The Amazon Management System — What Do I Buy

Book Review

Amazon Management System Building Block 1:

Customer Obsessed Business Model

Amazon Management System Building Block 2:

Continuous Bar-Raising Talent Pool

  1. Job insecurity — If I hire a person better than me, then I may lose my job.
  2. Frugality — Why should I look to save money? If I don’t spend, someone else will.
  3. Deep-dive — Why go into detail? This is not my job. If something goes wrong, it is not my problem.
  4. Have guts to disagree and commit. Many people do not have the guts to disagree with their boss, as it may be detrimental to their relations and career progression.
  5. Deliver results. People should be ready to commit and deliver results. Employees sometimes see this as not their job, but their bosses’ as he gets the higher pay and benefits, so why stick his own neck in it.

Amazon Management System Building Block 3:

AP Powered Data And Metrics System

  1. A dip in page load time by 0.1 seconds can reduce customer activity by 1 percent. Further, you can co-relate.
  2. A decrease in the number of customers contact by 90% can significantly increase profits as less of the support staff is required.

Amazon Management System Building Block 4:

Ground Breaking Invention Machine

Amazon Management System Building Block 5:

High Velocity and High-Quality Decision Making

  1. Type 1 — This is a decision that is a one-way street. That means you have done something, it impacts current systems and there is no point of return if the decision backfires. It is a costly affair as it impacts the running business. One takes this type of decision with the utmost care, a lot of precautions, and analysis at each step.
  2. Type 2 — This type of decision is about the new ventures, and does not impact anyone. This is about experimenting, exploring, and doing new things. Here too much thought and bureaucracy can scuttle the innovative process.
  1. Find the best truth — Use metrics to hold your opinion, challenge someone with it, without the fear of hierarchy, command, and control.
  2. Imagine the possible change — While Jeff Bezos wanted to implement Amazon Prime, other executive Brad Stone suggested that it is a bad idea. During the promotion time of 2-day free shipping, Amazon finances go for a toss, so what will happen when Prime is in place? Jeff states that when people buy more, Amazon will have to improve its shipping practice as well as the increased volume will decrease its shipping cost. Furthermore, later the analysis proved that Prime customers only shopped 2.7 times more than normal customers.
  3. Combat Group Thinking — Do not worry about the hierarchy, challenge the point if you think it can be improved or have to be changed. In many places, opinions are not aired to maintain harmony or prevent personal grudge against anyone. But you are doing injustice to the customers and the shareholders in that case.
  4. Have the backbone to disagree and commit — When you have a different opinion with someone, be ready to disagree with him, and prove your point.
  5. Minimize regrets — When nothing works, opinions vary, data is not there, nothing is clear, then go ahead with your gut feeling, so that you do not have regrets later on.
  1. Points stated in PPT are clear to the presenter, but not to the viewer.
  2. When the presenter starts with the presentation, he states points that are going to come later early, so this creates confusion.
  3. The answers which the viewers may be looking for earlier maybe later in the slides.
  4. PPT does not interconnect the ideas well.
  5. Someone can interrupt you between the presentation and disrupt the whole objective of the meeting.

Amazon Management System Building Block 6:

Forever-Day-1-Culture

  1. Budget control — No one should aim to build an empire in Amazon. There is a shoestring budget and only required people will be there.
  2. Indirect Headcount — Reduce the number of indirect headcounts. Direct headcounts are technology and customer-facing people skilled. Indirect ones are those in accounting, man-management. Amazon has only 1.5 percent of people who are of indirect headcount.
  3. Simplify the process: Rule should be made to avoid bureaucracy. Jeff makes it clear that the rules should be able to clear the following checklist, made by Jeff Rosemann.
  4. When the rules can’t be explained;
  5. When they don’t favor the customer;
  6. When you can’t get redress from a higher authority
  7. When you can’t get an answer to a reasonable question
  8. When there is no service-level agreement or guaranteed response time built into the process

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Piyush Jain

Piyush Jain

Piyush, a software professional, reads anything on AI, behavioural economics, strategy, macroeconomics, history, or anything good.