Jeff Bezos built Amazon into a $2T company--but what can small businesses learn from a company of this size? In today's episode, Steve Anderson (author of The Bezos Letters) shares how small businesses can take lessons from Amazon and apply them to their growth.

Specifically, Steve shares:

• The difference between customer focus and customer obsession.
• How Jeff Bezos accelerates decisions while mitigating risk.
• The easiest way to build a flywheel of growth for your business.

Mentioned in This Episode:

Download your FREE digital copy of The Bezos Letters: 14 Principles to Grow Your Business Like Amazon.

• Connect with Steve on LinkedIn
• Buy Steve's Book on Amazon: The Bezos Letters

About Steve:

Steve Anderson is an expert in strategic risk and business growth. Drawing on decades of experience in the insurance industry, he wrote The Bezos Letters: 14 Principles to Grow Your Business Like Amazon, which has become a Wall Street Journal, USA Today, and international bestseller. With hundreds of thousands of followers, Steve has been handpicked by LinkedIn as one of the world's most influential thought leaders.

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About Angela

Angela Frank is a fractional CMO with a decade-long track record of generating multimillion-dollar marketing revenue for clients. She is the founder of The Growth Directive, a marketing consultancy helping brands create sustainable marketing programs.

Her new book Your Marketing Ecosystem: How Brands Can Market Less and Sell More helps business owners, founders, and corporate leaders create straightforward and profitable marketing strategies.

Angela is the host of The Growth Pod podcast, where she shares actionable tips to help you build a profitable brand you love.

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Welcome to The Growth Pod. Today on the podcast, we have Steve Anderson, who is an expert in strategic risk and business growth.

Drawing on decades of experience in the insurance industry, he wrote The Bezos Letters, 14 Principles to Grow your business like Amazon, which has become a Wall Street Journal, USA Today and international bestseller. With hundreds of thousands of followers, Steve has been handpicked by LinkedIn as one of the most influential thought leaders.

Steve, welcome to the podcast.

Angela, thank you so much for having me. I look forward to our conversation.

I also look forward to our conversation. I really enjoyed reading the Bezos letters.

And so I'm very excited to share some insights about what we can learn from Amazon, which is what you're going to be sharing today. What small businesses can learn from Jeff Bezos. But first, Amazon is a huge company and it's valued at over a trillion dollars.

Is there something that we can actually learn from Amazon and apply in our businesses, even if we're not making anywhere near the hundreds of billions that Amazon makes?

Well, I think there is.

And where I'll start with answering that question is reminding people, listening, that Bezos started as a small business in his garage on his hands and knees, putting books and packages and driving them to the post office. So Amazon wasn't always what it is today. It certainly has grown.

And that's frankly what really intrigued me as I started digging into this is what were the things that Bezos did? And I think for anybody here, in fact, I hear quite a bit that I don't want to be that size. That's okay.

I think the principles can help you regardless of how big you want to grow. Now, I know probably all of us want to grow. And the principles that I talk about in the book, I think apply regardless of where you are.

Startup, starting out, building, or been around for a while.

Amazing. And you mentioned that there's 14 different principles that we can learn from Jeff Bezos. And you get these from his letters to shareholders.

One of the things that Amazon is really known for is that they put customers first. But one of the things that you talk about in the book is the difference between customer focus and customer obsession.

So why is it important to not only be focused on your customers, but obsessed with your customers? And what does that look like when you start implementing that obsession in a small business?

Really had a whole section where he talked about their focus would be obsessing over customers. And I just was really intrigued, still am, by that word obsess.

It's a different level and frankly has some negative connotations, potentially meaning you're too obsessed.

But I would ask, can you be too obsessed over your customers and really inventing on their behalf, understanding their wants, needs and desires so deeply that you know what will help them maybe more than they know themselves. Now I think that's part of that customer obsession and it's something that helped build Amazon.

It's something that's built into the culture at Amazon and still to this day you see evidence of that single focus on the customers. Now, I would also say there could be some negative to that and certainly Amazon has, you know, pushback from people.

But if you're focused and obsessed over customers, like you want to get packages delivered within hours, not days or week, I mean, that means fulfillment centers have to be fast and efficient. And so there's all kinds of things that are kind of tied into that concept.

Yeah, I think that's so important, especially what you said about knowing your customers so well that you can kind of, you can build for them and create these products and offers that they maybe didn't even realize was the solution to the problem that they were facing.

And so taking this element of obsession and putting this positive spin on it, you know, you're knowing your customers inside and out and you are building for them and anticipating their needs before they're even realizing they have a need. One of the things that I really admire about Jeff Bezos is his ability to make decisions.

And something that you mentioned is that he has two types of decisions. And I'm curious, how can we learn from his two types of decisions and implement his decision making matrix into a small business?

Yeah, that's a great question. And he really actually spends quite a bit of time talking about decision making at Amazon. And the principle is generate high velocity decisions.

So what he talks about is that businesses typically have two types of decisions that they have to make. He calls them type 1 and type 2. Not very creative, but that's what he says. And he uses the analogy of doors.

So type 1 decisions are bet the farm, bet the company decisions. They're big, they're maybe complex, they have long term potential impact, both positive or negative.

And so he says those types of decisions should be made with as much information as possible, should be made slowly and should be made by probably senior leadership or the owner of the business. And they need to take some time the problem is, he says those decisions are few and far between.

At most companies you don't have those kinds of bet the company decisions very often. On the other hand, type 2 decisions are decisions that are, I would call more normal, day to day types of decisions. And he says those are different.

Those types of decisions should be made with at most 70% of the information you wish you had. His phrase, which I think is really intriguing, not 70% of the information, but the 70% of what you would like to have before you made a decision.

And the difference is a two way door versus a one way door. So two way door is we make a decision, we move forward, we go through that door, look on the other side and don't like what we see.

And so we think that those decisions are irreversible, but they're not actually, they're easily reversible. So we can pivot on the decision or we can just say that was a wrong decision, let's walk back through the door.

And he says those kinds of decisions are the most common decisions in companies.

But what happens is as companies grow, and that might be from one employee to 10 employees or 20, I mean it doesn't have to be millions or thousands of employees. As a company grows, they tend to add bureaucracy and layers of decision making.

So now an employee has to go to a supervisor or you know, a department head or somebody else to pitch the idea and then they have to go through the process. And he says all that happens then is that growth slows down because you're not able to adapt and adjust rapidly enough.

And again, a key factor here, he says those decisions should be made by a small group of people who are capable of making that decision. And so it's a faster way to really find out whether the decision is correct or not. Do we have to pivot? What didn't we understand?

And so that's how a company stays on a growth pattern, not becoming stagnant.

I really love the way that that's framed.

There are very few bet the farm type decisions, but those decisions should be made slowly and you know, with the information that you need to make that decision. Whereas the other decisions, most of the decisions you'll make in the day to day as a business owner are these, it's a two way door decisions.

And I think that a lot of get tripped up there. They make these two way door decisions feel like a bet the farm decision.

So I love what you're saying there about the difference between those two and how if you are making a Decision that is the two way door.

You know, you can make that decision or you should make that decision with only 70% of the information that you wish you had to keep the momentum and keep the growth going within your company. I think the other important thing is also making sure that you're not getting so many hands in the pot to make that decision.

Your would it be correct to say pushing that decision to the lowest level that it makes sense in your company instead of pushing decisions all the way up to the top?

Agreed. Yeah. And Amazon has a rule, I'll put it in quotes, it's called two pizza teams.

And so they structure a team and the maximum number in a team is what two large peaches can feed. So that by its nature constricts how many people are part of a decision making process.

And this is where each principle stands on its own, but they all interact with one another. If you're hiring high quality people, then you are trusting their skill and ability to make decisions.

You should let them make decisions, but small teams that are accountable and understanding that if they fail, that's okay. So the first principle I have is encourage successful failure.

And that experimentation and failure are a key part of why Amazon is where it's at today. Because they don't punish employees for failure, they encourage experimentation, which by its very nature means you could fail.

Now let me also just add, Amazon is intolerant of incompetence. So we're not talking about stupid things, you know, we're talking about thoughtful experiments, thinking they'll work and they don't always.

In fact, Amazon has had a lot of things that have been failures. But what comes out of that, what you learn from that is really key.

And again, that's, that's part of that decision making process and it's part of that culture at Amazon that helps them be able to continue to move forward.

Yeah, I love that.

I think that when you are trying to unlock that next stage of growth, Amazon certainly has taken many bets that have paid off, but also a few that haven't. And it's going to be the same for your business. You're going to think things are going to work and they're not.

And instead of, you know, beating yourself up, take it in stride as a learning opportunity. You made the best decision that you had with the information you had at the time and you learned from that.

And while it's maybe not as exciting as wow, we unlocked this next lover like this growth lover and our business is taking off. You learned something that didn't work. And that's almost as valuable because now you are creating that guideline for your future decision making.

Something that I love to share about on this podcast is the power of the Flywheel effect, mostly as it relates to market marketing. But I've seen that the Flywheel is also Amazon's secret growth weapon.

Can you share a little bit more about why that is and how that relates to their business practices, what we can learn from that?

Yes. So the Flywheel concept, or at least how Amazon embraces it, actually originated with Jim Collins in his book Good to Great.

And at the center of that flywheel was growth. And then around the outside were all the things that helped Amazon continue to grow. So that's the concept of the Flywheel.

Typically we think of it if you remember some old pictures of the Industrial revolution and either water power or early electric kind of had this huge big metal wheel that took a lot of effort to get going, but once it got going, it kept going. And that's the concept of the Flywheel.

So for Amazon, what they realized their growth came from having a website that was easy to use, so that attracted more customers. And the more customers they attracted to their website, the more negotiation power they had with manufacturers to lower prices.

So lower prices also brought more customers. And then more customers started talking to others, friends, family about how easy have you heard about this Amazon?

So third party sellers now selling on the Amazon website to bring in more product, help lower prices, bring in more customers. And that just continued the Flywheel, pushing growth that obviously Amazon has continued that.

And he went into more detail with some additional examples of flywheels. And by the way, growth was Amazon's center. That's not always the case and it applies across types of businesses, be they for profit, even nonprofit.

So the two resources there to get a little bit more information about how to implement it in your own business.

I love that. As soon as we wrap the call, I'm going to look up the monograph and good to great is on my downstairs bookshelf.

I'm going to take out chapter eight and reread that. I think that a flywheel, like you said, it's kind of complicated to understand how you can implement it in your business.

But I think by looking at multiple different examples of how people have identified inputs for their own flywheel in their business and then unlocked whatever that center is, be it growth or I'm assuming the center of the flywheel for a nonprofit or a business that wants to remain small could be like their impact or their mission.

But I will tell you one of the examples that continues to stick with me in the monograph was a principal at an elementary school that wanted to increase students test scores. So that was the center, that was the key. And I won't you could read it.

But he talks about how the principal realized in order to do that it wasn't directly to the students, it was hiring higher quality teachers and then the students would be impacted so the scores would increase.

So I like that as a different way to think because you know, businesses, I think we typically think growth and I suspect for many that might be the center but it doesn't necessarily have to be. And for example a luxury brand or luxury company growth and low prices aren't going to be at this necessarily at the center.

So again there's nuances there that are helpful to understand as you're thinking about what is my flywheel.

I love that. Steve, you are a multiple best selling author, you are a top voice on LinkedIn and you have a consulting practice. I'm sure that keeps you very busy.

But I'd love to know what's next for you. What are you working on?

So I'm actually almost finished with actually updating the book. So the book came out a few years ago. Numbers and some things have changed. So we'll be updating the book.

I'm not sure yet if it'll be a second edition because there are some technical requirements to call it a second edition in the publishing industry. But it will be refreshed. I get at a Minimum. So that's what I'm working on.

And then I hesitate to say this, but I have a germ of an idea for another book. So we'll see where that goes.

Well, I love that. If anybody is listening. Well, first of all, we've only scratched the surface on the 14 principles that Steve highlights in the book.

So first of all, go get the book. Wait for it to be updated or get it now. It's great.

I've read it and reread it and I think that there are so many takeaways for businesses of any size in the book.

But if we're looking to keep up and see if this germ of an idea manifests into a book or we just want to keep up with you online, where's the best place for that?

My primary social platform is LinkedIn and so obviously Top Voice. And so I do. I'm pretty active there. So Steve Anderson Insurance. That's my kind of career.

Steve Anderson Bezos, you should be able to find me, connect with me, let me know you listened and I'll be glad to connect with you. And I also publish a lot there. The book website is thebazosletters.com and there's some additional information there also.

And Angela, let me make an offer to your listeners and I would love to give them a copy of the book.

Okay.

Yeah, I will provide you. There'll be a link in the show notes where they can download a copy, a digital copy of the book.

So Kindle primarily to be able to read the book themselves. And all I ask is that if you read the book, leave an honest review on Amazon. Those reviews really do help.

I love that the link for everything you mentioned will be in the description and that free book offer will be at the top. So if you're listening and your curiosity was piqued and you want to learn more, that will be there for you.

Steve, thank you so much for joining us today. I can already feel the wheels turning in my head. I got so much out of our conversation and I greatly appreciate it.

Well, thank you. I appreciate you having me.

Thank you so much for listening to this episode of the Growth Pod. I look forward to seeing you in the next one.