#93 Leadership from the mind and the heart

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Welcome back to the Project Aries Leader Show. I'm your host, Marie-Olive, and today we're diving into the fascinating intersection of analytical thinking and heartfelt leadership. Our guest today is Marc Onetto, former Senior Vice President of Operations and Customer Service at Amazon, operations executive at Solextron and General Electric, and now the principle of leadership from the mind and the heart. Marc has received the French Order of Merit. He brings a wealth of experience from working alongside luminaries like Jack Welch and Jeff Bezos, and I've been lucky to be his mentee for 25 years, half of his career. Marc believes that true leadership balances analytical precision with human connection. I'm thrilled to explore his unique approach to leadership and the insights from his storied career. Marc, welcome to the show.

Thank you, Marie.

I'm delighted to have you here. So let's dive in with our first question, which is about leadership values and culture. So Marc, Amazon is known for its strong leadership principles. How did you see those principles influencing day-to-day operations, and how can leaders ensure that company values are more than just words on a wall?

Yes, this is a, this is a very essential point in good leadership. In Amazon, it all began by the vision that Jeff Bezos had to create the most convenient store, shop for everything.

Hmm.

That was the vision from the beginning. And do that in a customer-centric way, meaning trying to think about everything we do to please the customer, to make it easier, safer, more honest in everything you deal with the customer. And so that was the vision, but then you have to transform that vision into strategy. I.e., how do you make this vision something that is over time will be sustainable and will be successful for the company? How does it become the foundation of the culture of the company, the way we think, the way we behave, the way we interact with each other, until even the tactical everyday decisions that we take in the company. So this is like a continuum from this vision of customer centricity all the way to daily behaviors. So let me take a few examples. Okay, in order for this to work, the leadership has to walk the talk. I demonstrate by difficult public decision that the whole company knows that this culture of customer centricity is real. It's not just talk. So let me give 2 examples, a small funny example, which is one of the values deriving from customer centricity is that we're not going to spend money on ourselves. We're going to spend money on our customers, on improving the experience of our customers, on proposing new services. new products for the customers rather than spend money on ourselves. So one of the value that we have in the, that derives from that is called frugality. We are not going to spend money, for example, on big offices for executives.

Okay.

So it's kind of fun to know, and that's a little example, but it talks, it walks the talk that my office had no windows. I had just a cubicle. My secretary office had a window. I mean, it was not really an office, it was like a large thing, but there were windows there, not in my office. So it was clear the message that frugality is not just a word, it's something that we apply to ourselves.

Got it.

Another small example is that everybody flies at the bottom of the plane, at the back of the plane in Amazon, including me, including senior vice president. Of course, at my age, I wanted to go in the front, but I paid myself The whole company knew that I was paying for my seat in business class, right? So it walk the talk in the small thing reinforces it. Now, walk the talk in the big thing, that is even more reinforcing. So for example, perhaps the best example ever is, as you know, Amazon started as a bookstore where we were selling books ourselves. But the vision was clearly the shop for everything. And so at one moment in time when we began to be a true retailer, not just for books, but also for, at the time, CDs and video, audio, sports, et cetera. At one moment, Jeff decided that we alone cannot be the shop for everything. There are so many sectors of the economy where there was no way we could fulfill the demand for customers. And so what he decided, he decided to open the website, which was a huge investment when you think about it, to competitors, i.e., to other merchants that would sell things that we did not have, but would also sell things we had for sale on amazon.com.

Got it. The marketplace.

The marketplace. That was, Wall Street went mad on Jeff that day. Okay. Saying, it's crazy. I mean, he spent all this money to finally have a decent website that people can use to buy stuff, and now he's going to make this available to competitors? Does it make sense? It doesn't make any short-term sense for Wall Street, but it makes complete sense in view of the vision and the culture that this is what we want to do. We want to be the practical, friendly shop for everything. And that was the way we extended considerably the selection of what our customers could find on Amazon. Because if you think about it, it's a pain in the neck for customers to go to, I don't know, 25 websites during the day because they want to buy 25 different categories. No, they can go to Amazon and find everything, the shop for everything. So you see, that was a tough decision.

Yes.

Because there was a lot of criticism around it. It was also difficult to establish. We also had to police the behavior of our merchants to make sure that they respected our customers. But it turned out to be one of the absolutely critical success factors of Amazon and also reinforced internally that Jeff knew how to make decisions that were really hard but were within that culture of customer centricity. He walked Got it.

So what I'm hearing is really using the value as a filter to take action. And he didn't hesitate to disrupt his own business, not to be disrupted by others.

Yeah. Disruptive means, you know, we had a vision and we also, I mean, Amazon is not an act of faith. I can assure you, we measured everything. So we of course measured how our customers reacting to what we're doing. You know, and then even if you think about it, the next step was when we introduced Fulfillment by Amazon. We realized that many customers, whilst they were happy with the selection, right? I, okay. So perhaps I should go back to say there was 3 pillars to customer centricity. Best selection, best price, best delivery. So with the marketplace, we had best selection. We also had best price because the website will tell you which merchant is cheaper.

Yep.

But we didn't have best delivery because many of the merchants had really no logistics. They would tell when they ship rather than when it arrives. They would, you know, all sorts of non-customer-centric behavior in deliveries. So that's when we introduced Fulfillment by Amazon. I, now what we were doing is, okay, you bring in a selection, your price is your You know, but we know it's competitive. And now what we can do, you merchant, is bring your stock to Amazon fulfillment centers and we will ship with the Amazon logistics. And now the customers will have predictable logistics, predictable time of arrival, and even the one-click message that will tell them if you order now, you will get it within 24 hours.

That leads to my next question. Marc, because in our time when we worked together, you stressed the importance of operational excellence, and that's a leadership from the mind, right? So what are some of the key systems or processes leaders can implement to ensure that on-time delivery, that continuous improvement and exceptional results?

Yeah. So, so when you have this vision of, and, and culture of, we are going to be excellent for the customer. Now it's very easy to have a strategic vision and everything. Now you've got to make it real. You've got to make it real in daily operations. And this is where comes, I'd say, the fundamental of operations excellence is absolutely essential if you want to deliver that vision you had, that customer centricity. And that is not easy. Because this is like millions of acts every day. Act of receiving goods in the fulfillment center, acts of storing the goods, which makes it available for the customer to order, acts of picking the goods, which is when the customer order arrives, we've got to pick it, act of reconstituting the order in case if it's a multi-order, and then act of packaging the order. and shipping the order. This is very, very complex because remember, every package is different. So you are creating millions, tens of millions different items every day.

Yes.

And tens of millions of opportunities to make a mistake. So now you have to be very, very excellent in operations. For that, I have always used in my life 2 major drivers. The first driver is known as the Toyota Production System or the lean thinking, the lean approach where you use fundamental manufacturing Toyota techniques such as Jidoka, stop the line on defect, Kaizen, do continuous improvement with the total involvement of the people who do the work every day.

Yes.

And elimination of waste, of any form of waste. which the Japanese use the word muda, which is waste is defined as if the customer saw you doing this, would they pay for it?

Oh.

That's the definition of muda, right? So, so on one side you have this, this, and for these, there are all sorts of very famous technique, very simple technique, such as something called poki-yoke, which is the best translation of this Japanese word. in English is foolproof, except fool is F-O-O-L-proof.

Okay.

Which is something that helps the worker not to make a mistake because it's impossible to make a mistake. I always use a kind of fun example on this. My daughter, when she was a young teenager, was known in the family as Miss Catastrophe. She could do anything you could imagine. She has done stuff to her PCs and her phones, which is beyond understanding. But the thing she was never able to do would be to plug her charger the wrong way around in the socket in the wall. Because a long time ago, electricians have designed a pokyok outfit called a socket in the wall because you cannot plug the live in the earth and reciprocally the way the socket is designed. By the way, it's designed differently In England, in Germany, in continental Europe, and in the US, but it's the same principle. You cannot plug it wrongly. So you understand what a pokyoke is. So you do a lot of these things. So those are very simple, I would say, physical acts.

Yes.

But then what we can do, and we did a lot of that at Amazon, is to add to the Toyota Production System traditional techniques, the strengths of digitization, the strengths of high technology. So you could call that digital lean if you want, or I like to call it, because we like it at Carnegie Mellon, the word intelligent future, I like to call it intelligent operations.

Got it.

So now let me give— so this is where the mind is really at work now. We said at the beginning, leadership from the mind. Let me give you an example. One, waste for the customer is when a customer gives 2 orders, you know, one order in the morning and one order in the afternoon or whatever. And then 2 packages will arrive the same day, which creates a lot of waste because you have a lot of carton and shipping. But for the customer, it's also, why did they send 2 packages the same day? It doesn't make any sense. And it's really a very good definition of waste.

Yeah.

Now, from an intelligent analysis point of view, this is very complex because when we get the second order, we now need to say, oh, whoa, whoa, whoa, whoa, has this customer already ordered something today or yesterday?

Mm-hmm.

Yes. Has it been shipped? Not yet. Ah, now we have an opportunity to combine the two, to consolidate the order into one package. Ah, okay. But Now I have to say, okay, item number 1 was in fulfillment center number A. Item number 2, it's not in fulfillment center number A. Let me see if I have a fulfillment center where the 2 items are, right?

Right.

So now I find fulfillment center number B. All right. Ah, now number A, which was the first, was promised for tomorrow night. Can I still make it? And combine A and B into the same package, which will leave that fulfillment number B and to go to that zip code number XYZ where the customer is. Can I do it? Yes. Let's consolidate.

Got it.

And this was an incredibly complex technology, as you can imagine, because there are so many systems where the information is included. Imagine we had the fulfillment center stock system, we had the fulfillment center picking system. the fulfillment center shipping system, the logistic control system. I mean, imagine all the systems we need to put together to reply to that question, can I consolidate? So you see there the usage of what I would call digital lean, right?

Mm-hmm.

I combine very complex questions with the spirit of customer excellence and elimination of waste.

Yes, complex system and need to have accurate data in all of the systems to be able to meet the prime promise. Imagine.

I also wanted to come back a little on making tough decisions because we haven't covered it completely. I spoke about leadership in the decisions made. They did not, they were not really tough decisions, right? Because they were decisions Absolutely within the spirit of customer centricity. Tough decision is a little more complex than that.

Tough decision— Can you give me an example?

Yeah. The toughest decision in business is to auto-cannibalize your own business. This is the reason why Kodak disappeared. You know, when I was a young man, there was a company called Kodak. Perhaps at your age, you don't even know what that is, right? But this was the number one leader in the world for photography.

Yeah.

Right? Except they were managed by a bunch of chemical engineers. And when a small company in Japan called Fuji began to develop this very strange thing called a digital screen, a digital acquisition of the image, Kodak was never able to autocannibalize themselves, to fire all the chemical engineers to hire computer science engineers and transform the business. And they disappeared from the face of the earth, literally. So for Amazon, oh, by the way, it's also the reason why Walmart will never compete against Amazon, really. Because in order to compete against Amazon, they would have to eliminate half of their jobs. They don't need them anymore.

Basically, yeah.

Imagine what that would mean. That's why Walmart never really walmart.com is nothing compared to amazon.com because they could not. And of course it's so difficult. So this happened also on Amazon. It happened when we introduced Kindle.

Ah, digital books.

So what happened the day we introduced Kindle? Okay. You have to know that the day, the time we introduced Kindle, the only business in Amazon that was beginning to really make money was the book business. Because it had been launched at the beginning. By that time we had a great, we had great books. We had all the books in the world for sale. This business was working very well because any new category, we took a while before we made money. And at the time we launched Kindle, we made a little money. We began to make little money on audio video. We are not yet making money on sports. Okay. But we were making money on books. So now we introduce Kindle and we decide that on Kindle, we are going to sell the books more or less for $9.99. Wow. Now the same book, physical book, was $24.99. The leader of the book business was the only guy making money in the company. I mean, he was part of, of course, of the leaders and said to Jeff, Jeff, you can't do that to me. I mean, I'm the only business making money. You're going to sell the same book for $9.99 and my book is $24.99? You're going to destroy my business. And Jeff responded, do you want them to destroy your business or do you want me to destroy your business?

Hmm.

There is no choice. The world is moving. Them out there, they're inventing The book readers, electronic book readers. We better do it.

Okay?

If not, we are going to be Kodak.

Wow.

And that one is more than just a culture thing. That one is top leaders cannot delegate this kind of decision. Those are crucial fundamental decisions for the future of your business. You got to face the reality even to the extent that is going to take And it did impact Amazon results, right? But then Kindle became such a big thing because, by the way, the difference between Kindle and non-Kindle, people read much more. Yeah. People read much more because it's so much easier, right?

Mm-hmm.

We still have a book business because sometimes there are some books that are much better to read as books and then some you want to keep in your bookstore, you know, in your home and some you want to share, some you want to take notes on, et cetera.

Yeah.

Where the physical book is better, but the customer can choose. And the result is that because of the electronic books, the number of books read has gone up by a factor of—

Yeah, it's grown the market. It didn't cannibalize.

And it has saved millions of trees that were transformed into paper.

Yes.

We don't need it anymore. So there is also an impact on environment.

Sustainability.

It was the right decision, but it was not an easy decision, I can tell you.

Yes. Yes. And that really reminds me of the decision of Netflix CEO to move from physical DVDs to the Netflix it is today.

I mean, they— Exactly. Exactly right.

They killed their own physical product. So it's very similar in some ways.

Yes. And we have many other examples of Companies have not been able to do it.

Yeah, no, it's courageous leadership. And I like to move to that leadership concept from the heart. What specific habits or behaviors can leaders adopt to create a more people-centered, energized workplace?

Yeah, this, this is a fundamental, fundamental point. If, you know, it's not that complex if you employ 25 computer science engineers and reinvent the world. It's complex when you employ, in the case of Amazon at my time, 120,000 people, most of them being workers in the fulfillment center. And it's very complex for every industry in manufacturing that employs a lot of people. Okay? You absolutely have to also take that dimension into your leadership. So And especially when I refer to this operational excellence thing we spoke about. Operational excellence is extremely demanding because you are never arrived. There is no end of the Tour de France in the 14th of July in the Avenue des Champs-Élysées in Paris. There is no end. It's a perpetual Tour de France. You'll have to climb up another pass again, right?

It's relentless.

It's a relentless demand because Customers are never satisfied. Customers always want more. You want more. I want more of Amazon or of any products that I buy. And I say, okay, this quality is not as good as what I would like one day. And that's why this is the fundamental of human progress, right? So therefore, when you are in charge of delivering everyday excellence, like I explained, then you're going to ask for more every day. You're going to do kaizen perpetually. Kaizen means continuous improvement towards the zen, towards paradise, but you never reach paradise. To take a mathematical term, excellence is an asymptote. You can't reach it. You're going to progress towards it continuously. So this is extremely demanding for people. Because people need to feel a form of satisfaction, a form of I have arrived, I feel good, I've done something. So one of the fundamental things in leadership from the heart is to know how to say thank you in all languages. Domo arigato gozaimasu. Merci. Gracias. So it's so, so important that good leaders know how to do that. And the idea is that whilst there is never any arrival, there are stages in the Tour de France, okay, or in life of excellence. And when you reach a stage, then it's time to celebrate, but really celebrate. And the most important celebration is when the leader says thank you, but a real thank you, a thank you from the heart.

Can you share an example that you lived yourself when somebody said thank you to you?

Yes. So I was the leader of many things, but I also worked for very demanding leaders, Jeff Bezos and the one before Jeff Bezos, who I liked a lot, who unfortunately passed away. is Jack Welch. Now, some of your audience perhaps have never heard about him because now it's the—

Oh, okay.

The hero of business of the 20th century. But I did work, not exactly directly for Jack, but I had some, some mission that Jack gave me. And, and I will always remember the day he said thank you to me. It was a very special day. So what happened is that I was in charge of excellence for GE Medical System, now known as GE Healthcare. So I was driving all the quality improvement and in medical, as you can imagine, that's essential. And the Six Sigma Lean program that we had at GE at the time. And I was in my office one Friday afternoon and the phone rings and my assistant says, oh, Marc, this is Jack on the phone. So, uh, the chairman on the phone. So I take the phone and, and I say to Jack, he says, hey, you Frenchman. That's how he called me.

Uh, uh.

Hey, you Frenchman, you know, I've been very happy what you've done with that Six Sigma thing and, and, and Lean. And so yesterday we had a board meeting and I asked the board to make you an officer of the company.

Wow.

So I, you know, this is like, this is a big deal. Okay. At the time, GE was a major corporation with many, many types of business and becoming, there was only about 100 officers in the whole of GE. For a French engineer like me, becoming an officer of GE was like a huge deal. So of course I said, Jack, thank you very much. I mean, I'm so happy. He said, shut up, you Frenchman. Here's what you're going to do. I said, okay, boss, tell me. All right, first you're going to stop whatever you're doing. You're going to go home, go tell your wife you're now an officer of GE. She can go and buy whatever she wants. I said, okay, that I can do. He said, okay, then on Sunday you throw a big party at home, do a barbecue. Ah non, oh, you're French. Oh, do your bullshit French stuff, champagne and all. I do beer and barbecue. You do whatever you want, right? And you invite all your friends and you brag about the fact that now you're an officer of the best company in the world. I said, I think I can do that, boss. And then he said, and then on Monday morning, back to the office.

Oh.

Now that's the next stage. Okay, here's, you're going to become the officer in charge of all operations for GE Medical Systems. And here is what I want you to deliver. I want this, I want this, I want this. This is your new kaizen, your new step. And if you don't deliver now that you're an officer, I will personally fire your French A because he was not very polite. So my point was that this was the way I knew that he was saying thank you from the heart. He was joking with me about what I could do to celebrate. He was patting me on the back saying, you've done a good job. And then he was setting the new step, right? So that's the way you have to manage from the heart. And by the way, that's not so easy. There are people like Jack Welch who can do that naturally, and you know it's real. You have other people that do it, but it's not real. You know, it's a little—

It doesn't feel authentic.

And then you have other people that just can't do it. It's too difficult.

Thank you, Marc, for sharing those examples. Now, we always want to leave our listeners with some practical takeaways. So I wonder if you have one additional kind of simple yet impactful action that our listeners can take today to start improving their leadership from the mind and the heart.

Yeah, I would even use 2 things. In fact, one is a continuation of the other.

Okay.

The first one, which is the high-level one, walk the talk. Okay? You have to, as leader, walk the talk of what you're talking about in terms of culture, value, strategy. If you just talk the talk, it goes to pieces. The other one, which is a consequence of that, is perhaps the most complex walking the talk is when you're facing decisions of integrity.

Hmm.

I, where there is a shortcut, there is a way to achieve the objective, but you're taking a gray shortcut where you perhaps close your eyes on a few things you should not do. That is the worst way of spoiling a company completely. So the one thing I would leave as a conclusion to this wonderful podcast with you, Mary, is do not do any compromise. Any gray shortcut is black. Never cheat if you want to keep your company energized. And successful with your culture.

Thank you for sharing those profound thoughts with us. It's clear that leading from both the mind and the heart isn't just a philosophy, but a proven pathway to sustained success. And I've seen you do both things very well. Now, for our listeners who want to dive deeper You can learn more about Mark's work through his consulting firm, Leadership from the Mind and the Heart, and you can find more resources on leadership and management on produce-international.com. We are very aligned with Mark's philosophy. Until next time, here's to creating the life and leadership you really want.

We hope you're feeling better equipped to create the career, the business, and the life you want. To find out more about how we support our clients in leadership, learning, and change, visit us at proteus-international.com. Have an excellent day, and thanks for listening.