Jeff Bezos' 2016 Letter to Amazon Shareholders

Key ideas

Bezos asks how a large company avoids the slow decline he calls Day 2, and offers four defenses: customer obsession, distrust of proxies, embracing trends and fast decisions.

1. 1

   Know what you are defending against

   Bezos describes Day 2 as stasis leading to irrelevance and eventually death, though he says an established company can take decades to get there. He treats keeping early energy inside a big organization as an open question. He says he does not know the whole answer and calls his list a starter pack.

2. 2

   Center the company on customers

   Bezos writes that a company can be organized around competitors, products, technology or a business model, but that in his view customer focus best protects its vitality. His reason is that customers keep wanting something better even when they report being happy, which pushes you to invent for them. He gives Prime as something no customer requested.

3. 3

   Do not let proxies replace results

   Bezos warns that as companies grow they start managing to stand-ins for what they want. Following a process can replace looking at outcomes, and he says a more experienced leader treats a bad result as a reason to examine the process. Surveys can stand in for knowing customers too; he is not against them, but says product owners must understand the customer themselves and use research to find blind spots.

4. 4

   Adopt big trends quickly

   Bezos argues that fighting a powerful trend probably means fighting the future, while embracing it gives you a tailwind. He says such trends are not that hard to spot but can be strangely hard for large organizations to embrace. His example is machine learning, where he expects much of the impact to come from quietly improving core operations.

5. 5

   Decide fast as well as well

   Bezos says Day 2 companies make good decisions slowly, and offers four thoughts while admitting he lacks all the answers. Use a light process for reversible decisions, and for most decisions probably act before you have all the information you want, while being good at correcting course quickly. Use 'disagree and commit', which he says bosses should do too, and escalate true misalignment early, since otherwise the decision goes to whoever outlasts the other side.

In Jeff’s words

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