Streamlining for Success: Lessons from Amazon's Playbook

I think a lot of people, if you're running a smaller business, they might think, oh, this doesn't apply to me because I'm not Amazon. Right. They got really complex logistics and operations. So yeah, I'm guessing they need to do that. But, you know, I don't need to do that. And I'm here to tell you there has not been a business that we've worked with that did not benefit from doing this, what we call value engine mapping, business process mapping. It's not a new concept, but very few small businesses do it. And so I would recommend everybody, here's the tools that you need. You need a whiteboard, you need a Sharpie, you need some sticky notes. Okay. Get you some post it notes and go on a whiteboard and just ask, okay. When it comes to customer or client fulfillment, like how does that happen after a sale is made, then what do we do?

Hey everybody. Welcome to another episode of Business Lunch with your hosts, myself, Roland Frazier, and my business partner and friend Ryan Deiss. Ryan, how are you doing today?

So good. We still talking Amazon, Amazon turnaround and.

What you can learn from it. Yeah. So we had taken from. We kind of did a case study and analysis of Amazon's turnaround under Andy Jassy and thought that there were enough lessons that it made sense because there's specific things for us to talk about that are very applicable to you as a small business owner, a startup, a medium sized business, obviously all the way up to, you know, to a company of like Amazon. We expect. Andy is tuned in to all of our episodes about this, just hanging on every word to be sure that he's making the right moves. But, but there is something that can be learned. And so I love, love case studies. We were talking about the big turnaround in valuation and profitability by him coming in and having kind of these different areas that were pretty large and significant that he focused on and how we can use those to improve our own businesses. The first three we covered last time, the power of a fresh perspective, the ability to embrace being frugal and then engaging with shareholders. This time we're going to talk about three more. We might finish it up this time and only do two or we might go three. We'll see how it goes. But it's definitely, there are lessons to be learned here. The next thing, the number four was streamlining of operations. So what he did was he eliminated unnecessary processes, he streamlined teams, and he focused on core competencies. And I think that's cool. He improved operational efficiency, which helped Obviously with the profits, he went back to things that Bezos had done successfully. Like no meeting should have more than can be covered by. I think it was two pizzas, right?

Yeah, two pizzas.

No team should have more people on it than that kind of addressing where, where they overstaffed, obviously on the bigger team of say, customer support. They probably need more than eight or 10 people at Amazon to cover that. But, but maybe, you know, thinking about sub teams and we talked about that on a couple other podcasts. The action step here would be have you mapped out your business processes? Because it's hard to be efficient. They say what gets measured gets managed. If you don't have something that you're measuring in, at least to the point of knowing what the process actually is, it's definitely a good idea for you to chart out what are your business processes. Then you can apply one of our favorite things, the theory of constraints to identify the bottlenecks and, and fix those. Where are things kind of chunking up? And then can you use more modern automation like, like rpa, which is robotic process automation or AI, or even just basic marketing automations and accounting automations that are present in software to replace or make more efficient the things that people are doing. And that's something that doesn't get looked at very often. So I think thinking about what technology should we be investing in that actually enhances our collaboration, our automation and our communication. And if we're looking at some goals here as how you would apply this to actually realize the benefits, specifically it would be we're going to reduce operational costs by X percent and while we're also increasing productivity by Y percent and maybe even turn, tie that into customer, because we always like getting back to the customer. At the same time improving customer satisfaction ratings by Z percent. So that's kind of the category of streamlining operations. Love to get your thoughts on it, Ryan.

I think a lot of people, if you're running a smaller business, they might think, oh, this doesn't apply to me because I'm not Amazon, right? They got really complex logistics and operations. So yeah, I'm guessing they need to do that, but I don't need to do that. And I'm here to tell you there is not been a business that we've worked with that did not benefit from doing this, what we call value engine mapping, business process mapping. It's, it's not a new concept, but very few small businesses do it. And so I would recommend everybody here, here's the tools that you need. You need a Whiteboard, you need a Sharpie, you need some sticky notes. Okay. Get you some post it notes and go on a whiteboard and just ask, okay, when it comes to customer or client fulfillment, like, how does that happen after a sale is made, then what do we do? Right? And if you will get a sticky note and you will write out one sticky note for each step or stage of the process until, until that process is done. And maybe it's. It's done when you fulfilled on the order or you've completely, you know, fulfilled on the service, or just when you're at a point where you're ready to ask for a testimonial or customer story, because I know some are ongoing, but when you feel like it's done and you fill in everything from the start to the end, you see all these little, you know, sticky notes that represent the different steps and stages of that process, it now becomes a lot easier and a lot simpler to look at them to go, just like you said, okay, which of these sticky notes could we be, could we audit? Could we optimize? Which of these sticky notes could we automate? Which of these sticky notes maybe don't even need to be there? That we could skip completely. Where are we missing some sticky notes? Which of these sticky notes, like you said, is the bottleneck? I just firmly believe that you can't optimize until you first visualize. And one of the simplest things that any business can do is just to get some sticky notes in a whiteboard and visualize a particular process not as a linear checklist, but as an actual flowchart occurring. Connect the arrows, show the flow through a process. You know, if it can fork off in different directions, you can turn it on a diagonal, use the diamond shape to show that it's going up. That anytime we're working with a client or a portfolio company to build out the operating system, that is step one. And you should do it for your customer acquisition process, you should do it for your fulfillment process, and you should also do it for how you innovate, how you roll out, create new products, services, features, things like that. If you do that for all three, it becomes a lot easier, like you said, to say, which of these sticky notes do we need to automate, optimize, just get rid of.

Yeah, yeah, I think that that. Is there a place, because I know that we have exercises on that. Is there any place that people can access a, Some, some sort of information on that, how to do that?

Yeah, I mean, it. I just recorded a YouTube video on it because we've had so many questions about kind of the process. And so I'll. That that should be up I would think around the time this comes out. So I'll see if we can grab, grab the link. But if not, you can check out my YouTube channel. Ryan Dice official should be there at some point.

Awesome. Then the next one is going to be attention to detail. Now we talked about this last time that he's known. Jassy is known for his meticulousness and that he was personally reviewing press releases and blog posts, blog posts and, and even statements that were going out. And the benefit is, well, it's all of this attention to the detail that's improving the company's communication and that's helping with profits and certainly messaging and ultimately translating into shareholder value. We have some issues with that, which we talked about before. But if we're thinking about.

How could.

You get like climb back into the business a little bit. Have you got any, anything that really what he's doing there is quality control. So do you have quality control? Does it have to be you as the founder, CEO? It's probably not your job. It's probably too much. But when you're doing a turnaround, it might be the most important thing. I mean he was trying to recover $1 trillion of SHED value. So he probably perceived that as a pretty high value thing. And even if we want to criticize as we did, and I think rightfully and over focus on shareholder value, it will impact that company's ability to get credit. It will impact covenants that the, that the company might have. And so there's a lot of things behind the scenes that we might not be aware of that cause the valuation to be more important to the operations and ongoing future of the company than just the stock price. So giving, you know, some, some room there for, for that to be the case. So what are some other things that you can do? Tell your employees what's going on, let them know what's going on as well so that they can be part of this. Have this culture of, of the constant, the kanai, you know, Kaizen never ending, constant improvement while you're allowing the employees to take ownership of the work. Be careful when you're doing what he's doing too. Not to do the jobs of somebody else to where they just become, you know, effete. They just become powerless. You know, it's like, well, I'm not going to do anything because this guy's going to come in and do it. And that happens a Lot in, in, in smaller and middle medium sized businesses. And then also what are the goals? Like what are the specific KPIs? Maybe it's reducing product defects by, you know, 50% or increasing customer satisfaction ratings by 15% or achieving a 98% on time delivery or whatever. Those are all things that could be potential goals. What are some of your thoughts on that?

I think what we talked about before really is the process for doing it. So you first have to visualize it and then you go step by step, stage by stage and ask, how can we optimize and improve this? How can we save? How can we make it more efficient? But you've got to go, you have to first get a clear picture of the entirety of the process. And so I think they're kind of one in the same a little bit. Because in addition to saying how can we make this more efficient? You can also say how do we make the step better? But again, you have to first visualize before you optimize, whether optimizing is improving the experience for the customer or making it more efficient for the company. I'll also say I do believe that CEOs, founders, they should be existing at 30,000ft and at three inches, right? You're, you're at the very, very highest level, strategic. And then you're diving down to the things that matter the most. And those are the two worlds that you need to live in. In balance, being ultra intentional about where you're going to be at 3 inches to the ground, it's so important. It sends such a massive signal. So if you're going to die, dive in, make it clear why you're doing it, make it clear that it's important. But also make it clear that you're not going to linger there forever. Make sure that your team knows that. And then, last point that I'll make is, as the CEO, you know, as the person in charge, it's not your job to have all of the answers. And this goes to what you were saying before about let's make sure we're not doing the work for our people. It is not your job to have all the answers. It's your job to ask the questions, hey, why isn't this performing up to this benchmark that we had? Or hey, you know, it seems like in the past we were able to get this result. Why can't we get that anymore? You know, and these don't have to be like leading passive aggressive questions, you know, why would you say you suck when before, like I'm not Talking about that I'm asking, asking sincere questions about why aren't we doing it this way or why isn't this working as well? Your job is not to have all the answers. Your job is to ask the questions. Yep.

I love it. All right. The next thing, number six, was balancing innovation and efficiency, which we talked about, and this is related to it. So Jassy's action, while prioritizing efficiency, he also invested in AI and other key growth areas. So this balanced approach allowed Amazon to maintain its innovative edge while improving profitability. How can we do that, too? One of the ways would be to allocate a specific budget for innovation initiatives. If you haven't done that, number one, have a budget. If you don't have a budget, you definitely need one. Okay, so let's start there. Then. Once you have a budget, you should have segmented sections for different things. So having a innovation budget, or very often it's called an R and D research and development budget, is one of the easiest ways to do that. Also, what can you do to encourage experimentation? Even if you don't want to have or you defund your moonshot program? That's the wild, crazy. Let's have lasers that float us up in the air and then make people buy. You know, it's like, okay, that's less likely to turn for sure into something. How can we have our employees focused on innovation? We talked about maybe doing that through masterminds. Google did. I don't know if they still do, but they used to say you need to have 20% of your time devoted to crazy. Just not to crazy, but to your own ideas for how you can make the company better. So I think a formalized versus informal program, even if it's as simple as take 20% of your time that is on the clock and devote that to meaningful development. But that alone, without some system for. How do I then see that you're doing that and that that's benefiting the company? How do I measure that so I can manage it? That's something that you're going to need to think about having, too. So it's not just, you know, have all the employees fall asleep in the Easter egg chairs and meditate, you know, about how they could be better at the business and never have to share anything or produce any result. It's got to be. We expect that we're going to have an innovation rate of X and have some ability to measure that as a KPI. So that's, you know, I think that's really important. The Other thing is, how can you let the employees know that it is safe to share ideas that you're not always shooting them down. Don't be a defensive manager. So they come and they say, you know, hey, man, the way we're manufacturing ketchup, I think you could get a whole lot more out of it. If you increase the size of the opening on the bottle, just, you know, double the size. People use twice as much ketchup, and you're like, that's the worst idea I ever heard. You don't even know anything about manufacturing. Where's your degree in efficiency of products and product design? I don't think so. You know, that's not. And the people do that. I say that hyperbolically, but, like, that does happen.

And it turned out that that ketchup.

Guy ended up, I think, doubling profits at Heinz. Right. So definitely think about creating that safe space to encourage and embrace the employee ideas. And then how are you going to measure these? What are the KPIs you'll put in place to do that? So that's. That's something to think about. If I was looking at the. At. At what those KPIs might be, maybe it's that you're tying increases in revenues, profits, or some other KPI that's important to you. Customer satisfaction, nps, even employee satisfaction, to the innovative offerings that are coming from the employees. How do you. How do you tie those together? So we want X percent of your time devoted to innovation. And then that innovation needs to be matched against improvements in a thing we care about that equals a certain amount. And then you can work, you know, again, measure and manage thoughts.

It's calendars and wallet. If somebody says, I'm really frustrated because nobody on my team is coming up with any new ideas, nobody's able to fix, you know, problems that are there, it's all left up to me. My question is always, number one, what are the specific metrics that you're trying to improve? Can you point to them on a scorecard? And have you pointed them on scorecard to your team? Have you said, hey, team, this is what we want to try to improve? Have you framed the innovation question for them? Because if you haven't and you're just saying, like, well, go blindly innovate. Go visionate, everybody. Well, that's kind of not fair. Um, that. That's probably not their job and it's probably not what they're best suited for. So you need to. Step number one is you got to frame it. But then going back to what I said before, you're committed to an idea if it shows up in your calendar, in your wallet. And for businesses, what this means is your meeting rhythm and your budgets. So if you're saying there's not enough innovation going on, non. You know, people aren't coming up with, you know, with any, with any new ideas. We're not. We need to push that out. And I need everybody, you know, coming up with, with all these amazing ideas to make me a lot more money. Number one, have you framed it? Number two, have you. Is there a specific budget for it? And do those managers know that they can spend that amount on innovation projects? This has happened to us before where I've been begging, like, why have we not tested this new ad platform or this new ad strategy? And I just assume that it's because people were lazy and they didn't care, which is not a fair assumption. What it came down to is they didn't want to burn up the budget that they had on something that they didn't know would work because now they're going to miss their goals and they're going to get in trouble and maybe even fired. Right, well, that makes sense. So we had not given them the budget to test with, so now it's like, no, no, use the test budget. Use the test budget. This is in addition to, not in lieu of so show me the budget. But then also, do you have meetings that are dedicated to brainstorming and innovation ideas? It usually doesn't happen in isolation. And so for all of our. Prior to any quarterly Sprint planning meeting that we're doing, there's going to be some type of idea brainstorming session that happens at the team level that is done in a particular way and it is designed to aggregate ideas. Those ideas are put on an idea scorecard, they're measured, they're ice scored, hypotheses are created and it is a formalized process. So if you find that people aren't innovating, have you framed it? Have you allocated the budget? Have you allocated the calendar, time and meetings to do it? If not, I'd try that before. You just assume that everybody is lazy and stupid.

I love it. Or think that. But keep it to yourself and try to get yourself to evolve, because I used to think that way all the time as well. Not only are they lazy and stupid, but they're all dead to me. Now I'm just going to do it myself. Terrible, terrible idea. So happy that we have all moved away from that. The next one would be number seven. Adapting to a changing landscape. So he was adapting to the post pandemic economic slowdown. Primarily his adaptation was the focusing on cost control and efficiency. So this has obviously helped them to be hugely profitable again, which also helped increase their valuation and share prices for, for the average bear, that's not Amazon. Stay informed about the industry trends. Know what's happening. There is definitely always something moving. Things definitely do not stay the same. And how can you stay ahead of it? How can you skate to where the, you know, the puck is, is going not to where the puck is right now? Per Wayne Gretzky, Think about investing a little bit of your budget in market research and, and also encourage your employees to learn and to anticipate and they should be consuming industry publications on job interviews. It's one of the most annoying questions I ask people. I think I say, so what are you reading or watching to or content that you're consuming to keep up with what's going on in the industry? And almost none of the candidates can tell me anything. I want the person I'm going to hire, the person who says, oh, these are my three favorite blogs and I like this YouTube channel and then I go to these meetings and I read this newsletter and this guy has a gal, has a great podcast and that's what I want. A passionate consumer who is interested in staying up on what's going on and what's likely to happen. That's who you need to be and that's who you want to encourage your, your staff and employees to be as well. So that that culture is, is important. And can I make a point on that?

Because it's, it's a narrow thing. Don't put that question, ask me how I know on a job application. We asked that question on, on a job application. Like what? Because we wanted to figure out, like if they're not reading it, then we just won't even.

Because they can research and think about it and give you a long list of stuff.

Well, what we noticed was that I looked at one, I was like, oh, that's kind of cool. Like, yeah, those are some good podcasts and blogs. That looks great. And then went to the next application and it was the exact same. And the next one, it was the exact same and the next one is the exact same. They put the freaking interview questions into ChatGPT and chat and they just copied and pasted what ChatGPT did. And what it made me realize is that there are now all of these AI based application job hunt kind of things that will pre Fill them all. And even if it's a question that's not on there, give you an AI question. So it made me realize that you can no longer ask these on an application because people are using AI to answer them. Incidentally, everybody who used it, we were like, you're done. Like if you're not even going to take the time to fill in its.

Own form of screen. But yeah, and to me, this is a, this is an in person question when I'm, when I'm literally totally agree interview. And if they can't tell me that, I'm like, you're going to not. I mean, you might be competent, but you're, you don't have the hunger that.

You won't grow it. Yeah, you won't grow unless I, unless I make you do something. You won't grow. You're not choosing. You clearly don't value growth and learning.

So what are the KPIs here? It could be a goal that you set that you want them to consume some sort of content. It could be reports to tell me what you see as the trends or the things that are happening. If you were KPI ing it, maybe it translates into some increase in market share, that we want our program, we want our growth rate before the program of, of keeping up with trends and everything was implemented. We want, you know, that's our measurement, our baseline. We want certain things to increase, you know, by a certain amount after that. That, that'd be, you know, that'd be some way to do that. So any, any other thoughts on that?

Yeah, I just, I think it's important to, to ask if you can have a pre mortem and a postmortem when you're making these strategic decisions. And ask before you make the decision, what's, what do we believe is going to be true about, you know, our world, this market, that isn't true today? Just asking that question is going to prompt investigation and conversation. Similarly, if something doesn't go right, asking was this a failure of execution or a failure of assumption? If it's a failure of execution, then maybe you got a systems issue, a people issue that's solvable. If it's a failure of assumption, then what that means is that you either didn't ask the pre mortem question or you asked it, failed to answer it or failed to answer it correctly. So saying what did we believe would be true about the industry, the world, like our market, that clearly isn't true. Questioning your assumptions on the front end and then questioning them again on the back End is one of the best ways to learn. It's way more painful to learn on the back end after a failure, but it's probably the most valuable lessons you'll ever learn. If you take the time to actually ask that question. What assumptions did we make that turned out not to be true? What can we learn about that moving forward?

I like it. And I think the last one that we should probably talk about is just the personal touch that he did come in and he held internal meetings. He communicated directly with the employees. He shared his overall vision for the company with everyone that he talked to. He was passionate about it, communicative on message the whole time. And that did. I don't have a specific increase in employee morale, but I have that it contributed to employee morale and engagement during this challenging transition period. So keep in mind he was coming in in a time that the company was transitioning, but he was a transitioning factor himself and a pretty big one to go from this aspirational figure that is so big in Bezos who created this amazing thing from scratch to be the person taking over. I know that I don't know if I'm going to pronounce his name. Is it satire? Nadella? Is that how you.

Satya Nadella?

What is it? Satya Nadella, Satya, Satya Nadella who came in and replaced Gates, right? I mean, or actually he replaced Ballmer. But that was, you know, its own thing. But, but like when you have these giant figures or cook replacing jobs, you've got to connect. You can't stay in your ivory tower as I am the designated crown prince that you know, or crown person of royalty that came from the founder that's got this giant larger than life personality. And so whether you're going through a difficult time, transition, a transition from that that might even be successful, from small company to big company, which can derail a lot of companies, or from leader old leader to new leader, or founder to manager, all of those are really going to require a very, very careful and intense amount of personal connection with the people that you're coming in to manage. Not just at the report direct to you level, but throughout the organization. So I think he did a really good job of that and, and helped the employees to feel it was going to be okay because I think there was a lot of concern about what was going to happen when Bezos left. So you guys out there regularly connecting and interacting with your employees at all levels, town hall or stand up meetings, actively seeking feedback, having a specific method where or mechanism where any Employee can provide feedback that will trickle up to top management and implementing customer feedback mechanisms and personalizing your communication with your key clients as well as not just employees, but key clients. And if we're looking at KPIs, it would be maybe ENPS your employee net promoter score or employee satisfaction score or CSAT store reducing turnover and attrition. You know, employee churn would be another one. Or increases in customer retention or decreases in customer churn. Those would all be things that would be directly related to that.

Thoughts at scale. The CEO is the chief communications officer and I think there's, there's three buckets to that. You've got to be communicating certainly to investors and stakeholders to the extent that they're there. You know, maybe the investor and stakeholder, by the way, is your spouse, your partner. Because they need to know as well that you're going into a season where it's nose to the grindstone and this is going to be really tough and I might be late some nights. I know some of my personal failures, like when, you know, I've made my wife very, very unhappy with me, it's not because I was working too much. It's because I failed to communicate the season that I was entering into and that I would need to be. So you're the chief communication officers to all stakeholders, be they investors or partners. You're also the chief communication officer internally to the team. And so yeah, like again, go back, show me your calendar. Like do you have a standing, at least monthly, all hands, where you are communicating the things that matter, the metrics that matter. No spin, no bs, just here's where we are and this is what's most important right now. Your team deserves to know what's most important right now at the company level. And then, not to be forgotten, is the chief communications officer for the customer. Great CEOs are the best spokesperson that their company has ever had. That was certainly true for Jobs and for Bezos and for all of these well known world class CEOs that we respect. I mean, heck, you know, over the 4th of July, um, you've got Mark Zuckerberg. You know, he's posting pictures of him with an American flag in a tuxedo, wake surfing, you know, on, you know, Instagram and other platforms.

Why?

Because if we like the CEO, we tend to like the company. So even if the business is not the CEO, like, we're not talking about like Tony Robbins here, we're talking about Mark freakin Zuckerberg. Right? Facebook's gonna be just fine without Meta's gonna be just fine without Mark. A big company, it's resilient, it's going to be all right. But it is still your job to communicate externally. And so I just think, yeah, that's it. And if you neglect for too long any one of those three groups, you're probably failing as a CEO.

I like it. Couple others that we won't spend as much time on just to think about and that way we'll wrap it up in two episodes. But the importance of cultural changes, having a strong culture that aligns the employees with the company values. This was something that, that, that Jassy did a good job of. The impact of external factors, being aware of external factors that are impacting the business. And we talked about the role of communication. And then leadership never stops, right? Continuous learning and adaptation. How, how are you able to make things, how are you able to continue to improve things at the company by being about a better leader? Those are all things that are important. So just wanted to kind of share all those things with you guys and we think that there's a lot to be learned by looking at success and failure. And Amazon has had a lot of both of those things and so just kind of deep diving ourselves and researching beyond the article that came out that caused us to think about this was, was really, really helpful. So that, that I think that's it for this one. Ryan, any summarizing thoughts?

I think it's just good to get a picture of what the CEO role does look like at scale. And then there's things that we pointed out that we thought was great and things that we would maybe be critical of fully acknowledging and trying to have some sense of humility, both because we ain't Andy Jassy and also we don't know the full story. But just in the discussion, I hope you realize the difference between running a company as a CEO at scale is fundamentally different than what it means at the founder startup stage. And I think that pivot, that transition is so hard for a lot of entrepreneurs to make and many of them just don't want to do it. And so I think if you at least know that the game does fundamentally change and what it takes to be great at the startup phase, it's a totally different set of skills. And in fact, if you try to bring those startup skills into the scale up phase, you're going to wind up failing. You're going to wind up bottlenecking your business. Because if you've listened the last this episode and the one before, none of this stuff really matters that much at the startup phase and yet all of it matters at the scale up phase. So just, I would say just, just keep that in mind and make sure I have every confidence in all of our listeners. If you've successfully started a business that you have all the skills and ability they might need to be learned to be the CEO at the scale up level. Just know that it's a, it's a different job. You're basically firing yourself at one job and rehiring yourself at another job. So be clear that that is the case. Be clear that that's what you want and if it's not, that's okay. Maybe time to exit somewhere all the business, that's okay. Or bring on the team. You know, bring on the Andy Jassy or the, the person who can do it in your stead. Awesome.

Well, hopefully you guys found this helpful and we appreciate you and would love for you to share this with everyone you know and tell them that there's some good stuff here on Business Lunch. We'll see you next time.

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