No one can accuse Jeff Bezos of thinking small or falling prey to convention. The man who dared to build the everything store, has a famously idiosyncratic approach to business.
From the big things like largely ignoring profits (and mostly getting away with it) to small ones like starting meetings with some communal reading, the Amazon.com founder doesn’t do things the usual way.
What’s the thinking behind his quirky ways and what can you learn from the Bezos approach to business that might change how things are done at your own company?
Recently on his blog current Microsoft employee and former private equity fund partner Tren Griffin suggested you go straight to the source, helpfully combing through Bezos’ public utterances for valuable nuggets of wisdom.
Inc.com reached out to ask if we could round up a few of the quotes he unearthed. Here’s a sampling:
"Your margin is my opportunity."
As Griffin explains "Bezos sees a competitor’s love of margins and other financial ‘ratios’ as an opportunity for Amazon since the competitor will cling to them while he focuses on absolute dollar free cash flow and slices through them like a hot knife through butter."
"Bezos spelled out his focus on absolute dollar free cash flow in his 2004 letter to shareholders. He is not about to run his company based on a ratio much beloved by someone outside the company, such as a Wall Street analyst," Griffin elaborates. Are you looking focused on the right numbers for your business or are you more worried about hitting metrics that someone else told you matter?
"The balance of power is shifting toward consumers and away from companies… The right way to respond to this if you are a company is to put the vast majority of your energy, attention and dollars into building a great product or service and put a smaller amount into shouting about it, marketing it."
"In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts," Bezos continued. Are you too focused on how you talk about your business and not on what it actually does? "The very best businesses acquire customers ‘organically’ without advertising. Great products and word of mouth drives sales at these companies. By contrast, companies which must sell their wares with huge advertising budgets are losing their edge in the Internet era," comments Griffin.
"If you double the number of experiments you do per year you’re going to double your inventiveness."
Perhaps increasing your innovation quotient is simpler than it first appears. Simply try more things. Based on this quote, that appears to be the Amazon approach.
"If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunity on the table."
This point is obviously related to the one above. Experiments, by definition, can fail. Avoid failure to spare your ego and you cut down on the number of experiments, and it’s often a bigger problem to fail to experiment than it is to experiment and fail. According to Griffin,"“Warren Buffett puts it this way: 'Typically, our most egregious mistakes fall in the omission, rather than the commission, category. That may spare Charlie [Munger] and me some embarrassment, since you don’t see these errors; but their invisibility does not reduce their cost.'"
"You have to be willing to be misunderstood if you’re going to innovate."
OK, it’s not only Bezos who has innovation can be lonely, but he certainly exemplifies the principle. "You can’t outperform the market if you are the market. Similarly, you must adopt a non-consensus view and be right about that view to beat competitors," Griffin says.
"Frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out."
Do you spend your days dreaming of a time a flood of money will scour away your business’s problems? Your daydreams may be misguided. "More money often equals more problems. Companies with too much money are often less rather than more innovative," notes Griffin. It can, of course, be hard to learn to love your constraints, but this quote suggests there are benefits to be found in doing so.
"The great thing about fact-based decisions is that they overrule the hierarchy."
Many companies make choices based on the seniority or charisma of those arguing the various points of view. Not at Amazon. Could your company benefit from trying a more fact-based approach?