Amazon Working Backwards Method

The Amazon Working Backwards Method is a product development methodology that advocates building a product based on customer needs. The Amazon Working Backwards Method gained traction after notable Amazon employee Ian McAllister shared the company’s product development approach on Quora. McAllister noted that the method seeks “to work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.”

Contents

Understanding the Amazon Working Backwards Method
The Amazon Working Backwards Method press release
The benefits of the Amazon Working Backwards Method
Key takeaways
Connected Business Concepts
- Related

Understanding the Amazon Working Backwards Method

Customer obsession goes beyond quantitative and qualitative data about customers, and it moves around customers’ feedback to gather valuable insights. Those insights start with the entrepreneur’s wandering process, driven by hunch, gut, intuition, curiosity, and a builder mindset. The product discovery moves around a building, reworking, experimenting, and iterating loop.

Amazon CEO Jeff Bezos later admitted that while the method was resource intensive, it saved a lot of work later in the product development process. “The Working Backwards Process is not designed to be easy, it is designed to save a huge amount of work on the backend, and to make sure we are building the right thing”, said Bezos.

A fundamental principle of Amazon’s method is that the product team must imagine the product is ready to ship. This entails the drafting an imaginary press release. In the next section, we will discuss this core component of Amazon’s method in more detail.

The Amazon Working Backwards Method press release

Amazon gives the product team flexibility to draft the press release in any manner they see fit.

However, McAllister noted that it should occupy a page and a half or less and be broken down into short paragraphs of three to four sentences.

It must also contain certain elements, including a:

Heading – containing the product name in a form that will resonate with the customer.
Sub-heading – concisely describing the intended customer or target audience in no more than a sentence.
Summary – or a brief product summary focusing on the benefits the product will deliver to the customer. Product teams should assume that the reader will focus most of their attention here, so the summary must be high quality.
Problem – identifying a problem and then describing how the product in question offers a solution.
Solution – how does the product solve the problem in practice? The language must be relatable and not use technical jargon.
Quote – include an inspirational quote from a company representative explaining the reasons for developing the product. The company should also detail what they hope the customer will gain by using the product. Is it extra time or money? Perhaps it is related to confidence or an increased feeling of autonomy?
Call to action – it is important to direct the customer to take advantage of the new product.
Testimonial – since the product has not been created yet, the team must create a hypothetical testimonial. Focusing on the benefits of the product is recommended first and foremost.
FAQ – or a similar addendum answering common questions or concerns. This feature is optional.

The benefits of the Amazon Working Backwards Method

Amazon’s method helps decision makers become more emotionally intelligent. Product teams often become emotionally attached to unviable ideas. Without proper due diligence, these teams find it difficult to let go of ideas and spend vast amounts of time and money trying to make them work.

By drafting a mock press release, the team is forced to flesh out and then refine an idea in detail. This makes idea legitimacy more apparent because teams are forced to clarify whether their intentions are aligned with customer needs. With a more objective approach, decisions are based on thoughtful and considered research and analysis.

If a product does progress to development, a well-crafted press release helps the product team stay on track and avoid scope creep.

Key takeaways

The Amazon Working Backwards Method is a product development framework where teams create hypothetical products based on real customer needs.
Central to The Amazon Working Backwards Method is the creation of a press release announcing the release of the product. The press release must demonstrate that the company has a sound grasp of its target audience and their particular needs, among other things.
The Amazon Working Backwards Method enhances the emotional intelligence of product teams. Crafting a press release removes emotional attachment from product design and avoids low viability ideas being pursued indefinitely.

Connected Business Concepts

The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.

Amazon has a diversified business model. Amazon’s primary revenue streams comprise its e-commerce platform, made of Amazon labeled products and Amazon third-party stores. In addition to that, Amazon makes money via third-party seller services (like fulfilled by Amazon), advertising on its platform, AWS cloud platform, and Prime membership.

In the letter to shareholders in 2016, Jeff Bezos addressed a topic he had been thinking quite profoundly in the last decades as he led Amazon: Day 1. As Jeff Bezos put it “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

The cash conversion cycle (CCC) is a metric that shows how long it takes for an organization to convert its resources into cash. In short, this metric shows how many days it takes to sell an item, get paid, and pay suppliers. When the CCC is negative, it means a company is generating short-term liquidity.