Every so often you come across a concept so elegant in its simplicity that you can't help but be drawn to it because of how easily it reduces even the most complex set of ideas into something short and memorable. For example, Malcolm Gladwell's Tipping Point, or Robert Fulgham's All I Really Need to Know I Learned in Kindergarten.
Once you've been exposed to these simple frameworks, you use them as compass settings to navigate the complexities of life.
Amazon's founder and current CEO, Jeff Bezos, came up with one of these that is a real gem when it comes to identifying the most essential attitudes, practices, and culture of a successful and growing company. But before I reveal it, some quick background that will be familiar to any founder.
I've mentored and advised hundreds of startups over the past 30 years. There is an energy and an optimism in the eyes of a startup team that's nearly impossible to replicate. Despite working ridiculously long hours, sacrificing time, family, money, and pretty much all of the things that most of us hold holy in life, a startup team produces a euphoria that only they can fully understand. If you've been there, you know what I'm talking about.
Yet there is one pitfall that every startup needs to be careful of: the desire to get out of startup mode, to grow up and be a real company.
Look, I get it. I've been there. And there's nothing wrong with wanting the stability and accolades of having arrived.
So, what do I tell these overly eager, restless, and bright-eyed evangelists of entrepreneurship? "Stop and take a good look at how you operate and feel right now. You don't realize it, but this is success. The attitude, the hunger, the passion, the ability to move and adapt instantly, the willingness to take risks, and the sheer energy and enthusiasm you have is as good as it gets. When you lose that you lose the ability to grow, and that will be the greatest challenge to success and threat to innovation. (Want to guess what their response is when I tell them to hold onto the startup magic? Read on.)
I've often struggled to put a name to the unique chemistry of a startup. Bezos has, and it captures beautifully all of the trials, tribulations, and magic of the entrepreneurial spirit, He calls it being a day one company. He is so passionate about the importance of staying a day one company, the building he works in is called day one!
According to Bezos, a day one company's obsessive goal should be to avoid becoming a day two company. In his own words, "Day two is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why [for Amazon] it is always day one."
So, how do you stay in day one? In his just released letter to stockholders, Bezos outlines the four obsessions of a day one company. See how many of these you subscribe to.
True customer obsession.
According to Bezos,
"You can be competitor focused, you can be product focused, you can be technology focused, you can be business-model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of day one vitality."
He goes on to say:
"Customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don't yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf."
You don't have to look far or hard to find day 2 companies who have lost sight of this essential truth (read United). If you really want to know if you're a day one or day two company, just ask your customers; that is if you're ready for the answer.
I love this one, because proxies are what every large company hides behind when common sense heads for the exits.
Bezos nails what has to be the biggest challenge to innovation in every large company--the safe and prescribed path that people use as an excuse to absolve themselves of personal responsibility.
"As companies get larger and more complex, there's a tendency to manage to proxies. This comes in many shapes and sizes, and it's dangerous, subtle, and very day two. A common example is process as proxy... if you're not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you're doing the process right. Gulp."
Bezos warns us to be vigilant of processes. "It's not that rare to hear a junior leader defend a bad outcome with something like, "Well, we followed the process." A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It's always worth asking, do we own the process or does the process own us? In a day two company, you might find it's the second."
Embrace external trends.
It never ceases to amaze me how intelligent and apparently successful companies will look directly into a new trend without a clue as to what they're seeing. It's like looking at a tsunami rolling in on a bright sunny day and wondering where to pitch your umbrella for maximum shade. In Bezos' words, "These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace."
Easy to say -- infinitely harder for day two companies to do. Having worked in both day one and day two companies, I can say that what changes most is the attitude toward risk. When you're small you have this attitude of experiment, fail, get back up, repeat. As you grow, that changes to experiment, fail, get fired, or, best case, don't experiment again! Welcome to day two.
High-velocity decision making.
I won't spend too much time on this one. Jessica Stillman does a great job describing it in her recent article, Here's How Amazon's Jeff Bezos Makes Great Decisions, Super Fast.
The bottom line is, when it comes to decisions, Bezos emphasizes speed over perfection,
"...most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, in most cases, you're probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you're good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure."
This is also where he introduces a concept I've found to be invaluable for leaders to embrace, which he calls disagree and commit.
"...disagree and commit...will save a lot of time. If you have conviction on a particular direction even though there's no consensus, it's helpful to say, 'Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?' By the time you're at this point, no one can know the answer for sure, and you'll probably get a quick yes."
It's day one every day.
Bezos' advice is timeless. It really doesn't matter what industry you're in, how young or old your company is. I began by sharing how I always try to point out to startup teams the importance of capturing and sustaining the magic of day one. Do you want to guess how they typically respond?? Most of them say something along the lines of, "But this is exhausting. We want to get to a point where it's not so hard." Sure, we all do. But if in trying to make it easier you also take that fateful step from a day one company to a day two, you've lost the battle.
In fact I'd stretch Bezos' concept of day one to virtually any organization or relationship. Whether it's for-profit or philanthropic, personal or professional, the truth is that you're either in day one or the "excruciating, painful decline" of day two. Where are you?
Me? I'd rather be exhausted from the passion of day one -- any day of the week.
You can find the full text of Jeff Bezos' letter to stockholders at this SEC.gov link.