Earlier this week, Jeff Bezos announced he would step down as CEO of Amazon, handing the reins to Andy Jassy, who has overseen the company's huge and lucrative cloud service, AWS, since its inception. It was a surprising move that left many people wondering just who Jassy is and what kind of leader he'll be. In an onstage interview three years ago, Jassy laid out his philosophy as a leader, and one of the most important lessons he says he's learned at Amazon about embracing change rather than fighting it.
If you want to understand how Jassy thinks, it's worth watching at least some of the onstage interview from 2017 that video interviewer and host Jeff Frick just posted to LinkedIn. Frick has helpfully broken the interview down into 15 lessons from Jassy, providing a link to the appropriate spot in the video each time.
You'll see that Jassy is well versed in technology, able to speak intelligently on the importance of artificial intelligence and the internet of things. He's also very well steeped in Amazon culture and articulates some of its most important and most effective principles, such as make fast decisions and be willing to fail, disagree and commit, and focus on the customer. ("I've been at Amazon for almost 20 years at this point, so I've obviously drunk the Kool-Aid," he commented.)
Near the end of the session, Jassy was asked about the most important lesson he's learned. To answer, he tells the story of the launch of Amazon Marketplace in 2000. Back then, the "dot-com bust" forced thousands of tech startups to shut their doors, and most, including Amazon, were widely judged to be permanently unprofitable. Over two years, Amazon's share price dropped from $91 to about $15.
At the time, Amazon only sold products it had procured itself. But online marketplaces like eBay and Half.com (which eBay acquired that year) were eating up market share in online retail by matching small sellers or even individuals who wanted to clear out their garages with buyers seeking a wide range of products. Clearly, there was a lot of money to be made by allowing third-party sellers to sell to Amazon customers. But many Amazon executives were opposed to the idea.
"We had a really animated debate about whether we should allow third-party sellers to sell on the Amazon site," Jassy recalled. "First of all, we had this fundamental belief that other sellers weren't going to care as much about the customer experience as we did because it was such a central part of everything we did." Not only that, the entire company and all its technology had been built around an owned-inventory business, he said. And then, some wondered how Amazon's suppliers would feel about third-party sellers selling products alongside theirs.
"You can't fight gravity."
Still, after a lot of debate, Jassy said, the company decided to allow third-party sellers into Amazon. In part, this was for the benefit of customers, who would likely appreciate a wider variety of products, some at low prices. But also, he said, "We realized--you can't fight gravity. If something is going to happen, whether you want it to happen or not, it is going to happen. And you are much better off cannibalizing yourself, or being ahead of whatever direction the world is headed than you are howling at the wind or wishing it away or trying to put up blockers."
That turned out to be a really important lesson "for Amazon as a company and for me personally as well," he said. "Today, roughly half the units we sell in our retail business are third-party-seller units. It's been really good for our customers, and really good for our business as well."
You can't fight gravity. In a different way, this is a description of "the innovator's dilemma," a notion put forth by the late brilliant Harvard professor and author Clay Christensen, who argued that successful companies have to continually disrupt their own business, even at the cost of a lower ROI. If they don't, some startup will come along and steal their customers away. Amazon starting Amazon Marketplace was a recognition of this reality.
It's a lesson that applies to many aspects of leadership, and even to our personal lives. Most of us are holding on to some way of doing things--running our business, interacting with customers, or even communicating with our friends and family--because we know it works and we don't want to change to something new. It's human nature to stick with what makes us comfortable and to resist change or even fear it. But one of the things that makes Amazon so powerful is that it's never afraid to try new things and is always willing to disrupt its own business before anyone else can.
What tried-and-true ways of doing things are you sticking with because they're comfortable and you know they work, even though you can see the rest of the world trending in a different direction? What good things might happen if you stopped fighting gravity and embraced this new direction instead?