CHAPTER EIGHT
Culture of Innovation
The younger man lifted his eyebrows and nodded, “Sure, I know how a flywheel works.”
The old man continued. “The Four Pillars of Amazon accelerate each other to create a sort of flywheel that spins faster and faster with every innovation, every optimization and every movement toward greater customer centricity. But you’ve got to remain agile or you won’t be able to keep it going.”
“What keeps companies from being agile?”
“Bureaucracy. Arrogance. Fear of making a mistake. If even one of those creeps in, you no longer have corporate agility.”
The younger man said, “I read that Bezos paid Jim Collins to participate in Amazon’s 2001 executive retreat just before his book, Good to Great, was published. Collins told the Amazon team, ‘Picture a huge, heavy flywheel — a big metal disk about 30 feet in diameter and one foot thick, mounted horizontally on an axle. Your job is to get that flywheel spinning and keep it going as fast as possible. It’s hard at first, but if you don’t give up, pretty soon you’ll have that flywheel going faster and faster, even though you’re pushing no harder than you were in the beginning. Every time you touch it, you’re building on all your earlier efforts. The momentum of a flywheel is a wonder to behold.'”
The old man said, “An arrogant person would never have asked for advice in front of his team. Bezos is focused and intense, but he’s never been arrogant.”
“As Collins was talking about the flywheel, Bezos said, ‘Lower prices lead to more customer visits. More customer visits increase the volume of sales and attract more commission-paying third-party sellers. This allows us to get more out of our fixed costs, like the fulfillment centers and the servers that run the website. This greater efficiency enables us to lower prices even further, which leads to more customer visits…'”
“Jeff Bezos grabbed hold of that flywheel and he’s been slapping it faster and faster ever since.”
“It seems so simple,” said the younger man.
“Simple, but not easy,” replied the old one. “Sunshine, do you know what I think is Jeff Bezos’ greatest innovation?”
The younger man turned his palms upward.
“Bezos insists that every idea be presented in writing in a document of very few pages. He says, ‘When you have to write your ideas out in complete sentences, complete paragraphs, it forces you to think with deeper clarity.'”
“You think that’s an innovation?” asked the younger man. “That sounds completely retro to me.”
“Have I ever told you about my friend, Don Kuhl?”
“I’ve heard you mention him. I think I even met him once. He’s the behavior-change guy, right?”
“Yeah. Don’s big into evidence-based research. Some of his people even wrote the protocols used by psychiatrists when they admit patients into the hospital.”
“In other words he’s not a philosopher, he’s a science guy.”
“Badda-bing. Anyway, Don invented a thing called interactive journaling that has been proven to be very effective in the rehabilitation of addicts and criminals. When it comes to behavior change, there’s nothing like it.”
“How does it work?”
“Basically, people in jails and prisons and rehab centers are given a journal containing a few easy-to-agree-with facts followed by interesting questions followed by blank lines where they can write their responses to the questions. These people are told they don’t have to turn these journals in. They don’t even have to fill it out if they don’t want to.”
“Do most people fill it out?”
“Yep. There’s not much else to do when you’re locked up.”
“And they really don’t have to turn them in?”
“They really don’t.”
“Then how do you know it’s working?”
“Millions of people have voluntarily turned in their journals because they wanted someone to read what they wrote. It’s not unusual for people to have a life-changing epiphany during the time they’re contemplating their answers to the questions in the journal.”
“Really?”
“Your mind goes to a different place when you’re writing than it does when you’re talking. There’s a solitude in writing. A level of introspection we don’t experience when we’re speaking.”
“So explaining an idea in writing really is the best way to refine it?”
“Sunshine, have you ever heard of Professor Steven Pinker?”
“Can’t say I have.”
“TIME magazine named him in their list of ‘The 100 Most Influential People in the World.'”
“Badda-boom!”
“Pinker was the chair of the department of Brain and Cognitive Science at MIT for a number of years, then he was hired away by Harvard to head up that same department for them. He’s written a bunch of books you might find interesting.”
The younger man opened his browser to Amazon.com. “Tell me what they are.”
“Start with The Language Instinct.”
“Got it. Steven Pinker. What else?”
“His newest book is about writing. It’s called The Sense of Style.”
“The Sense of Style: The Thinking Person’s Guide to Writing in the 21st Century. Got it. Anything else?”
“That’s enough for now,” said the old man.
The younger man looked down at his computer screen. A minute later he said, “Did you know that at any given moment since 2004, Amazon has had at least 200 experiments running concurrently?”
“Yes, Sunshine, I did know that.”
“This is Bezos: ‘One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.'”
The old man poured the other half of Sunshine’s coffee into his own cup while the younger man continued to read. “Bezos says, ‘If you double the number of experiments you do per year you’re going to double your inventiveness… Some decisions are consequential and irreversible or nearly irreversible—one-way doors—and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that—they are changeable, reversible—they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high-judgment individuals or small groups. As organizations get larger, there seems to be a tendency to use the heavyweight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.'”
The old man said, “It takes courage to have a Culture of Innovation.”
Without looking up, the younger man continued reading out loud, “Timothy B. Lee writes, ‘Jeff Bezos has been fanatical about letting teams operate independently of one another. It doesn’t matter what technology teams use at Amazon,’ one of the company’s former engineers wrote in 2011. ‘Bezos has explicitly discouraged the kind of standardization you see at companies like Google and Apple, encouraging teams to operate independently using whatever technology makes the most sense… Amazon is a modular organization with a minimum of company-wide policies. That has made Amazon’s internal culture somewhat chaotic. An engineer on an Amazon project can’t easily jump to another project the way they can at Google or Apple. Friction between teams with different cultures may explain why some people find Amazon a stressful place to work. But this chaotic culture is also hospitable to innovation. A new team can use the tools and processes that make the most sense instead of feeling pressure to conform to company-wide standards.”
“Who did you say wrote that?
“Timothy B. Lee at Vox.com. December 28, 2016.”
“What else does he say?”
The younger man began to read again, “A key factor in making this work is that experiments start small and grow over time… Amazon doesn’t spend too much time on internal testing. They prioritize launching early over everything else. Launching early with a ‘minimum viable product’ allows Amazon to learn as quickly as possible whether an idea that looks good on paper is actually a good idea in the real world.”
“In other words, Ready. Fire. Aim.”
The younger man said, “In the Navy, that’s called ‘finding your range.'”
“In the world of business, it’s called Corporate Agility in a Culture of Innovation.”
“Another innovative slap on the flywheel of Amazon happened in 2008,” said the younger man.”
“Oh?”
“Bezos said, ‘I think we’ve all experienced the frustration that sometimes occurs when you try to get a new toy or electronics product out of its package,’ and he announced Amazon’s Frustration-Free Packaging initiative. In addition to making packages easier to open, a major goal of the initiative was to be environmentally friendly by using less packaging material.”
“We can also assume that less packaging material costs less money,” said the old man.
“Which lets Amazon reduce prices even further.”
“Which accelerates sales,” said the old man.
“And that flywheel just spins faster and faster,” said the younger man. “In 2016, Amazon became the fastest company ever to reach $100 billion in annual sales.” After a moment’s pause, he continued, “Two billion dollars a week.”
“Two billion a week,” smiled the old man.
© 2017, Roy H. Williams - www.mondaymorningmemo.com
Jeffrey and Bryan Eisenberg - buyerlegends.com