relentless dissatisfaction with the status quo. They are continuously looking for better ways of serving their customers and making the shopping experience even more convenient. When retailers talk of innovation, they tend to mean things like pop-up stores and digital displays. With Amazon, it’s underwater warehouses and robotic postmen.
In his 2016 letter to shareholders, Jeff Bezos wrote:
There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. 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.
Bezos makes the point that no one ever asked Amazon to create the Prime membership programme ‘but it sure turns out they wanted it.’8 Amazon has the solution before the customer need even exists.
In 2017, the retailer spent over $20 billion on research and development – more than any other US company.9 Yet despite Amazon’s deep pockets for R&D, the company considers frugality to be a key leadership principle as it helps to breed resourcefulness, self-sufficiency and invention.
Frugality is a common trait among the world’s most successful retailers. In the early days, Amazon famously used doors as desks. Walmart got its very name because it only had seven letters, which was shorter than the alternative suggestions and therefore cheaper to install and light the exterior neon sign. Meanwhile, senior executives at Spain’s largest retailer Mercadona are thought to keep a one-euro-cent coin in their pockets to remind them that they are working to cut costs for the shopper.10
Similarly, Amazon will only spend money when there’s a clear benefit to the customer. ‘Jeff would never dream of changing a pixel, a button, a place on the checkout or anything on that website unless you articulated to Jeff what it was going to do to the customer’, said Brian McBride, ASOS Chairman and former Amazon UK boss, speaking at a retail technology conference in 2018. ‘Unless there was something in it for the customer, why do it?’11
So how does Amazon create a culture that thrives on agility? How do they innovate at scale?
One example is the ‘working backwards’ approach. Amazon has always been quite a vocal critic of PowerPoint slides (easy for the presenter, difficult for the audience). Instead, meetings are structured around six-page narratives which are silently read at the start of each meeting. The memos, according to Bezos, force a deeper clarity, particularly when it comes to new product development. They’re designed to read as a mock press release announcing the finished product while conveying the benefits to the customer in layman’s terms – or as Ian McAllister, currently Director of Alexa International, calls it, ‘Oprah-speak’, not ‘Geek-speak’.