Jeff Bezos made decisions at Amazon based on 5 key principles, according to a former board member

November 26, 2021

Jeff Bezos made decisions at Amazon based on 5 key principles, according to a former board member

A new book reveals the rules Amazon founder Jeff Bezos used to make the company a success.
Tom Alberg, an ex-Amazon board member, wrote the book, which detailed Bezos' "Day 1" philosophy.
It also discussed how Bezos overcame the company's early struggle to attract investment.

Jeff Bezos led Amazon to mammoth success by using a particular set of principles when he needed to make important decisions for the company. The principles were discussed in a new book, "Flywheels: How Cities Are Creating Their Own Futures," by Tom Alberg, a former board member at Amazon.

Alberg – now a managing director of Madrona Venture Group, a Seattle-based venture firm he founded – was an early investor in Amazon.

Back in 2019, Alberg said no one wanted to invest in the company's first funding round because they expected what was then a fledgling online books startup to be "murdered" by Barnes & Noble, Insider's Ashley Stewart reported.

Bezos ultimately convinced Alberg to invest because he had a thorough, focused business plan and strong initial results, Alberg wrote in the book.

Now that it's a trillion-dollar company, Alberg said he's often asked: "Why is Amazon so successful?"

Drawing on his experience of watching the tech mogul make decisions, Alberg set out to explain the principles Bezos stuck to at work.

"The most important is customer obsession," Alberg wrote in the book. He added that, according to Bezos, too many companies focus on their competitors as opposed to their customers.

As Bezos explained to a Congressional Committee, "customers are always beautifully, wonderfully dissatisfied. A constant desire to delight customers drives us to constantly invent on their behalf," Alberg wrote. Bezos sometimes made decisions that could harm Amazon's bottom line but benefit the customer, he added.

The second principle is "constant invention and innovation." Per Alberg, invention is closely related to customer satisfaction. "Customer satisfaction and innovation are powerful touchstones when making decisions," he wrote.

Making decisions is much easier when you ask "what is the best decision for the customer?" and "is there a way to invent our way to a solution?" Alberg wrote.

The third principle championed by Bezos is operational excellence, according to Alberg. Some examples include "two-pizza teams," one-click shopping, single-threaded leaders, and working backward.

The "two-pizza rule" is one of Bezos' more creative strategies, which is aimed at not losing an entire day to unnecessary meetings. It's potentially a key to the founder's success, Insider's Áine Cain and Shana Lebowitz reported.

So, how does it work? The more people you pack into the meeting, the less productive the meeting will likely be. The idea is that most people will end up agreeing with each other rather than voicing their own opinions and ideas. The solution? Never have a meeting where two pizzas couldn't feed the entire group.

Thinking long-term underscores the fourth principle for Bezos' decision-making process at Amazon, according to Alberg. That can range from launching a new business or investing in new technologies. One example Alberg notes is Bezos' early adoption of AI.

"When businesses were just beginning to recognize the possibilities of machine learning and AI, Jeff told the board that he intended to use AI in every part of the business," he wrote. Bezos then began to hire AI experts and train his existing engineers to use it.

Amazon subsequently created and made AI tools available to customers on Amazon Web Services — one of the company's subsidiaries — that they could use in their business to even compete against Amazon, according to Alberg.

The fifth principle, and perhaps the overriding one, is his "abiding optimism of the future and how we are only in Day 1," Alberg wrote. Bezos' "Day 1" philosophy is based on the broader idea that although the internet and Amazon may seem mature and in successive phases to many, Bezos believes, we are still at the beginning.

"It is his ultimate expression of optimism about what the future will bring," Alberg wrote.

These principles are "no secret," Alberg added. "But you have to live by them all of the time, and most businesses are unwilling or unable to do so."

Read the original article on Business Insider