Chief Investment Officer
Commercial Loan Automation
BirdsEye Viewamazon leadership principles
Amazon’s market capitalization has recently surpassed that of Walmart, making Amazon the largest retailer in the US. Many focus on the technology and innovation aspects of Amazon and how those elements got it to the premier market position is has attained in such a short time.
I’d like to highlight the company’s leadership principles, which, in my opinion, can be useful for any enterprise working for market leadership, customer delight and defensible competitive advantages. We can ALL learn from Amazon, even if technology isn’t in our DNA. In this article, we will look at Amazon’s Leadership Principles one by one, and discuss their applicability to banking.
“Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.” AB: Banks are too engaged in tweaking their own structure and legacy delivery systems to seriously consider this important mindset change. I believe such a shift can create a truly sustainable competitive advantage and should bear consideration by any bank leadership. It is not about the next big thing in technology. It is about the principles that made Amazon the formidable company it is today – simplicity and minimal friction in interaction. I realize we can’t wave a magic wand and change our structure, but there is less reason to deliver our services through that structure today than ever before. Starting with how the customer navigates our enterprise can quickly become a major differentiator.
“Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say “that’s not my job".” AB: Studies by numerous mega-banks show that our customers get transferred well north of 3-4 times in order to get service of solve a problem. Overall abandon rate (i.e. the issue was never resolved) exceeds 40% in some instances. Again, this problem is not technology-related. It’s an opportunity to change our mindset, which SuperCommunity banks, with their strong cultural identity, can adopt and execute on effectively.
Invent and Simplify
“Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here". As we do new things, we accept that we may be misunderstood for long periods of time.” AB: Our Forums are a great example of this principle, since they provide excellent platform for folks to learn from each other. “Not invented here” isn’t a variable. Thinking out of the box is difficult. The right stimulation makes it easier. In fact, learning from Amazon is a good example!
Are Right, A Lot
“Leaders are right a lot. They have strong business judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs.” AB: Making fewer mistakes is something we all strive for. What Amazon has discovered, and we all know, is that the right team makes better decisions than any individuals. One of my favorite sayings is, “I have many limitations, but my team has none”. The right team brings diversity of viewpoints and experiences to the table, thus ensuring appropriate considerations at the table.
Hire and Develop The Best
“Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization. Leaders develop leaders and take seriously their role in coaching others. We work on behalf of our people to invent mechanisms for development like Career Choice.” AB: We all know this is true, but our hiring and acculturation practices do not reflect this statement.
Insist on the Highest Standards
“Leaders have relentlessly high standards - many people may think these standards are unreasonably high. Leaders are continually raising the bar and driving their teams to deliver high quality products, services and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed.” AB: I don’t believe in compromising expectations. I know this isn’t a popular viewpoint, but I strongly feel that, once this is done, results and personal excellence and satisfaction all suffer. Expecting the best will get you much closer to being the best than expecting what you believe can be done. Shoot for the moon and you’re likely to hit a star or two. I am a firm supporter of this principle, and found it to lift the team’s spirits; folks soar to higher levels and achieve well beyond their own expectations. This is not a stress-less environment, but it is a high satisfaction environment, which, in my experience creates constructive stress and positive dynamic tension.
“Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.” AB: I admire companies that grew out of someone’s willingness to dream and the guts to reach for that dream. I see in our industry companies that started this way and became leaders in their markets just because they dared to think big. TSYS, Capital One, CashConnect and others are examples of what I’m talking about. Even the smallest bank can become a major player in a well-defined pond.
Bias for Action
“Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.” AB: So many banks have outstanding management teams who have tremendous analytical capabilities. They put these to full use, slowing down decision making and unintentionally inhibiting the bank’s nimbleness. I’m a firm believer in analytics, but reject analysis-paralysis, which plagues so many of us. Achieving certainty before making a decision will render the decision obsolete. Amazon’s leadership put it best: some decisions aren’t so critical or non-reversible that they merit extensive and lengthy analysis. Many small tests in the real world work very well. Try it.
“Accomplish more with less. Constraints breed resourcefulness, self-sufficiency and invention. There are no extra points for growing headcount, budget size or fixed expense.” AB: I find this statement almost humorous given the billions Amazon is spending in R&D and market expansion. And yet, the second sentence is important. There is no status associated with territory, they say. Can you make the same claim?
Learn and Be Curious
“Leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act to explore them.” AB: Leaving and curiosity are two traits that help people – and organization – stay young and vibrant. The moment we realize that we know it all and got it right is the beginning of our decline. The world continues to change, and by learning how it happens we ourselves become leaders in it. We can’t sit it out and be successful.
“Leaders listen attentively, speak candidly, and treat others respectfully. They are vocally self-critical, even when doing so is awkward or embarrassing. Leaders do not believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best.” AB: I have nothing to add. Trust is the foundation to all relationships, business or personal.
“Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdote differ. No task is beneath them.” AB: True leaders pitch in wherever they are needed. I’ll never forget seeing Thomas Keller, the venerable French Laundry chef, wipe the counters in his kitchen. If you have a moment, lend a hand. Further, I believe that market and sales leaders need to spend the vast majority of their time in the field, with customers or with their people. That’s where they make the most difference and where they connect themselves with reality.
Have Backbone; Disagree and Commit
“Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.” AB: Leadership courage – we all love it and want it, but so rarely have it. Again, the last sentence is an excellent summary – regardless to disagreement, once a decision is made, true leadership means you are on board 100% and will execute the decision to the very best of your ability.
“Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.” AB: At the end of the day this is what matters the most: getting it done for our customers and shareholders. A for effort is nice, but it doesn’t put food on the table. Handling adversity is a key element to results achievement. Adversity is inevitable. The real question is, how are you going to handle it, overcome it and learn from it?
Amazon is not a flawless company. It make minimal profit (and often doesn’t even do that), it’s involved in numerous tax issues, and it has problems just like other companies. But Amazon created a marketplace for millions of small businesses that didn’t exist before. It offers customers such a seamless experience and innovative loyalty paybacks (e.g. Amazon Prime) that its customer loyalty is enviably strong. The company’s values as reflected above are entrepreneurial and yet ethical. They are good business. Take a second look at these principles. I am confident you will find some that bear further highlighting and emphasis in your own environment.