Being like Bezos

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Amazon is one of the most successful companies of all time, and its founder, Jeff Bezos, is regarded as one of the world's greatest entrepreneurs. Hi everyone, I'm Steve Sandusky for Barron's Advisor, and welcome to Actionable Intelligence. My guest today is Bill Carr. Bill joined Amazon in 1999 and spent more than 15 years with the company. As Vice President of Digital Media, he launched and managed the company's global digital music and video businesses, including Amazon Music, Prime Video, and Amazon Studios. He's also the author of Working Backwards: Insights, Stories, and Secrets from Inside Amazon. In today's conversation, Bill and I discuss the leadership principles and execution strategies that Jeff Bezos implemented to grow Amazon and how you can apply and modify those ideas to grow your company. So let's get started with Bill Carr. Bill, you spent more than 15 years at Amazon, so you are well-steeped in the culture of the organization. And I've heard this word tossed around. I've heard Amazonian. So what does it mean to be Amazonian?

Yeah, Amazonian is a word that is used inside the company and is also a word that we used in our book Working Backwards to try to describe what it means to be a role model leader in Amazon. And this is the easiest way to understand what defines an Amazonian leader is to actually refer back to Amazon's 14 leadership principles. And this sounds very corny, by the way. I tell, when I was at the company, I'd be interviewing people all the time and they would say, okay, great. Well, how do I prepare for the interview? How do I understand, you know, what kind of questions you'll ask me or what's your company's like? And I would say, well, just go to our website or Google Amazon leadership principles. Principles and go read those principles and read them very carefully. And this is unusual because in most companies, a lot of companies have some sort of list of values, list of principles, but over time people have learned to sort of tune them out because they tend not to actually really mean anything at the company. They tend to be just posters on the wall or some words that the PR or HR team came up with. But that's not how they work at Amazon. They actually are very real. And there's something that both the company, Jeff Bezos, and the leadership team sought to document what defined the great leaders of the company, but also add some aspirational components to it to define what the company, what great leaders needed to do to be successful at the company. They did this work back in around 2003, 2004. And the other remarkable thing is that then they sought to really communicate these and refer to them frequently. They're referred to in meetings at the company. They're referred to as a way to help people make decisions. They're referred to to define what makes a great leader to hire coming into the company. They're referred to to define and coach people within the company to improve their performance. So they mean a lot. So when someone is really behaving in an Amazonian way, it means that they really have embraced the leadership principles, and it shows in the way that they think and that the way they act.

I want to talk about these 14 leadership principles, and I want to talk about maybe 2 or 3 of them. The first one I'd like you to touch on is this idea of think big. So obviously Amazon, huge company, but for other people listening to this that aren't as big as Amazon, how should we think about think big as a leadership principle? How do we apply something like that?

[Speaker:BRYAN LAWRENCE] Well, think big is one of these things that when people look at Amazon today, in retrospect, they say, well, of course, that was easy because they're Amazon. But as successful as the company was when I joined it in 1999, you have to remember that we really were kind of a one-trick pony. We did e-commerce. We weren't even considered the most valuable e-commerce company when I joined. That was eBay. We really only sold books, CDs, and DVDs, and VHS tapes, whereas sites like eBay were a bazaar and selling all kinds of things. So we're relatively limited. And when you compare that to what Amazon is today in everything from having an incredibly vast selection of e-commerce items, whether they are the retailer of record or they have merchants, the number of merchants selling on Amazon exceeded eBay a long, long time ago. But more to the point, Look at the diversity of Amazon's businesses. They're the leader in cloud computing in AWS. They're one of the top 2 or 3 digital media companies— media companies, actually, I wouldn't even use the qualifier of digital— media companies on the planet between Prime Video, Amazon Music, and Amazon Studios. They're again among the most successful media device manufacturers on the planet between Echo and Alexa. So I could rattle on this list all day, but When you think back to 1999, no one could have easily predicted that, of course, Amazon would go and do all these things. The only way that happened is by thinking really big. A simple example of this is when I was leading the digital video business that's now known as Prime Video, we were struggling for quite some time. We had difficult competition with Apple and Netflix, and we hadn't really found a way to differentiate and add a lot of value. We launched that business back in 2006. And even in 2009 or so, we weren't that big and doing that well, but we were thinking big. And one of the ways we thought big is to say, what customers really want is to be able to think of Amazon or any media property as a place to find and watch must-see movies and TV shows that they can't see anywhere else. And we realized that doing that by continuing to borrow or rent or license them from the major motion picture studios like Disney and Warner Brothers, we were never going to get there. Those movies and TV shows were always going to appear first on a major network like CBS or NBC, or movies would be in theaters, you know, months before they would come to us. So we weren't going to get there by relying on them. And we had to say, well, if we're going to do that, we really need to build our own movie and TV studio, which sounds simple today, but it sounded crazy and audacious at that time. I remember taking one of the leaders from my team, Roy Price, and asking him to go off and start this. It's a very lonely task when it seems— at that point, it seemed really unlikely that we would end up having any kind of a significant presence in this space. Roy had started off with no team, no budget. It's very difficult to think big, but it really required you take these first steps in that direction, no different than the first steps that Andy Jassy took. When he recognized that this new technology of web services had incredible promise, wasn't really sure where it led to as a business and didn't seem to have anything to do with e-commerce, which Amazon was doing, but he started that lonely journey on his own of having no team, no budget, no people, and starting to go figure that out. So think big requires you to think really long-term, look out into the future, and have a lot of courage to sort of step off the cliff and go chase that big thought, big dream.

So let's say I'm the leader of a company and I want to think big, I want to have my BHAG. How do I walk a fine line between I set this big, hairy, audacious goal and get people inspired by that and they say, oh my gosh, that would be the greatest thing in the world if we could accomplish that versus like, there's no way in the world we're going to do that and I'm demoralized. How does leadership walk that line?

What most CEOs do when they say they've identified some new area, some new opportunity, is that then they don't actually set the company up for success to actually get there. So one of the first mistakes they made, which we learned over time at Amazon, is that they don't make it the full-time job of someone who is experienced and senior enough to actually realize that vision. So in other words, at Amazon, if we had, instead of saying, Andy, this is your full-time job to go figure out AWS, if we had said to a product manager within the engineering organization or one or two engineers, go try to figure out AWS, the reality is that they wouldn't have had the experience, the access to Jeff, the ability to sort of wrestle through all the problems to get there. So a lot of CEOs try to solve this by making it the part-time job of some leader, some division. And when you're a leader of some division, what you do is you assign relatively junior people to go do that. And as that leader, you're going to spend very little time on it because by definition, your existing business is always going to be the bigger priority for you, hitting the revenue targets for the quarter, hitting the revenue targets for the year, whereas this some skunkworks thing that has zero revenue but only big promise is not going to draw your time and attention. What most people don't realize is that— I know this for a fact because between Colin and I, we know what Jeff was doing back in this time. In 2004, Jeff was spending about half, maybe a little more than half of his time on two speculative think-big businesses. One was Amazon Web Services, and one was digital media and devices. At that time, Neither one existed at Amazon. They were zero revenue. I am willing to bet that there are very, very few Fortune 500 CEOs that are spending half of their time on businesses that don't yet exist. And so if you want to think big, that means you're going to have to go invent something. And to quote the head of the device business at Amazon, the name Dave Limp, the best way to fail at inventing something is by making it somebody's part-time job. So It needs to be the full-time job of someone senior enough to carry it out. And the CEO is going to need to spend time and give proper care and feeding to that business because nurturing a new business requires special skills and special patience.

So if you want full-time results, you can't give it part-time effort.

That's right.

Yeah, that's right. A second one of these 14 principles is have backbone, disagree, and commit. So tell me a little bit more about that.

I've heard this story that Steve Jobs, at one point, Apple launched a new product that failed. And he went back to one of his lieutenants and said, it's your fault that we failed at this. And his lieutenant said, what do you mean it's my fault? I was the one who's been telling you for the last year or two that we should not be going and doing this new initiative. And Steve says, yes, I know that. But you didn't actually bring a persuasive enough argument and the right data to bear to point out to me why this wasn't going to work. So I find that story fascinating. And I tell that one a lot because this is actually really the point of disagree and commit. So a great leader like Steve Jobs or Jeff Bezos, their goal is to make the right decision to get things right. That is not the same thing as that every decision starts off as an opinion in their head, and they are unable to be influenced by others to update their opinion. And their job is to win the argument and be right from the get-go. Instead, what these great leaders do is they create an atmosphere of where they bring in many voices and many leaders into conversations and discussions so that they can actually get a balanced set of viewpoints, pro and con, on any one topic or decision. And so to loop all the way back to your question, what disagree and commit means is that it is your job as a— at Amazon, if you think that we are going to make a wrong decision or we're in the midst of making a decision and you think that we're headed down the wrong path, it's actually your job to forcefully and persistently voice your disagreement and clearly state why you disagree. And in fact, if you read about the details of how this is described, you're really supposed to do this all the way up to like the CEO level. And this is not behavior that's encouraged in most companies to sort of persistently disagree. Now, at the end comes the commitment part. If along the way, whether it's to your manager, your boss's boss, or ultimately you get to Jeff, if along the way you hear from the manager, well, I hear your point of view on this, but the reason why we're actually gonna go do this is this. If you hear then a counterargument that then makes you say, aha, okay, I get it now. So my disagreement is not valid. I'll set that aside. Or if you hear, yep, I hear you on that, on your concerns about project XYZ, that maybe we're going to run over cost or it's not technically feasible. But in fact, I factored that in. And here's why we're still going to do it anyway. This is now the point where you're supposed to commit to say, okay, I've made my voice heard. They've heard the specific argument that I've made. They factored that into the decision. So now that that decision has been made, including my argument, I'm going to commit to this decision as if it was my own. And you need to reflect that back. So if you leave that room and leave that meeting, you would then go back to your team if you're a leader and tell your team, yep, here's what we're going to go do. And you explain it and you back that decision as if it had been yours from the get-go and you never voiced You don't voice the, well, I didn't really think this was a good idea, but Joe says we're going to do it.

I think this is such an important principle. And I think this is one that a lot of companies get wrong for a couple of reasons. One is, if I'm an employee, and I'm one or two levels below Jeff Bezos at Amazon, and I disagree with him, it's going to be extremely difficult for me to tell him, well, I think you're wrong, and this is why. So that's kind of one thing. And then the second is, if I'm Jeff Bezos or if I'm a leader of a company and I founded this thing and it's hugely successful, I'm probably gonna have some amount of ego and I'm gonna think that I'm right. So I think by having this leadership principle that you just described it, everybody's putting the ego aside. They have the space to actually say what they think and be respected for that. And everyone's gonna be heard. And then even if what I want to do doesn't get done, we decide to go a different direction, I've respectfully disagreed, I've heard your side, now we're gonna commit, we're gonna move forward. So I think this is, it's a great principle, but I think it's awful hard for a lot of people to implement.

Well, it is. And let me be clear, we talked about this all the time at Amazon in our meetings. For example, we would have meetings, promotion, or reviewing someone for promotion, reviewing someone for performance. And this is actually the most difficult and complex leadership principle to follow because there are these very nuanced points to it about when is it really appropriate to disagree? When are you supposed to stop disagreeing? Once you've committed, that part is actually relatively clear and easy to define. What's complicated, and frankly, requires some experience and judgment to figure out, is how long am I supposed to keep disagreeing What is the point at which I'm supposed to commit? Because obviously today at Amazon, if you just came out of business school, it is just more than a little unrealistic that you should disagree all the way up to Jeff Bezos.

Yeah. I think we just have to know when we pick our battles. We can't fight every battle. We have to decide what's really important and what's not that important that I don't have to really go to the mat on this one. Yeah, I totally understand how this thing can be nuanced. Like many people, I'm a big believer in continuous learning, and the world is moving so fast that we just have to keep up with what's going on here. And I think back to Bill Gates when he was running Microsoft. He used to have these think weeks where he would go out into the woods in a cabin. He'd go off the grid, and he would read dozens of books and papers and just really spend some time to think. So I'm curious how Jeff and how you and how other leaders at Amazon, how did you come up with the ideas? How did you come up with the leadership principles? Were there some input sources that you guys and gals would tend to gravitate toward that furthered your learning that maybe you connected some dots and came up with something different? But what are the input sources that were great learning places for you folks?

Jeff, first of all, he was a student of business, of the world, of life. And one simple example of this is that he would assign a book each week for he and his team to go as directs to read and then have a discussion about that book. And largely these were business books, books like The Mythical Man-Month or The Goal, many business classics. This was especially prevalent in the early days of Amazon when this was of course the biggest job Jeff had ever— he hadn't been a CEO before. He'd been an analyst at a hedge fund, but he had a growth mindset and realized, okay, I've got to figure out how to basically get an MBA plus, plus, plus here while I'm doing the job. What was clear to me as an observer is that he really set aside time to make sure that he was learning how to be a better leader and operator. And he talks about this too, how he didn't really know how to operate at the beginning and he had to learn how to do that, learn from, from learned from others, learned from actually one of the direct reports he had, Jeff Wilkie, who was one of the best operators on the planet. So he had that growth mindset and he would actually use that to help teach and train people too. The second thing I would just say is when I think about like a Bill Gates Think Week and what a lot of companies do, and I'm not saying this is how Bill Gates does it, I wouldn't know Bill Gates well enough to know, but a lot of companies think about think big as something they might do for a week, but not all the time. In other words, a lot of times companies have an annual planning process and the thing they'll schedule before that is an offsite to go do some big thinking. Make no mistake, we did that too. But the difference is that a lot of companies would constrain all of the big thinking to that one period of time and then use that to think, but then come back to work and sort of stop doing that and then just worry about the day-to-day, maybe inject some of that into their long-term plan. But thinking long-term was an event that lasted a week and now it's over. At Amazon, One of the big mechanisms we used that made it a continuous process was this process that we frankly named the book after, which is called Working Backwards. And this is the name of a process, the Working Backwards PR/FAQ process that Amazon uses to develop new products at the company. And in a nutshell, the way this process works is that you start off by writing a press release describing the specific product problem you're going to solve and the solution to that problem. And you don't constrain yourself when you're writing that press release with various technical constraints, capital constraints, resource constraints, whatever those constraints might be, you define those in the second part of the document, which is the FAQ, frequently asked questions. Some of those would be externally facing questions like, how does this product work? And some of them would be internally faced questions like, yeah, well, how large of a team is it actually going to take to build this product? Or will I need to— if I have to have a sales force to do it, How's that going to work, etc., etc.? But the point of this is that this happened anytime and all the time. And by making it something that was accessible to anyone, all you had to do is write a Word document. I just had to write a press release and write a few pages of frequently asked questions. Any, any, anyone in the company could be thinking big, thinking long-term, and write a PR FAQ at any time and surface it up to management through their team. In my role, I would be reviewing PRFAQs every week. Sometimes it might be the fourth draft of a PRFAQ, and sometimes it might be the first draft, but it was a continuous process. There was never a week that I worked at Amazon where I wasn't spending some of my time reviewing PRFAQs, which are really product plans for the future. I think one of the secrets of Amazon is to make thinking big and product planning for the future a continuous exercise, not an event that lasts for some discrete period of time.

Now, you mentioned the word mechanism, and I'm also very interested, and I think you touched on this a little bit too earlier, about embedding these leadership principles into the company. I think one of the mechanisms that Amazon has is this annual planning process. I'd love for you to describe how the annual planning process works at Amazon?

High level, a good annual planning process is really just a resource allocation exercise for your next fiscal year. In general, those resources are about people, how many employees can you have in various departments and teams, capital expenditures for property, plant, and equipment. In the case of Amazon, a lot of fulfillment centers, servers, I guess now airplanes and electric electric trucks to deliver items to people. Then just capital for other initiatives. In the case of my old business, how large would our budget be to make original movies and TV shows in the next year? In that regard, any company that does this well recognizes this. Again, they recognize that it's not the time to start thinking big for the first time and start coming up with all their wildest dreams. It really has a very specific goal in mind. But the thing that I would say that's notable In this phase of the program, what each product team is doing or operating group is identifying controllable customer-facing initiatives and input metrics and making specific goals and plans around those. So in some cases, that initiative might be launch the next generation of the Amazon Echo. In some cases, it might be improve our click-to-deliver time, for items from, you know, X hours to Y hours. And each team comes up with these very specific goals, specific owners. And then what happens is that the Jeff and the senior leadership team, the S-team, his direct reports, they identify the most important initiatives and goals from all these plans, and they make a big list of them and they call them the S-team goals. And they then track and monitor these goals in the following calendar year. And this is a long list. So even back in 2010, you know, I can give you this number because it was public. There were 452 goals. I can only imagine how many there are today, because certainly by the time I left in 2014, there were— trust me, there were more than 452. But the notable thing about these is that in most companies, first of all, that's a very long list. Second of all, it's notable that that the vast majority of these metrics actually were going to touch the customer experience. So 360 of those 452 goals in that year were going to have a direct impact on the customer experience. Secondly, financial output metrics like revenue and free cash flow were mentioned a total of just 12 times across those goals. And many other financial metrics like free cash flow and gross margin were never mentioned at all. And, you know, every quarter, Jeff and the S-team would sit in a multi-hour meeting and would hear from the various owners of each one of these goals to understand what's the status, red, yellow, green for each one of them. This is a very rigorous process and it's a process that was focused on ensuring that the goals were really going to benefit the customer and they were things that the company could control. By focusing on those controllable inputs to the business, the company had faith that the outputs of revenue, free cash flow, etc., would then materialize and meet the company's goals. So this is quite different from how most companies are laser-like focused on those output goals, not the inputs to the system.

Yeah, and this is really interesting because 452 goals, I mean, that's just nuts. I mean, by most standards. And so I think you were also saying that this was almost part of a bottoms-up process where people would bubble up their ideas.

That's right.

Okay, but is there also a top-down where Jeff and the S-team would say, "Hey, here's the 2 or 3 big goals that we have for the organization, and then maybe somehow from the bottom-up and the top-down, we're going to meet and the S-team is responsible." Is that how it worked, or how does it work?

Yeah, so, and first to take a step back and editorialize, I hear a lot about whether a company is a command-and-control company where everything is from the top-down, or a lot of what's in vogue is that, "Oh, the company should just be completely a from the bottom up and every individual should go figure out what their goal is and it should work that way. I think neither one is the right answer. The ideal is it's a harmonious combination of the two. You're never going to get it right if it's all one or the other. And one of the great things about this process was that, yes, each department, each team, each operating unit had an obligation to go develop their own operating plan. And as the company grew, these would sort of stack up and have to become rolled up into larger groups. But nevertheless, each group would have a plan. And then these plans would get reviewed with Jeff and the S-Team. This was a serious process. Let me just give you a simple for instance. At the very end of my tenure there when I was running Prime Video, Amazon Studios, and Amazon Music, the Prime Video operating plan review, it lasted about 6 hours. So pretty much occupied an entire business day. That was just for one business unit. If you were Jeff and the S-Team, they would literally have several weeks, weeks on their calendar blocked out where they were doing nothing but sitting in a big room reading extremely detailed operating plans and then having lengthy discussions about each one of them. I don't really know how all the other companies in America or the world are run, but I am willing to bet that very few of them are the CEO and the senior executives spending that much time crawling through that much detail and minutia of all their companies' operating plans. So yes, each one of the teams was bubbling forth, here's what I think, you know, here's what we believe we need to do to drive our business. So they are then empowered. And just as equally, Jeff and his reports are empowered to give critical feedback and suggestions. And so what you would end up with, each operating plan would then be modified based on that feedback. And Jeff and his team would then harvest from each one of those plans the goals that they thought were most important. So they were a combination of the two. That's not an easy process to go through. It's tough. At times, it's not fun, but boy, is it effective.

Yeah, for sure. So you've talked a lot about operational excellence, and Amazon certainly is known for operational excellence and execution. And I was listening to another show that you were on, and you were describing a situation where you were being offered an opportunity to be promoted into a new position. You were a little concerned that maybe you didn't really have quite the experience for that particular role, and then you were talking to one of the senior leaders there who said, "Look, everything can be distilled to a process, and you've now shown a track record of creating and running things based on a process. So as long as you apply that here too, you're going to succeed." And then you went on to say that a founder needs to understand that everything that is important in the company can and should be distilled to a scalable, repeatable process. That's kind of an end quote there. I'd love for you to expand on that a little bit in terms of How should organizations think about creating scalable, repeatable processes? What does that mean? Are these technology systems? Are these checklists? What are they?

The first thing I would say is that when the CEO is grumbling about some specific problem in the company, the first thing they should do is try to understand, well, why is this happening? And oh, by the way, they're probably grumbling about it because it's happening frequently. And a simple example of this might be, why do we seem like we have some people in our company who, quote unquote, aren't bought in? They aren't really bought into the mission of the company. They seem smart, they seem capable, but they don't seem to be bought in. And what I found is in a lot of cases, using this one example, what a leader might try to do is to address this issue with some sort of extra communication plan or some employee rah-rah event. To like get them more excited about what we're doing. And, you know, I saw this as sort of more like, well, when you recruited and brought the people in, because you can find, there are plenty of talented people for each one of these roles, whether it's you're hiring engineers, product managers, you name it, but they're not all going to be as successful and as happy in each company because every company is a little bit different. So what are you doing to make sure that when you hire and bring someone in, that they're going to be super successful in your company because the culture and the way that you do work at that company is a great fit for how they are oriented, how they think, and how they do work. You know, in that case, I said we need to go upstream all the way to defining, well, what, what does the culture of your company even mean? Like, what is that? Have you codified it? And then two, how have you then applied that to actually as a formal process for how you think about hiring people? And a formal process for how you think about giving people coaching and performance feedback. So that was a simple example of where, and I can give you 20 more, where I observed some symptoms, some recurring problem. And instead of trying to come up with some short-term method of wallpapering over it or talking people up or coaching them up or saying, well, I'm going to go around the company, have a one-on-one with everyone who's grumbling, like that just doesn't scale and it's not going to work. It's not going to change the underlying conditions. So it's that realization that good intentions or extra effort or extra rah-rah, those things really don't work. They don't stick. They don't have stamina. The only way you can know something works is by having a process that somehow you can measure and then you can make it repeatable and scalable. And Diego Piacentini, the former senior vice president of the international business at Amazon, who had also had a very successful career at Apple prior to Amazon. He's the one that gave me that comment about the process, and I never forgot it. I then realized from that point forward in my career that anytime I was encountering some recurring problem, trying to solve it with some sort of extra effort or communication like this was not really fixing it. You needed to then go back, deconstruct what was really going on there, and figure out, okay, what's the root cause? And then how do I devise a process that actually addresses this and fixes it forever?

Yeah, so it sounds like we're not trying to fix the person, we're trying to fix the process here. And I think of it like a river. So how is a river going to flow? It's going to flow the course of the riverbed. It's going to take that path of least resistance. And so if we can create a process by which it's easy for people to follow, then we can pretty much put, you know, any kind of person in because it's going to be easy to follow the process as opposed to trying to fix the person.

The biggest transition or hurdle that early-stage CEOs have to make is because what got them there, frankly, is their personal hustle, their personal persuasion. They were persuasive with the venture capital firm. They came up with a big idea. They hustled and dove for every loose ball to be able to get their product or service out the door. That's what worked and that's what got them there. But it's going to stop working once you get to about 150 employees, because it doesn't really scale. And it really doesn't work when you're trying to be international and get to more than 1,000 employees. At that point, the only thing that's going to really work is like, how do I distill and take how I, the founder and CEO, think, you know, like to make decisions? You know, should we prioritize speed or quality or both? Or you have to start to codify these things so that then the people you bring in understand how they're supposed to do their job in your image.

Yeah, I love that because in the early stage, we've got to make sure we get the— well, we always have to make sure we get the right people on the team, but certainly in the early days, those early people are really going to help set the tone. But it's also critical in those early days as we're scaling that we have the right processes and systems in place that enable that scaling. So we have to put just as much attention on the processes as we do on the people throughout the building phase of the company. And speaking of which, I'd love to talk about hiring here. Here as well. It's so easy for people to say, "Oh, we just have to go out and we have to hire the best people we possibly can." Okay, well, that's nice to say. But in practicality, Amazon, as you talk about in your book, has this process that they call the Bar Raiser process. What is the Bar Raiser process?

[Speaker:BRYAN LAWRENCE] Bar Raiser is Amazon's solution. They had a specific problem with their specific scalable, repeatable solution to that problem. The problem was, back in 1999 when the company started to grow like a weed. And to quote one of the senior leaders of the engineering organization, we had new people hiring new people hiring new people. And in doing so, you basically then at that point, it becomes completely subjective and random. In other words, new person number, it doesn't matter whether 2 or 3, if they haven't been given some specific instruction on exactly how they're supposed to interview, what they're supposed to look for, what are the criteria, then you've completely left it up to someone's opinion that was influenced by what other companies they worked at prior to getting to your company to decide how they'll hire people. So that was sort of problem number 1 that you're dealing with. The problem number 2 that I would say really applies to any company, whether you're scaling fast or not, is if you look at a vice president of marketing who's had a long and successful career in marketing, that professional is not going to be equally successful as the vice president of marketing at— you pick 5 companies, I guarantee you that there is at least one of those companies where that person is not going to be very successful, and there's another one where they'll be very successful, because how each company does work is very different. And not only is it the individual's goal who's seeking a job to try to find the place where they will be most successful As the employer, as the hiring manager, that is also your goal. Not just to hire anyone who is a qualified person, but hire a qualified person who also, based on the way they work and think, will be successful in your company. And the way that that is defined and distilled at Amazon is by— we already talked about them— the leadership principles. The leadership principles literally define what does a role model leader— if you could go into a factory and create one, they would they would be aces at all 14 of those principles. So when you're out recruiting, you need to go try to find, well, how do I identify people that look like that or identify ones that don't? And so the way Amazon does that is on a typical loop, say there are 6 interviewers, they take the 14 principles and they divvy them up so that each interviewer is assigned 2 or 3 of those principles. And then they devote the interview not to asking whatever questions are their favorite questions or whatever they think they should ask them. They only are asking them about questions that will allow them to evaluate whether this candidate meets or does not meet the bar for those specific principles. And second of all, they've got to take detailed notes of the interview, and then they need to write up, write an assessment at the end on top of those notes. That then says, I think we should hire or not hire the person and defend that assessment based on the facts and the data that they gathered. And then they submit that into the recruiting tool, as do every other interviewer. And then that group gets together for an in-person debrief meeting, reads all the feedback. So now they have feedback on all 14 leadership principles. And then everyone in there revotes. It says, okay, now that I have all the data, Do I still think this person is a hire or not a hire? And oh, by the way, there's one special interviewer on every loop who's called a bar raiser. That person is not the hiring manager, and they are not even in the organization for that hiring manager. They are sort of an independent expert in the hiring process at the company. They participated in the loop as well, and they run that debrief meeting, not the HR leader, not the hiring manager. This bar raiser person does. And they also help give coaching and feedback to everyone in the interview. And they make sure that the process is being followed and the criteria that the hiring manager and the interview loop are using are those leadership principles and making sure that they are actually setting an appropriately high bar for each one of those principles and the candidate as a whole. So altogether, these things encompass the hiring process that is seeking to be highly databased, not subjective, seeking to ensure that the hire is going to be great at Amazon, not just a talented person, because those are not the same thing.

Well, that's a super involved process. So is that process used for hiring someone in entry-level position just coming out of college, or is it reserved for people that might be director level or higher?

At least when I was there, this process was used for all, you know, white-collar, for lack of a better term, jobs. But now Not for hourly employees in the fulfillment centers and customer support, but everyone who had a salaried position, a salaried role, this was the process. Yes, this is an incredibly time-consuming process. I was a Bar Raiser. In fact, I was a member of the group who helped manage this process. I was part of Bar Raiser Core. As a Bar Raiser, this was a time commitment for me of 8 to 10 hours a week between actually conducting interviews, and sitting in debrief meetings, helping to coach people on this process. I was devoting roughly one business day a week to this process. And that didn't make my job easier because I really needed every day of the week to sort of manage my business. But what I realized early on and why I was willing to put in this time is that while that is very expensive for me and many others like me to spend so much time interviewing, it is far more expensive to hire the wrong person in terms of the impact, negative impact they can have on your organization and all the time and effort as a manager you will use up to try to coach, develop, and ultimately move that person out of your organization. So making the right hire is among the most important decisions that any manager can make.

Yeah, and it's clear that Amazon allocated a significant amount of time to making sure that you brought the right people into the organization. Bill, I'd like to just wrap up here with one more topic. And a little bit earlier, you touched on this idea of the PR FAQ, and I think that falls into this area of communication and narrative. So Amazon is famous for not using PowerPoint presentations. So can you tell me a little bit about the internal communication process, the 6-pager? What is that?

Yes, so like these other processes we've already talked about today, Amazon does not use PowerPoint to conduct internal meetings, and by that I mean your typical business review decision meeting, internal meetings of, call it, 50 people or less. If you have an all-hands meeting with the whole team and you get up on stage and are giving a presentation, sure, use PowerPoint for that. Or if you're meeting with some external partner, you're going to use PowerPoint because they would be freaked out if you handed them a document. But for most Amazon meetings, the way it starts is literally whoever is the presenter for that meeting, that team, that leader, they begin the meeting by, you know, physically or virtually, you know, distributing the document that the participants in the meeting will read. And then there is, for a 1-hour meeting, there's about 20 minutes of silence while everyone reads the document, takes notes, makes their comments. And then the next 40 minutes of the meeting are devoted to a discussion of the document, of the subject, and the subject could be anything. The reason why Amazon does this is back in the early 2000s, which is really this Renaissance era when Amazon established all these processes and established all these new businesses, Jeff was getting frustrated with the lack of progress that was being made in meetings. Jeff held a weekly meeting for he and his direct reports, the S-team meeting. It was about a 4-hour meeting.. And different teams would come in to present, and he was frustrated that they weren't really getting to the bottom of problems. They weren't— he didn't feel like they were making high-quality decisions. They felt like they had to— a team had to come back in and re-present. And so Jeff and his technical assistant, Colin Bryar, my co-author of the book Working Backwards, they sought a solution. They didn't just accept that, oh, well, that's just the way it is. They sought to say, well, what is a different way of thinking about this? And they were reading the writings of Edward Tufte, the Yale professor who was writing about the ways in which he thought that PowerPoint was actually the wrong tool for companies to discuss important topics and make decisions. And he said that, you know, with PowerPoint, you can kind of get away with glossing over details, staying high level, just have a few bullet points. And frankly, you can also get away with that if you're a really good and charismatic presenter, your charisma will win versus the actual idea itself. And so instead, if you're really dealing with complex issues, a better way to deal with those issues is to write a business memo. And this way, a lot of different data points, you can read through a document with many data points and the author, a good author will help to connect the dots for the reader. There's a lot more information that is transmitted in 20 minutes of PowerPoint presentation versus 20 minutes of reading a document. The meeting participants are actually getting about 8 times more information in that 20 minutes because of the pixel density and the rate at which people can read versus listen. So if you think about it, if you're, if you're the leader of a company and you're in a meeting, what is the definition of an efficient meeting? An efficient meeting is one where there's a lot of information, good, well-documented, accurate information being transmitted. So then everyone in the room can share the same information. And then there's a high quality discussion where sort of both sides of an argument are presented and discussed. And then at the end of that, a high-quality decision is made. So if you think about, well, how should you best invest— if you compare at face value a 1-hour meeting conducted with PowerPoint versus a Word document, it's pretty hard to argue why PowerPoint would allow you to better meet those goals than a business memo. But I think a lot of companies don't do this because, first of all, it's a lot harder to write a good business memo than it is to create a PowerPoint. It's also just become an accepted norm. And frankly, it requires a lot of commitment and discipline on the part of the leaders of the company to enforce this and to read complex documents. If you're spending 10 hours a day in meetings as a CEO, and each one of those hours you're reading a 6-page detailed document, that is actually quite mentally challenging. And trust me, I can tell you this because that was what my job looked like for several years. But if you want to think about which way we'd be more effective, be much more informed about your business, be able to give higher quality feedback and suggestions to your team, and make better decisions, I don't see how you could possibly make a good argument that conducting that meeting with PowerPoint would be more effective.

One of the things I love about that idea is that if you're the person who has the idea, by having to write it down, it's forcing you to just clarify your thinking. And I'm sure this is part of why Jeff suggested that you folks do that is you have to clarify your thinking. It's going to make you think longer and harder about what you're trying to propose there and think of all the nuances. And I think in your book you also have a template for this 6-pager, is that correct?

Yeah, we do provide a template. And, you know, to be clear, the 6-pager— there are all kinds of different meetings and topics you can use. It doesn't matter whether it's a monthly business review, an annual operating plan. The PRFAQ is just another type of narrative, but we give some tips about good ones and some of the tools that you can also use, like having sections at the end with FAQs, frequently asked questions, which will ask the kinds of provocative and challenging questions you would expect the audience to ask you and reflect that, A, you have a good enough mastery of the topic to understand, like, what will those people ask you, and B, do they be able to provide a cogent and concise answer to it. But yes, yeah, part of the benefit, as you point out, frankly, of forcing teams to write a business memo is they're going to spend a lot more time being much more thoughtful and understanding the topic at hand better than if they did it with PowerPoint. And so that in and of itself is enhancing the productivity. So if you think back to Jeff then being frustrated about meetings where they weren't making progress, they weren't getting down to the details with PowerPoint, that's a combination of the team not really having very clear thinking coming in and Jeff and his reports not being able to sort of grasp all the information in a timely and detailed way. And those two things combined, you know, means you're just gonna have to come back again and do it again, and that's super wasteful.

Well, Bill, I think this is a great place to wrap up. I really appreciate you sharing all these ideas, and congratulations on the new book. What's the best way for people to connect with you and get access to the book?

Well, the book is, uh, being sold at all kinds of bookstores, both bricks-and-mortar stores and online stores, ranging from, you know, Barnes Noble, Books-A-Million, and of course Amazon. But you can also visit our website at www.workingbackwards.com, or just send me an email, bill@workingbackwards.com. Excellent. Thank you, Bill.

Thank you. My key takeaway from my conversation with Bill is the importance of codifying and reinforcing your leadership principles. I found it fascinating that the interview process for new hires at Amazon was based on determining how well the new hire matched up against the company's 14 leadership principles. That's definitely one way to ensure that your culture stays intact as you grow and expand geographically. All right, that's all for today. Make sure that you like and share this podcast through your favorite social platform, and for more great podcasts, visit us at Barron's dot com slash podcast. Take care and be safe.

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