How to Think Like a Futurist
Why Power is Everyone’s Business
Creativity in the Virtual Age
PAGE 20
PAGE 26
PAGE 60
The Magazine of the Rotman School of Management UNIVERSITY OF TORONTO
FALL 2021
THE SOCIALLY-CONSCIOUS BUSINESS PAGES 6, 32, 108
MANAGEMENT
Now What?
QUESTIONS FOR Colin Bryar, Amazonian and Co-author, Working Backwards
Q &A An ‘A mazonian for life’ distills the key principles that have made Amazon so astronomically successful. Interview by Karen Christensen
You and your co-author spent a combined 27 years working at Amazon, sharing founder Jeff Bezos’ conviction that the long-term interests of shareholders are perfectly aligned with the interests of customers. Please unpack that belief for us.
It’s more than just a belief — it’s an unshakeable conviction that is embedded into the company’s thinking and behaviour. The idea is that if you constantly focus on addressing customer needs and solving their problems, things will work out over the long term for your company. Amazon’s success proves that when you have customers’ best interests in mind, they reward you with trust and ongoing business over a lengthy period of time. Some leaders think that if you adopt this kind of longterm mindset, it will take too long to get where you want to go, but Amazon’s experience has been just the opposite. There are less ‘zigs’ and ‘zags’ focusing on short-term needs that don’t actually accrue long-term value. If you’re focused on hitting a quarterly number and you’re throwing together a promotion, typically you’re pulling demand from a future period into a current period and not really creating anything new. So on the first day of the new quarter, you’re back to where you started from. If you had devoted those resources instead to building value over time, the results will accrue in this quarter and the next quarter. rotmanmagazine.ca / 125
It has been said that the Amazon culture consists of four things. Please summarize them.
At a conference many years ago, someone asked Jeff Bezos what Amazon’s culture was all about. He said, “Really, it’s four things.” The first element is a complete customer obsession instead of an obsession with competitors. The second is a willingness to think long-term, with a longer investment horizon than most of Amazon’s peers. Third is an eagerness to invent, which, it is recognized, goes hand in hand with a certain degree of failure. And the fourth aspect is taking pride in operational excellence. That is particularly important, because much of what a particular team does is not seen by anyone outside of the team — so everyone needs to get all the little details right, throughout the company. Amazon takes a rather unique approach to hiring. Please describe it.
The company’s ‘bar-raiser’ process is a data-driven exercise that has four key elements to it. First of all, going into an interview, the interviewers know exactly what data they need to collect from the candidate. Amazon has 14 official ‘leadership principles’, and each interviewer is assigned to cover off two or three of them. Their task is to gather data in those specific areas. To achieve this, they use a technique called ‘behavioural interviewing’, which involves asking about the candidate’s past performance. Research shows past behaviour to be the best predictor of future performance. Then, with the data they collect in the interview, they ‘map’ the candidate’s past behaviour to the 14 Amazon leadership principles. The second key to this approach is that there are processes in place to remove bias from the interviewing process. After the interview, each interviewer has to write a verbatim account of the interview. They can’t compare notes with other interviewers or discuss the candidate with anyone until they have written out that feedback and included an indication about whether they would like to hire the candidate or not. This prevents the, ‘Hey, this candidate 126 / Rotman Management Fall 2021
was great, you have to go in there and sell this person on the job.’ Everyone has to go in and objectively obtain specific information. The third piece of it is that candidates for a particular role see all of the same interviewers. Given the process, by definition, no one interviewer is going to have a complete set of information about the candidate. They are only tasked with getting a couple of slices of the candidate’s profile to create a larger map tied to the leadership principles. Lastly, there is a specific role involved called ‘the bar raiser.’ This appointed individual is assigned to every interviewing process and is typically not part of the chain of command of the hiring structure. As a result, they have much less bias as to whether a candidate gets hired or not. ‘Urgency bias’ is a major issue in hiring. People think to themselves, ‘I need to hire three people quickly or my team won’t get our work done for this quarter.’ The bar raiser doesn’t have to worry about that. Their job is to make sure that the candidate who comes on board has met — or raised — the overall hiring bar. The bar raiser has veto power, even over the hiring manager: If they don’t feel the candidate meets the Amazon bar, they can exercise veto power and the person is not hired. In practice, this veto power rarely gets used. In the post-interview debriefs, the bar raiser walks the hiring team through the hiring process. Everyone reads all of the feedback, which is a great way to learn about techniques that other interviewers use to obtain pertinent information about candidates. Like any good process, this one is simple and can be easily taught. And the best part is, the more you do it, the better the process gets. Another of Amazon’s leadership principles is ‘working backwards’ from the desired customer experience. What does that look like?
This is the process Amazon uses to vet ideas and decide whether to turn them into a product or new feature for customers. At its heart, the working-backwards process is about starting from the customer experience and working back
from that. It sounds simple, but it’s actually very different from the way most organizations make go/no-go decisions about moving forward with ideas. A lot of organizations use something like a SWOT analysis, asking ‘What are our strengths? What are our weaknesses? What are the opportunities and threats we face? What are our competitors doing? One word that is not even mentioned in all of that is customer. So, Amazon threw that approach out the window and said, ‘We are going to — front and centre — make sure that the customer is involved in this vetting process from the moment an idea comes up.’ The tool that Amazon uses with customers in the working-backwards process is a written document called the PRFAQ, which is short for ‘press release and frequently asked questions.’ When a team has an idea, the first thing it does is write a one-page press release about it. Having only one page forces them to focus on the issue at hand. The press release has to clearly state what customer problem they are trying to solve, and it has explain to the customer what the solution is. Then, they have to tell the customer why this is a worthwhile product or feature for them to investigate and either use or buy. If the team is not satisfied — if this document doesn’t make them want to run out and get the product or use the service — they go back and rewrite the press release. Working backwards is an iterative process. Once the team has a press release that everyone is satisfied with, they move on to the frequently asked questions document. There are two components to this: an external FAQ and an internal FAQ. The external one includes questions and answers that explain to people outside of the company about this new feature or service, how much it costs, why anyone should change their behaviour and use it and how is it going to make their life better. The internal FAQs are all the tough questions around bringing the new feature or service to market. Things like, can we build this with materials less than $150? Are we going to build our own sales force for this or partner with an
external sales force? Again, this is an iterative process, and once the team agrees on the document, the whole package is presented to the leadership team. If they find the team hasn’t asked all the tough questions, they are sent back to do a rewrite. Very few ideas make it through this process on the first round. But once all the requirements are met, then and only then can the project be greenlit and the resources allocated to move it forward. Amazonians are not fond of PowerPoint decks or large, lengthy meetings. What are they replaced with?
They are replaced with ‘narratives’, which are essentially memos of six pages or less. For a standard one-hour meeting, six pages is the maximum length for a narrative. Amazon stopped using slides in 2004 as an experiment for meetings where teams would come in to present to Jeff and his senior management team. Slides can be used if you’re talking to a large audience in an auditorium, but for decisionmaking processes, or where you’re getting a group together to communicate an idea, they use the narrative concept versus slides. Jeff has said this was one of the best decisions Amazon ever made. Written narratives allow the reader to gain a deep understanding of complex issues to make better informed decisions. How do they achieve that? First, they force the writer, or the writing team (because it’s usually more than one person writing it) to clarify and synthesize their idea and present the story arc and all the information in a cohesive format. It’s much harder to write a six-page narrative than a slide deck, and you can’t just whip it together the night before. You have to go through multiple drafts, send it out to the team and get feedback until you crystalize your thinking. The second advantage of this approach is that it makes the ideas matter, versus the presentation itself. You often hear people say, ‘Wow, that presenter was so engaging’ or ‘That was so boring!’ At the end of the day, customers don’t rotmanmagazine.ca / 127
care about any of that. They care that companies make the right decisions to provide products or services that make their lives easier. As a result of this approach, ‘presentation bias’ is removed from the equation. You can avoid having a very charismatic presenter with a so-so idea convince a group of people to make a decision the company probably should not make; or on the flip side, you can avoid missing out on a great idea described by an awful presenter. You can also convey multi-causal arguments better in a narrative than in a linear slide format. Amazon has found that this approach allows people to absorb about 10 times more information for the same unit-of-time investment.
Overall, I really believe Amazon has advanced the field of management science in terms of best practices for building and running an innovative organization. Taken together, the processes we’ve talked about — from the bar-raiser process to linking everything to defined leadership principles — are things that every organization, small or large, can learn from.
Since leaving Amazon, you have introduced some of its tools and frameworks into other organizations. Which are at the top of the list?
For smaller organizations, it is very important to get your own leadership principles defined, because that really determines how people are going to make tough decisions when you’re not in the room. I always tell organizations that don’t have any defined principles to get some. You have to define who you are and how you are going to operate in the world. The second thing is to implement a hiring process that enables you to bring people on to reinforce those principles. If you have a five-person company and you want to grow to 50, you need to ensure that you are bringing on people who will reinforce your principles, or your company is going to change. You have to work really hard to get the culture you want. For larger organizations, there are good lessons to be learned from Amazon’s operating cadence in terms of focusing on input metrics versus output metrics and the working-backwards process. Those really change the ways that companies build and introduce new products and how they look at managing businesses, both in the short term — where the details matter — and over the long term, where you’re creating customer value. 128 / Rotman Management Fall 2021
Colin Bryar is the former Technical Advisor to Jeff Bezos, co-author of
Working Backwards: Insights, Stories and Secrets from Inside Amazon (St. Martin’s Press, 2021) and the co-founder of Working Backwards LLC.
Leading the Way to Recovery: CDL’s Moonshot(s)
Crisis Management: Lessons from the C-Suite
The Magazine of the Rotman School of Management UNIVERSITY OF TORONTO
SPRING 2021
The Health(y) Issue
An Economic Recovery Plan for Canada
FIXING A BROKEN SYSTEM
MANAGEMENT
Harnessing Behavioural Insights
In defence of Troublemakers
The Origins of the Gender Gap
PAGE 6
PAGE 20
PAGE 38
The Magazine of the Rotman School of Management UNIVERSITY OF TORONTO
SPRING 2019
HOW AI WILL AFFECT BUSINESS PAGES 44, 62
MANAGEMENT
The Art of Change Behavioural Approaches to Diversity PAGE 26
The Fearless Organization PAGE 74
The Seeds of Change PAGE 80
Explore more
rotmanmagazine.ca