5 Brilliant Strategies Jeff Bezos Used To Build The Amazon Empire

5 Brilliant Strategies Jeff Bezos Used To Build The Amazon Empire

DRAKE BAER STRATEGY  MAR. 18, 2014, 1:14 AM

The Gazelle Project. That’s what Amazon called its initiative to cajole book publishers into giving them better deals. According to The New Yorker, CEO Jeff Bezos said “that Amazon should approach these small publishers the way a cheetah would pursue a sickly gazelle.” 

A cheetah can sprint 70 miles per hour, accelerating faster than a Ferrari Enzo. Bezos’s company moves at a similar clip. Amazon has grown at breakneck speed over the past decade and brought in nearly $75 billion last year, thanks to the unconventional, daresay ruthless style of its chief executive. Here are five strategies that Bezos used to build the Amazon empire.

1. Be like the Godfather: Make them an offer they can’t refuse.

In 2004, Amazon set its sights on the Melville House. The boutique publisher of serious fiction and nonfiction based in Brooklyn, N.Y., was just a fledgling company when things got tense with Amazon. Co-owner Dennis Johnson recalls his distributor calling him and describing negotiations with Amazon “like dinner with the Godfather.”

As The New Yorker reports, Amazon “wanted a payment without having to reveal how many Melville House books were sold on the site.” Johnson was critical of the policy, and shared his concerns with literary trade magazine Publishers Weekly. A day after it published a story on Johnson, the “Buy” button on Melville House’s Amazon pages suddenly vanished.

So Johnson, who’s since blogged of Amazon’s war on books, decided to pony up. “I paid that bribe,” he says, “and the books reappeared.”

2. Don’t give up information unless absolutely necessary.

Amazon didn’t tell Melville House how many of its books were sold on the site. Amazon also stays mum on Kindle sales, and won’t say how many employees it has in Seattle. Moreover, the floor where the Kindle team works at the Seattle headquarters is called Area 51, since you can’t set foot there unless you’re directly involved with the product. Bezos, it seems, likes to deliver information — and create Amazon’s narrative — in his own way, such as his carefully crafted shareholder letters.

3. Keep teams small enough that members can be fed with two pizzas.

Bezos is famous among management nerds for his Two Pizza Rule: No team should be larger than can be fed with two large pizzas. That means that task forces are limited to just five to seven people, allowing teams to test their ideas without too many onlookers, which guards against groupthink — one of Bezos’s pet peeves. Those tiny teams have led to big innovations, like theGold Box deals, a popular promotion that gave customers limited-time deals.

4. Stop talking so much.

At an off-site retreat in the early 2000s, word was going around that groups needed to communicate more. Bezos got up and said, “No, communication is terrible!”

How could talking too much be a problem? Cross-team communication limits team independence and leads to people agreeing too much, he estimated, which stands in opposition to the creative conflict that defines Amazon’s culture.

5. Get adversarial.

“The people who do well at Amazon are often those who thrive in an adversarial atmosphere with almost constant friction,” writes Brad Stone, author of “The Everything Store,” which chronicles Amazon’s rapid growth. Why? Bezos can’t stand “social cohesion,” the cloying tendency of people who like to agree with each other and find consensus comfortable.

Research suggests that the best entrepreneurs are super disagreeable. That love of debate — where people are forced to advocate their perspectives — is ingrained in Amazon’s culture. As Businessweek writes, one of Amazon’s 11 leadership principles is: Have Backbone; Disagree and Commit.

Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

Like a cheetah commits to a gazelle.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

One Response to 5 Brilliant Strategies Jeff Bezos Used To Build The Amazon Empire

  1. Gede Prama says:

    Well written. May peace be with you 🙂

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