4/25/2018 0 Comments The Pursuit of Higher Standards - Lessons from Amazon's Annual Shareholder LetterHere they go! They are talking about Amazon again! Yep. We sure are. Why? Because as Amazon CEO Jeff Bezos noted in his annual shareholder letter, his company just:
How is that possible? How does a company with 560,000 employees stay laser-focused and rise both on Wall Street and in customer satisfaction polls? Bezos is likely the most "customer centric" business leader in the world. He obsesses over those that use Amazon's services and buy their products.
He writes, "One thing I love about customers is that they are divinely discontent. Their expectations are never static -- they go up. It's human nature. We didn't ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday's 'wow' quickly becomes today's 'ordinary'." This is so true! Bezos used his annual letter to address how any business can stay ahead of ever-rising customer expectations. How does he believe the race against customer standards can be won? By having higher standards. Bezos' stance on higher standards is that they are teachable, they are domain specific, you must recognize them, and you must explicitly coach realistic scope. Here are few thoughts from his letter that offer a look into his customer-obsessed mindset. If you haven't read the letter yet and would like to, click here. (Side note: You should read the letter. It is a masterpiece and this attempt to summarize a few of its points will likely fail to do it justice.) High standards are teachable There has long been a debate on the intrinsic nature of key job skills. Are employees born with them or can they be learned? On the topic of higher standards, Bezos falls into the latter category. "I believe high standards are teachable. In fact, people are pretty good at learning high standards simply through exposure. High standards are contagious. Bring a new person onto a high standards team, and they'll quickly adapt. The opposite is also true. If low standards prevail, those, too, will quickly spread." This statement should first make us look inwardly at our practices. Do we have a "high standards team" in place? What environment are we bringing our new employees into? Perhaps a better question is, do you demand high standards (both of yourself and your team) as a leader? High standards are domain specific You aren't going to know it all. Your employees aren't, either. Bezos notes that he had high standards on inventing, customer care, and hiring when he started Amazon, but "didn't have high standards on operational process; how to keep fixed problems fixed, how to eliminate defects at the root, how to inspect processes," etc. He points out that he had to learn and develop high standards in these areas. If you believe Bezos here (and why wouldn't you?), there are plenty of opportunities to improve on your deficiencies. Do you need to be a better leader? Maybe you don't understand the hiring process? The point here is that it is never too late to become more well rounded as an individual or as a professional. There are domains that are specific to the medical and eye care industry that are ever-changing. Taking the time to grow in these areas is crucial for success. You must recognize higher standards Bezos goes on to write that "you have to be able to recognize what good looks like..." and that "you must have realistic expectations for how hard it should be (how much work it will take) to achieve that result... To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be..." The metrics for what is good are probably not what most would assume. If you look at the Amazon approach, profitability has never been the goal. Customer satisfaction has always taken precedence over net profits and Bezos and his team have reaped the benefits. Raising the standards of your practice must be for the benefit of your customers. What are the specific areas your practice can improve in that will have the highest impact on customer satisfaction? You must explicitly coach realistic scope Once you recognize what higher standards within your domain, Bezos says that you "must have realistic expectations for how hard it will be (how much work it will take) to achieve that result - the scope." He uses two examples in this section of the letter to describe what this process might look like, one of which is his friend who was trying to learn how to do a freestanding handstand. After trying on her own and failing, she decided that she needed a coach to help her. (That's right. A handstand coach.) The coach gave her some great advice. He said, "Most people think that if they work hard, they should be able to master a handstand in about two weeks. The reality is that it takes about six months of daily practice. If you think you should be able to do it in two weeks, you're just going to end up quitting." Bezos chimes in and says that "unrealistic beliefs on scope -- often hidden and undiscussed -- kill high standards. To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be - something this coach understood well." We have to be realistic about where we are and the work it will take to get from the current to desired state. It probably won't be easy and it will likely take longer than we expect, but it will be worthwhile. The Amazon shareholder letter is rapidly reaching legendary status. Thousands of eyes are drawn to it every year as it is a look behind the curtain of a fascinating business. Why would Bezos use the one opportunity he has each year to address something like higher standards? Because he believes the benefits are well worth it. He notes that higher standards produce better products and services for customers. That is the goal, right? He admits that it is, but also points out that a less obvious benefit of high standards is that people are drawn to them. They help with recruiting and retention. He writes that, "More subtle, a culture of high standards is protective of all the 'invisible' but crucial work that goes on in every company. I'm talking about the work that no one sees. The work that gets done when no one is watching. In a high standards culture, doing that work well is its own reward -- it's part of what it means to be a professional." What could possibly produce higher customer satisfaction than everyone in your practice taking pride in every task they do? As he always does, Bezos closes his shareholder letter by attaching a copy of the first shareholder letter which was written back in 1997. If you read through it, you can see the growth of the business in many aspects, but one thing is clear: Amazon has always obsessed over its customers satisfaction. It would be hard to argue that it's a bad approach.
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