Book Review — Amazon for CMOs
How Brands Can Achieve Success in the New Amazon Economy
BOOK WRITTEN by MARK POWER AND KIRI MASTERS
REVIEW WRITTEN by LINKEDIN.COM/IN/MORTGREENBERG
INITIAL THOUGHTS
There is a need for every brand to know all about Amazon and how Amazon works. Mark and Kiri not only talk about how brands can maximize thinking and execution for working with Amazon, but get into how Amazon makes decisions, competes, and continually wins. The countless quotes from CMOs, heads of eCommerce and company founders that spell out their strategy with Amazon is reason enough to buy this book.
SELECTED HIGHLIGHTS
INTRODUCTION
Since Amazon’s inception Bezos and his team have been relentlessly competitive, innovative and agile. This theme is one that brands or anyone for that matter need to become to lead.
The book is structured around Amazon’s 14 leadership principles. Here is an overview from Inc Magazine on these principles, LINK and a LINK to Amazon’s site as well. Below are the full 14 principles to give more color to what comes on the following pages of Amazon for CMOs.
1. Customer Obsession.
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.
2. Ownership.
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.”
3. 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.
4. Are Right, A Lot.
Leaders are right a lot. They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs.
5. 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.
6. 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.
7. 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 drive 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.
8. Think Big.
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.
9. Bias for Action.
Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.
10. Frugality.
Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing headcount, budget size, or fixed expense.
11. Earn Trust.
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.
12. Dive Deep.
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.
13. 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.
14. Deliver Results.
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.
BEYOND THE 14 AMAZON PRINCIPLES THERE ARE A FEW AMAZON CONCEPTS TO UNDERSTAND AS WELL:
“Day One” is the mantra meant to convey that Amazon will never stop being a start-up. “Day Two” is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1 at Amazon according to Bezos. Part of “Day One” is: Stay focused on customers (Day One Vitality is to be obsessively focused on customers).
Focus on results and not process (Sometimes companies stop looking at outcomes and only consider whether they have followed the process correctly, not whether the desired outcome was achieved) “The process is not the thing,” Bezos wrote. “It’s always worth asking, do we own the process or does the process own us? In a Day Two company, you might find it’s the second.”).
Look outside the company (“The outside world can push you into Day Two if you won’t or can’t embrace powerful trends quickly,” wrote Bezos. “If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.”).
Make decisions quickly (Bezos wrote that Day Two companies do actually make good decisions, but the problem is they make them slowly. He wrote that start-ups have no problem making high-quality, high-velocity decisions, but large organizations struggle with doing the same.
Two Pizza Rule. In the early days of Amazon, Jeff Bezos instituted a rule: every internal team should be small enough that it can be fed with two pizzas. This helped focus on efficiency and scalability. A smaller team spends less time managing timetables and keeping people up to date, and more time doing what needs to be done.
The Flywheel. The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selection of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.
For a deeper dive on Amazon check out CB Insights Amazon Strategy Teardown, https://www.cbinsights.com/research/report/amazon-strategy-teardown/.
And, check out Amazon’s own annual reports and read the letter to shareholders to understand more about how Bezos and Amazon think, https://ir.aboutamazon.com/annual-reports.
Now back to the book review…
INTRODUCTION CONTINUED…
Amazon is now a strategic imperative for brands, whether brands are selling products or not. For many companies online sales are ahead of traditional retail, meaning Amazon is not just a sales platform… For many brands, their biggest challenge is shifting mindset around treating as only a distribution channel… Brands that ignore Amazon and treat like an adversary are missing the opportunity… 50% of all eCommerce in the US take place on Amazon….
CHAPTER ONE — NAVIGATING THE NEW AMAZON ECONOMY
Learning to think like Amazon is such a big part of working with Amazon because Amazon moves so quickly, the 14 principles should be studied…
CHAPTER TWO — FORMULATING A WINNING STRATEGY
Brands need to figure out where they are on the strategy continuum: Actively univested, Ignorant, Semi-invested, Actively invested… There are many marketplace, marketing and advertising capabilities that Amazon has that brands should take advantage of, including distribution, and a marketing channel for the brand. A great case study noted in the book is that of Anker and battery and cable company focused on quality with the majority of their sales from Amazon and beating Apple and Samsung selling accessories. Here is a deep dive on Anker if you like from The Verge, LINK. And companies working with Amazon need to develop an Amazon strategy that is not fixed but highly adaptable, always test and learn… Customer obsession is the glue and utilizing Day One thinking is key and even if a company cannot adopt Day ONe thinking across the board they can shift their obsession to delighting their customers.
CHAPTER THREE — STRATEGIC FRAMEWORKS FOR SUCCESS
Read up and get to know The Amazon Flywheel. Focusing like a laser on the customer experience is why Amazon has done better than its peers. A company once they decide to work with Amazon should not have just one person or one team lead the effort. Every department of a company needs to work together to have the most successful outcome with Amazon. So complete and full alignment across and throughout a company is needed from raw materials to inventory control, to marketing, to shipping, to customer service etc… And always look to optimize.
CHAPTER FOUR — THE TWO EDGED SWORD: THREATS & CHALLENGES
Many brands will have different challenges, but key items expanded on are: Counterfeits and unauthorized third parties, Amazon private label brands, Antitrust and marketplace diversification, Margin concerns, Chasing moving target of changing Amazon policies…
CHAPTER FIVE — WINNING ON AMAZON: OUTCOMES AND GOALS
At Amazon the environment fosters innovation, lateral thinking and massive ambition, which are all rewarded. A key part of this chapter is spelling out the process of developing a new product, program, feature, etc… Amazon actually works backwards by writing the press release first of what they are going to do. This gets the team to have the most difficult conversations first so that they fully understand the products value proposition and how it will be pitched to customers. If the team cannot come up with a compelling press release then the product is not worth making. And the press release keeps everyone on track throughout development since they can go back to make sure they are building what is in the press release. Also covered are: The Hierarchy of Your Brand’s Needs, Customer Experience, Operational Excellence, Market Penetration, International Expansion, Setting Realistic Expectations About Amazon, Amazon as Part of a Multi-Channel Media Mix, Brand Building on Amazon, and Fulfilment is a Marketing Decision.
CHAPTER SIX — ORGANIZATIONAL DESIGN IN AN AMAZON WORLD
All about the deep dive inside of a company to prioritize working with Amazon. Companies need to go through an “Amazon Transformation”. The parts broken down are: Internal structural transformation and the customer facing marketplace transformation. This allows companies to define who is accountable for Amazon, see Amazon as an investment, and understand The New Marketplace Responsibilities.
CHAPTER SEVEN — PICK YOUR PEOPLE: TALENT AND PARTNERS
A good Amazon team at a brand needs to balance analytics with awareness that your brand is an always evolving entity that requires care. Hires leading an Amazon effort need to be confident of course but be able to wear many hats, comfortable learning constantly, adaptable, and in the end find a way to “hack” Amazon. Teams need to have full responsibility for planning, product development, marketing, advertising, and all efforts on the platform or work with a third party to help with certain items.
CHAPTER EIGHT — FUTURE OPPORTUNITIES AND CONSIDERATIONS
Amazon is about innovation both as a company and a marketplace. The value testing and learning more than anyone will imagine until you dig in embrace. Amazon is constantly evolving, pursuing new ideas and creating new opportunities. For any brand looking to continue growing and innovating they need to understand what drives Amazon: True customer obsession, Resist Proxies, Embrace External Trends, have High Velocity Decision Making.Essentially plan around your customer in place of just the channel and you are on the right track.
CHAPTER NINE — NEXT STEPS
To execute the right strategy with Amazon you need the right internal and external partners. Start with strategist and agencies. Ask the questions of: Who is going to be responsible for your account, How much experience do they have with Amazon, How does their approach for Amazon differ for other platforms, What Amazon specific resources do they have at their disposal? Hold partners accountable. Continually challenge and learn. Or just reach out to Mark, https://www.podean.com/contact/ or sign up for his newsletter, LINK
