Business strategist, leadership expert, and former Amazon executive John Rossman explains some of the principles essential to how Amazon became the consumer and media giant they are today, including customer obsession, keeping a broad vision, keeping an eye on OKR's (objectives and key results), setting the right incentives to create movement, making sure leaders are never done learning, and always taking the next best available action.

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This episode is presented by Dr. Marc Sniukas at MakeBetterStrategy.com

Make Better Strategy

This episode is presented by Dr. Marc Sniukas at MakeBetterStrategy.com

Make Better Strategy

What are we talking about today?

Your whole life history in 30 minutes or less?

That won't be interesting for anybody.

Really great to meet you today. But I feel like I already know you since about half our

household budget goes to Amazon Marketplace, which of course, you were the executive responsible for

launching and scaling that.

Yeah, some people see that as a real feature. Some people see that as a bug. So yes.

I'm so interested in your story, I know you started off at at Jasmine High School, I'm a

real fan of Jesuit education.

The real quality that I got out of that was they just had high expectations for me,

right. And I had never been in an environment where people had high expectations for me, in

general, like, I would say, the environment I had come from people kind of had low expectations. And

so wow, you know, start thinking about making a bigger impact. I went to Oregon State was lucky to

get a degree in Industrial Engineering joined a consulting firm, but I think one of the big pivot

points was joining the Amazon. So I joined Amazon in early 2002. I was there for about four years, I

launched the marketplace business, which is third party selling@amazon.com. And what I learned from

there just completely reformed me as a problem solver as a communicator, as a leader that helps

companies and leaders reimagine you know what their business should be in the digital era. And

then, you know, writing the books that I've written, the Amazon way, been the one that we've

done three editions of, you know, that combination of taking the learnings from Amazon and sharing

them with others, that's really become, you know, my mission, which is helping companies win and

compete in the digital era. And I use Amazon and a bunch of other reference points to give people not

monumental shifts that they have to do, but little nudges little things that we can do to help us

take advantage of the situation we're in and to learn, like what it means to compete in the

digital era.

You know, one thing that can be a bit daunting is when we have a company that is not the

size of Amazon to think how in the world could ever get some lessons from a company that large

and that successful? What What would you say to say a small business owner would be one real key

finding for somebody that is at a very competitive marketplace and try to figure it figure their way

out.

I'm gonna answer that bigger than just one thing. So first of all, you know, what

everybody remembers is kind of about Amazon is like, you know, where they are today, the last 10

years where it's just been exponential growth in the stock has reflected that in everything. Amazon

wasn't always the size, right. And there was about a 10 year period where stock was flat, a lot of

doubters and naysayers relative to their business model, and they earned everything that they got

these principles came from that era. And so these are not big company principles, these can be

applied a lot of them as an individual, as a team as an enterprise. And it has nothing to do with

either the industry you're in, or the size of the teams. But you know, there's there's no 16

leadership principles at Amazon. The first is probably the most famous, it's about customer

obsession. And it reads, leaders start with the customer and work backwards, they work vigorously

to earn and keep customer trust. And while they pay attention to competitors, they obsess about

customers. Now, you can't have just customer obsession, but leading with customer insights,

being curious about your customer bigger and broader than just maybe how you intersect with

them today, how you serve them today, your products or services really sets up so many great

things for a business and for a team. And so if there's one thing if I if I'm forced to deliver

one thing from Amazon, the one thing would be be extremely curious about your customers, the jobs

they're doing the frustrations they have like what happens on a bad day, you know, everybody who

tends to when you're in business, you kind of focus on like, well, how things work in general

right now not be curious about what happens when things don't work. In general, when they don't

work and be a problem solver, be a builder to build better approaches for helping your customers

in those moments. And that's the essence of everything from Amazon is start with the customer

and work backwards.

Which any size business or organization that's involved with people can do exactly,

because we can get into their bad days we can figure out ways to make those days not so bad. And

that's when they want to work with us for a long period of time.

And again, think about a broad customer experience, not just how your product or

service is being used. You want I understand that intently. But understand upstream and downstream

to it will give you better insight into your product and service. And you'll probably gain

ideas of how to serve them bigger and broader than just what you do. And that's really been, you

know, if you think about when I was at Amazon 90% of the business was books, music video, right?

Think about where Amazon is today, the conglomerate business that Amazon has today. And

it was really that mindset of exploring different types of customers and the broad customer

experience, not just how you're working with them today, that's really been the catalyst that has

taken them on to a journey that there was no plan, there was no vision, nobody predicted that Amazon

would be the world's biggest cloud technology company in the world. Nobody predicted that Amazon

would be the most dynamic and innovative logistics company in the world. Like nobody saw those things

coming. It was because they explored customer experiences.

Customer obsession doesn't have a time stamp on it.

No, I think that patience element, understanding what to be patient for and what to

be impatient for is a real business superpower for leaders and Amazon. I think one of their real

superpowers is the ability to be patient in the right way uncertain investments. Bezos has been

quoted several times of saying, just because on some investments, he can be patient for seven to

eight years before payback versus his competitors, which have 18 to 36 months, it allows him to

compete completely differently, he can do things that his competitors can't follow. So that

patients can be a real if you think long term can be a real defining feature of how you create

legacy and how you compete and enduring business that competes for the long term.

John, even though your career is full of stars on it, I know that you've had some brick

walls along the way. What kind of strategies would you share with us regarding when something

unexpected, completely out of the blue obstacle, just derails everything, knocks you flat on your

butt?

Well, understand what's within your control. You know, the 14 leadership principles at

Amazon is deliver results. And what it talks about is that leaders deliver hard results despite

setbacks despite dependencies. And that we focus on the the controllable inputs more than we focus

on the uncontrollable outputs. And so in life in business, especially if you're doing hard,

unpredictable, innovative things, you need to have a plan, but things never go to plan, right? You

better love setbacks, especially if you're going to be an innovator and a game changer. Just always

be thinking about what's your next best available step, right? Understand your controllable inputs

versus, you know, kind of the outputs, you want the goals that you have, but realizing, you know,

there's a lot of factors that go on outside of your control relative to achieving those goals.

Just understand your next best available step.

Yeah, I'm glad you blew that up for us. Because when you look at the words, deliver

results, it seems to be outcome based on what you're saying is if we look at what we control,

which are the inputs, ultimately, the outcomes are going to happen the way we want them to provide,

we're doing the inputs correctly, and with the right focus.

And you do want those to have those outputs, as you talked about, in fact, one of the

leadership principles is about thinking big and encourages leaders to create inspiring visions for

you know what a product or a service would have business could be. But that's why you need the

complement of Yes, but break it down to the small controllable steps that you're going to take this

year, this quarter, this month, this week today, in order to get there. And that's how you build

towards those things. And sometimes the outputs come or the outcomes come into different flavors.

Sometimes they take longer, sometimes you get outcomes that you never intended or saw. But that

balancing factor of thinking long term thinking big, but bringing it back to like, a manageable

timeframe, and what are we in control of what can we do next? That's that's where, you know, action

matters. And and you know, where you're in full control.

I like that, you know, I think that vision is kind of the fuel in the tank. And what

we do with our hands on the steering wheel and the shifter and the turn signals are the control was

it really cut that fuel to get someplace we want it to go?

Yeah, there's a good business planning tool goal setting tool that's that's

pretty popular these days. That is in line with this notion we're talking about it's called OKRs

objectives and key results. And it's essentially says you set your goals, your objectives, which

could be a year long or two year long objectives, but then you create key results that are probably

no more than 90 days, right? And well, those these are the key things we're going Gonna get done over

the next 30 to 90 days that we believe will lead to this objective. And so it just helps create

this kind of zoom out zoom in, you know, kind of mindset that we're talking about.

When I started out in sales at the age of 18. They said, You want to have a great summer

you want to do really well, but the main thing you'd focus on is the next two hours.

Yeah, I've got two boys that have just graduated college. And, you know, one of them

asked me, like, what's one thing you do that you think you think I should do? And I said, on Sunday

nights, I sit down, and I write my to do list for the week, you know, that's, that's the timeframe

that helps me out is thinking about the big things I need to get done this week. And I actually think

forward to the next week, because so many things are like setting up meetings, and you typically

need two weeks to kind of get a meeting set up and everything. And that that, you know, kind of to do

list orientation is, you know, a real healthy little habit.

Right? Would you say that's one of the ways that you keep yourself in a strong motivated

mode, instead of just going into the coasting mode, and sitting back and enjoying all the

accolades?

I love problem solving, like I love helping a team see a path where today they don't

see a path, that's that's ultimately, it's, it's kind of my superpower, it's what I really enjoy

doing. And, and seeing a team achieve success and see potential where they were kind of stuck

before. That's what really is the fuel in my tank. These are just kind of some of the tools that help

keep me prioritize relative to to achieving that. And I love sharing it, I love writing the books

that I do. And that helps me think better, and helps pass it on.

So problem solving is a really cool thing to talk about for a second because you have

the ability to take a perspective that maybe person too close to can't really see what other

kinds of insights would you put to people that are faced with problems? In general, I guess, what's

the mindset you would adopt toward what people would say as a problem instead of throwing their

hands up in the air?

Well, there's lots of little tricks, right? Problem, reframing can be a really powerful

tool. And reframing just basically says, like, restate the situation, your problem in different

terms. And that can help you see things from a different perspective, I think, again,

understanding kind of like what you're in control of, versus what you're not in control of is a

helpful thing relative to problem solving. And so many times, especially in business, one aspect

that doesn't get explored enough is incentives, creating the right incentive systems, especially

when you need to get people you know, in your ecosystem moving to help accomplish something,

thinking through incentive systems is a is a real interesting way of exploring, like, oh, a

different way of creating action, right. And so that's where, like, systems dynamic is a powerful

framework and study to use, because it helps show the forces between different organizations

capabilities, factors that are in play. And so you start to see the relativity and how these things

work together. And you'll spot opportunities. Amazon has a famous version of kind of their

system dynamic. It's the Amazon flywheel, and it basically was a simple articulation of their

business strategy. And so it allowed us to state our business strategy, both to our team and to the

market to the investors and so that everybody could get it. It was a simple but not simplistic

point of view of communicating what we were trying to get done, by adding selection by adding sellers

to create growth, which created a great customer experience, which spun the flywheel that's a

system dynamic mindset at work. And some of those tools for some of the more complex and dynamic

situations can be really helpful.

And flywheels are all based on momentum and keeping that momentum strong.

Partly, it's like, what's the most leverage position where we insert energy that can

be resources, time, effort, energy to help create that moment? Because oftentimes, like, Oh, we

don't, we're not getting that momentum, or we need to create that momentum or accelerate that

momentum. And by having an understanding of that flywheel, then you understand well, that's my

point of leverage. If I put a little bit of pressure there. The theory is, the hypothesis is,

is that that will create momentum that we get to take advantage of.

You spoke about an incentive systems job. What about incentives that don't involve

cash?

There's all sorts of incentive systems that don't involve cash. And you know, so

when I think about like the Amazon market place of business, we had to think through incentives of,

well how other than just sales, how do we create incentives that help our sellers do that? right

thing on behalf of our customers, which was a key part of the flywheel. So we, we developed a set of

tools and a set of measures, KPIs, key performance indicators, metrics, that gave the sellers in a

very scalable way, meaning we didn't have to put a lot of ongoing effort to it. We built tools and

technologies that helped them do the right thing. And then some incentives to motivate them to do

that, for example, if they started slipping on in stock percentages, or on time delivery

percentages, guess what their search results started to dwindle down a little bit, you know, in

everything. So you could say, well, that's a cash incentive. It's kind of an indirect cash

incentive. But it's not a direct penalty. It's a subtle, like you do the right thing, we're going

to help you add a little bit more you don't treat our customers well, we're going to penalize you a

little bit.

So that's an example using the right kind of leverage all focus on what's best for the

customer, that obsession with the customer experience, right? You know, a lot of our

listeners are in pretty good pathways in their lives right now. Things are joyful, and they're

feeling good about things, got some others that are kind of discouraged, and they're kind of down,

what advice would you give to somebody that has just hit a point where they don't know where to

turn, they don't know what to do next, I guess seeking words of encouragement.

You know, I'd say you learn something that you can put to work today, right.

And that could be in your job could be in your life, that would be one thing. And then when you

feel good physically, it tends to help you just be more optimistic, like I believe in the power of

exercise, not just because of the physical benefits, but because of the positive mental

benefits out of it. And so if you're not feeling great, go get a good workout in.

It gets the endorphins moving in the bloodstream in the right direction. But also, it's

a feeling of pride and satisfaction that we did something that maybe the moment we didn't feel

like doing. That's right, you get something done. Kind of a reminder that if we can get one thing

done, we can maybe get another thing done just breaks that logjam of not going into your action

at all.

It's just the habit of kind of taking the next best available action, right like

that back to something we've already talked about, which is like, you know, when something's got you

down, will perplex just be leaning forward and asking, well, what's the next best available step?

That's a good one, because often, the next step is not going to look like the best one,

but he's the only one available. If it is we're going to take it otherwise, we're going to assess

and take a better one. But we opened up by you sharing that your early schooling helped you

understand the importance of high standards, people with high expectations that you've not

experienced that before, at a more of a societal level, is there something we can apply from that

to our nation to help people be the shining city on the hill that was once envisioned?

I think the ability to have open discourse, respectful discourse, and welcome

contrary views insincere ways, that is the basis for so much that can be accomplished nationally,

internationally, whenever you can understand others better, I think that you learn and you

figure out where you can make progress. So one of the leadership principles, talks about this, learn

and be curious as the leadership principle, leaders are never done learning and always seek to

improve themselves. They're curious about new possibilities and act to explore them. They seek

diverse perspectives and work to disconfirm their beliefs. And what we tend to do is just live in a

echo chamber, right, like people telling us what we already believe in. And I think in both

business, as well as societal that that's, that's a danger when all you're hearing is the stuff that

you absolutely believe in, that you need to be open towards discourse and hearing things that you

may not necessarily believe in. And that's what real communication is.

Avoiding those subtle forms of conformational bias.

That's right, that I mean, that is what confirmation bias is is just listening to

stuff that tells you what you already believe.

John, thank you time with you goes really really fast. I appreciate your insights.

Appreciate the life that you lead, and the good things that you've done for our world and know

that you will continue to do.

Thank you and back atcha, thanks for everything that your show does and the