Jeff Bezos’s legacy of innovation
With a month and a half under its belt, 2021 has already brought along some monumental events. The USA inaugurated its first woman vice president, Elon Musk became the richest man in the world, Facebook and Twitter banned Donald Trump, and Covid vaccines began rolling out. But the most surprising, and some would even argue, most significant event of 2021 to date, is the stepping down of Jeff Bezos as Amazon CEO. Earlier this month, Bezos announced he will be leaving his post later this year, and will be replaced by Andy Jassy, currently the CEO of Amazon’s cloud Web Services. Bezos will still be present in the company, transitioning to executive chairman of the board.
This marks the end of an era. Bezos launched Amazon from his garage back in 1994, naming it “Amazon” because it was “exotic and different”. The online store began by selling books, and within two months sales were up to $20,000 a week. The company’s soaring success led to its IPO that took place in 1997, at $18 per share. Today the share price is $3277.
Bezos was a trailblazer of new ideas and concepts, single-handedly leading his garage-born company to become a global success story in only a couple of years. On the path to success, he also established the fundamentals for online retail, with innovative thinking leading every step of the way.
Since the launch of Amazon, innovation and creativity became the leading pillars in the business and tech world, and today they are not only important for company growth, but for actual survival. In our ever-changing world, where companies rise and fall on a daily basis, managers can learn a lot from the mighty giant that is Amazon, and its thought-leading, soon-to-be-former CEO.
Leaving a trail of innovation behind
Bezos began his career on Wall Street, and quit to start Amazon, in the very (very) early days of e-commerce. After the fast profits of his online bookstore, he began his customer-centric thinking, and sent out an email to 1000 random customers asking ‘‘Besides the things we sell today, what would you like to see us sell?’”. The answers he received were all pretty lengthy, but they all had one thing in common: they all wanted Amazon to sell whatever it was they were looking for at that exact moment, with one customer asking for windshield wiper blades, and another for plastic cups for a party (sustainability was not as essential).
“I thought to myself, ‘We can sell anything this way,’” Bezos said at an Economic Club of Washington talk back in 2018. And thus, began the crazy journey of Amazon, with Bezos maintaining an innovative, thought-provoking approach, as the company continued growing. Amazon is responsible for some of the most — — practices in retail today, with the customer-centric approach leading the way. From powerful recommendation algorithms that tell us what to purchase, through customer ratings that reveal preferred products, to the fact that anyone can open a virtual storefront from their own garage, anywhere in the world.
Alongside its innovative practices, the company is also a pioneer in fostering a culture of innovation for its millions (!!) of employees, with ways and practices that could lead other business owners in inserting innovation to their ventures.
According to the company’s employees, or “Amazonians”, innovation takes place as a part of everyday work. As the company’s customer-centric approach leads every step of operations, there are a few key ways that employees use;
A passion for invention is a key factor in everyday proceedings, and employees are encouraged to think outside of the box in order to come up with new ways to provide the best services for their customers. This is encouraged through the PR/FAQ document (Press Release / Frequently Asked Questions); The employee outlines their vision for a new product through a theoretical press release, and writes a FAQ that explains the customer benefits and answers potential customer questions. Then, a fellow team evaluates the idea, leading some to, initial funding, development, market deployment. Amazon Go, Prime, and Alexa were launched through PR/FAQs.
The company’s long-term vision and focus is another important factor, and to that end, Amazon has never paid its shareholders a dividend, but instead invests all the profits into existing products and bold new bets. This reality encourages employees to always stay on their feet in terms of new products, and also fosters failure as an option, and even a somewhat positive outcome of their boldness. As long as it’s ok to fail, people are not afraid to suggest the craziest, most out-of-the-box inventions.
Another important factor is the “two-pizza rule” stating that every internal team should be small enough that it can be fed with two pizzas. The goal wasn’t to cut back on catering expenses, but to encourage a sense of responsibility and entrepreneurship while saving time on managing timetables.
These practices are some of the reasons why Amazon went from $511,000 in revenues in 1995, to $386.064bn, a 37.62% increase from 2019. “Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely recognized as one of the most successful companies in the world”, Bezos wrote in his goodbye letter to employees earlier this month. “How did that happen? Invention. The invention is the root of our success. We’ve done crazy things together, and then made them normal…Keep inventing, and don’t despair when at first the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1”.
In 1995, Amazon had one million products for sale, and they were all books. Now there are more than 350 million products, — and over 2000 of those products are windshield wiper blades. If that’s no innovation at its finest, I don’t know what is.
