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How Amazon is Winning

This week is re:invent, Amazon’s AWS conference in Las Vegas. They’ve been shipping new products about once every 15-30 minutes it seems this week. Everything from magic AI cameras to container management to new databases.

As the announcements keep coming it’s easy to feel disoriented, which may be exactly the point.

John Boyd

I’ve been re-reading Certain to Win, Chet Richards book about Boyd’s OODA loop applied to business. The essential idea is to create disorientation, confusion and withdrawal in your enemy while promoting harmony, speed and effectiveness in your own organization.

It takes a book or three to more fully understand how to do this, but at a high level:

  • The faster you can execute, the less able an enemy is able to predict your movements and counter them.
  • In order to know what to execute you need to:
    • Observe the situation,
    • Orient yourself to it using your knowledge (and possibly just act based on instinct, skipping the Decide step) and,
    • Decide what to do.

To get there as a large organization you need decentralized command. There’s simply too much going on to keep track of everything and plan. To get decentralization, you need a bunch of trust between people.

It looks like Amazon gets its trust from their principles: A fairly concise set of deciders on how to act. It can be used to some extent to resolve situations without referring to management (and therefore politics, I guess). For example, number one is customer obsession. You can use this to decide on something, a feature say, by asking if it’s good for the customer. You’d be surprised how often product managers might want to do things that work badly for customers.

This acts as the implicit guidance & control that goes from Orient to Act, skipping Decide. Or at least, it makes many decisions speedier and easier.

Speaking of speed, there’s another principle titled “Bias for Action”.

Certain to Win includes an anecdote about Yamaha trying to compete with Honda in the motorcycle market, the “Honda-Yamaha War” as it became known. Yamaha declared they’d build a huge bike factory presumably to reduce per-unit costs. Honda countered by producing about ten new bike designs for sale per month.

This huge iterative speed and innovation (trying things at random very fast) beat out Yamaha’s economic strategy of reducing costs and flooding the market. It’s the difference that Thiel tries to get across in Zero to One; the difference between building something new the first time and then copying it. Yamaha, I posit, was trying to out-copy while Honda was trying to create the new thing. Out-copying doesn’t work.

And thus with AWS and the whole of Amazon.

The bewildering speed of new products doesn’t make sense if you’re a competitor trying to keep up by copying. It’s too difficult to keep up and the environment is changing too rapidly. This is how a fast OODA loop works, by setting the timing of the battlefield. The timing, the cadence, is set here by Amazon at a rapid rate. In war, you want to be in the same place with your assets: Your tanks should be moving around and changing so fast that the speed hinders your enemies very understanding of what is happening. It just doesn’t make sense what is happening.

I can’t think of a better analogy for what Amazon is achieving here, whether or not OODA has consciously been deployed internally. If you look, Amazon quietly launches products all the time like this, re:invent isn’t a special case. The only special cases which come to mind are the Kindle and Kindle Phone launches, which if I had to bet, probably act as negative datapoints internally at Amazon anyway. Why do a big launch? My bet is they figured out it wasn’t necessary, they have their amazon.com homepage and it works just as well.

Amazon will continue to win for as long as their cadence outstrips their rivals. The more rivals try to copy or model it in to simple narratives like having a great website, warehouse robots or other things which are the result of the cadence, they’lll continue to lose. As soon as they start focusing on copying Amazons DNA instead of Amazons products, they’ll win. Much like various cities try to copy having big buildings and airports, just like New York, instead of copying the free market or the US Constitution.

Incidentally, this is why I think Microsoft is doing well right now. The Windows Insider Program is testing out tons of things all the time:

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Steve’s Golden Rules of Feedback

You know business books which spend 300 pages explaining something that is easily laid out in a few sentences? I’m looking at you, Millionaire Next Door (to be a millionaire, buy a used Toyota and cheap vodka – there, I summarized it for you).

Well, here are my golden rules of feedback:

  1. About 1-in-10 people ask for feedback on things
  2. About 1-in-10 of those will try to action the feedback

Some multiplication will tell you that only about 1% of people are able to both ask for and use feedback. If you think about it, that about explains the 1% of people who’re successful at whatever they’re trying to do.

Feedback sucks.

For whatever reason, we don’t like being wrong. It feels bad.

Most people want to feel good, and someone pointing out their mistakes doesn’t tend to induce that special unicorns-and-puppies feeling.

Here’s how most people approach feedback:

  1. Don’t ask for feedback at all

Things are much safer that way, in the same way that a ship is safe in a harbor. But they’re meant to be sailed.

Today, I got an email from a company asking for feedback. This is a great start.

Underneath the summary text, the huge logo and then two paragraphs of text I was invited to click a link to give feedback. Clicking the link lead to this:

feedback1Now – this is how you don’t ask for feedback.

But lets back up. Why should we want feedback?

You need feedback because you have no idea if what you’re doing is correct. You have made some guesses, perhaps even educated guesses. But you need the humility to figure out if you’re wrong. Should the widget you made be blue or red? The quicker and cheaper you can find out, the better.

It’s very easy for us to think we’re right, but we usually aren’t. The cost of being wrong if we’re talking about who’ll win Superbowl 100 isn’t super high. But where money, life and business are concerned it can be very painful.

So although most people, maybe 80%, don’t ask for feedback at all there is another 10%-20% who ask but are just really bad at it. It usually goes like this:

  1. Grudgingly ask for feedback
  2. Figure out how to disagree with it and do whatever I want anyway

I see this all the time. Like in that example above, let’s see it again:

feedback1

What’s wrong with this is varied, but it comes down to wasting my time. I had to:

  1. Open the email
  2. Read it
  3. Click the link
  4. Wait for it to load
  5. Answer some number of questions, starting with the most dumb question of all. Dumb, because you’re asking me if I’m a customer when I obviously am.

Each of those steps throws out potential responses. The number of people sent the email might start at a 1,000 or so, but then that gets cut down to perhaps 5 or 10 responses if we’re lucky. This is because every step will lose people. Fewer steps are better.

Here’s all you need to ask –

What one thing would you change with [Product/Service/Thing]?

That’s all you need to ask. And you can do that in the email without sending people to a website.

Most people are more than happy to tell you the one thing. Then you collate all the responses together and crucially you actually try the thing.

If the customers say it should be red but you like blue, all you need to do is try it. Maybe they’re wrong. But if so, the costs are trying some red for a while. If they’re right then the upside can be huge because you’ve learnt something and applied it.

That’s what we call an asymmetric payoff, and it’s what I help people figure out all the time. If you want some help, give me a call.

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