In the letter to shareholders for 2016, Jeff Bezos addressed an important topic. Something he had been thinking quite profoundly in the last two decades: Day 1.
What is that and why is that so important?
Jeff Bezos starts the letter by saying:
“Jeff, what does Day 2 look like?”
That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.
I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?
Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.
Let's dive into each of those points, which made Jeff Bezos convinced that Day 1 is all that is about to build great businesses that stand the passing of time and shape the future.
True Customer Obsession
There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.
In fact, according to Jeff Bezos customers, even when they report being happy; in reality, they're looking for something better. He mentions how customers didn't know they wanted a prime membership until he created it.
As he specifies:
Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.
As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous, subtle, and very Day 2.
In short, if you focus on the process you might end up losing sight of the outcome. The consequence is to confuse the process for the outcome itself.
In fact, as Jeff Bezos continues:
The process is not the thing. It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second.
Embrace External Trends
The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.
In fact, according to Jeff Bezos, that is not hard to find large trends. What it's hard - especially for large organizations - is to embrace those trends.
He mentions how Amazon has made of AI and machine learning an essential part of the company's vision. He also suggests how this strategy is taking shape in a few products:
Amazon Lex (what’s inside Alexa), Amazon Polly, and Amazon Rekognition remove the heavy lifting from natural language understanding, speech generation, and image analysis. They can be accessed with simple API calls – no machine learning expertise required. Watch this space. Much more to come.
High-Velocity Decision Making
Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations. The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business – plus a high-velocity decision making environment is more fun too.
How to make the best of a high-velocity decision-making process?
First, never use a one-size-fits-all decision-making process
Second, most decisions should probably be made with somewhere around 70% of the information you wish you had. (if you wait for 90% you're too slow)
Third, use the phrase “disagree and commit.” (not everyone might agree, but when a decision is taken over a direction, everyone should move with decision toward it!)
Fourth, recognize true misalignment issues early and escalate them immediately.
In short, for many entrepreneurs, building a successful business is about creating great products. For others, it's all about designing sustainable business models. For Jeff Bezos, it's all about Day 1!
You can read the whole letter here.