A version of this article previously appeared on Forbes.
My article 5 Time-Tested Success Tips From Amazon Founder Jeff Bezos was so well received, I am sharing five more pearls of wisdom from Mr. Bezos.
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6. Let Your Competitors Chase The Quick Buck
“Sometimes we measure things and see that in the short term they actually hurt sales. But we do it anyway, because we believe that the short-term metrics probably aren’t indicative of the long term.”
As I discuss in Entrepreneurs Should Go For The Quick Buck – Then Stop, there are situations in which a startup can generate profitable, near-term revenue that does not support, and may even undermine, its long-term strategy. In some instances, it is reasonable to generate such revenue as a means of financing your business. The toughest aspect of such opportunities is weaning your company off these “bad profits” and focusing on opportunities that may not have an immediate payoff, but will drive long-term enterprise value.
7. Two Pizzas, One Meeting
Business veterans know that there is a direct correlation between a meeting’s length and the number of participants – the larger the group, the longer the meeting. Thus, smaller meetings facilitate efficiency and accountability.
If improperly administered, meetings become counter-productive, especially as an organization grows beyond its initial startup phase. In order to limit the negative impact of large meetings, Jeff imposed the Two Pizza Rule early in Amazon’s life. This guideline dictated that no more people than can be comfortably fed by two pizzas should meet at any one time. This encouraged task groups to be limited to five to seven individuals.
8. Growth Happens In Bounds And Leaps — Of Faith
The very creation of Amazon was the result of a leap of faith. Jeff left a comfortable Wall Street career to enter a world he knew little about. He was not an expert in technology, inventory logistics or publishing. Yet, like container shipping tycoon Malcom McLean, Bezos felt that his idea was so “obvious and compelling,” he had to take the leap.
“The framework I found which made the decision incredibly easy was what I called – which only a nerd would call – a ‘regret minimization framework’. So I wanted to project myself forward to age 80 and say, ‘Okay, now I’m looking back on my life. I want to have minimized the number of regrets I have.’(If I did not start Amazon) I knew that that would haunt me every day.”
Understanding the power of a thoughtful leap of faith, Jeff encouraged his employees to take their own bounds into the unknown by creating a culture that did not castigate well-reasoned risk taking.
9. Being Simpleminded Is A Good Thing
“You have to use your judgment. In cases like that, we say, ‘Let’s be simpleminded. We know this is a feature that’s good for customers. Let’s do it.’”
Business is simple. Economically solve a problem that matters and everything else will take care of itself. In keeping with this sentiment, Jeff encouraged Amazon employees to not overly intellectualize the company’s problems. This encouraged them to deploy logical, common sense solutions that were in the best interest of its customers.
10. Inch By Inch It’s A Cinch
Web-based businesses must compete in the blinding light of total transparency. They cannot rely on discovering a propriety methodology that they can protect via intellectual property common law. Every time Amazon made a change to its website, whether it be modifications to its customer acquisition funnel, upsell techniques, customer service, etc., it was instantly broadcast to its competitors.
This caused Jeff and his team to focus on constantly making the less evident back-office processes, as well as the consumer-facing aspects of its business, incrementally better. Numerous small changes, any one of which had a minor impact on inventory costs or customer conversion metrics were compounded when combined with other small improvements. A company that is constantly improving, even in small ways, is a difficult company to beat.
These small, back-office changes eventually led to the technological expertise underlying Amazon Web Services (AWS), by far the most successful public cloud computing platform. Such “small improvements” have undoubtedly created more intrinsic value than Jeff ever envisioned when he took his initial leap of faith and may yet prove to have the most lasting impact on Mr. Bezos’ legacy.
Note: This article was inspired by a sidebar which appeared in: FastCompany, Inside the mind of Jeff Bezos, August 04 HERE
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Image: Getty Images via @daylife