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JohnRossman
PODCAST - Unpacking the digital shelf

The Lessons We Can Learn from Amazon on Building Winning Strategies and Culture with John Rossman

Peter Crosby and Justin King sit down with John Rossman, Managing Partner at Rossman Partners and former Amazon executive, to discuss what commerce leaders can learn from analyzing how Amazon builds its strategies and culture. We share takeaways from his book, Think Like Amazon: 50 ½ Ideas to Become a Digital Leader.

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Transcript

Peter:

Welcome to Unpacking the Digital Shelf where we explore brand manufacturing in the digital age. Hey John, thank you so much for joining us on the podcast today. I'd love to start just by hearing what led you to write this book. Like what was the, the beginnings of, of how you got this thinking. Tell us a little bit about that. 

John:

Peter, thanks for, for having me. So I was a executive at Amazon a long time ago. Early 2002 through late 2005, ran two businesses, I launched the marketplace business, I ran enterprise services. When I left Amazon in late 2005 I started working with my clients on making change happen on innovation, on digital strategy. And one of my clients at the Gates foundation actually pulled me aside and like said, you know, John, you do a nice job of kind of taking the little strategies and mindsets and maneuvers of Amazon and inserting them into our work and you really ought to write a book. And that was really the impetus for, you know, not just my books, but the work I like to do with clients. And keynote speaking is, you know, the book's not about Amazon. The book is about what can you take from a company like Amazon that is so distinct in how they think about things, how they think about their culture, how they build their strategies that we can all learn from them. And that's what inspired me to write the book.

Peter:

Yeah. John, that that became so clear to me reading it. And I particularly read it with the lens of our audience. You know, the brand manufacturer executives who are often the digital tail wagging the brick and mortar dog in their organizations that particularly in this moment are finding themselves with, in some ways unexpected power to drive change faster than they might've been able to otherwise. And that really, that opportunity really reminded me of some of the ethos that Bezos has offered and that organization has built and that you've really put into the ideas in your book. And so I want to just kind of run through, kind of careen through each part of your book, but pulling out the ideas that at least for me resonated with someone that finds himself in that position. Like what are the Amazonian lessons, the ideas that you put together that, that might be applied best in this time, then hopefully encourage readers to go back and read the whole book. Cause it's great. There's 50 and a half ideas, short chapters. You can read it all in one sitting and, and start to absorb lessons or you can go and sort of check in on ideas that you're thinking about implementing, which I thought was awesome. So I kind of start with the, the first part, which is culture, a key part of getting this done at any, at any organization, but certainly in large organizations. And the first thing that you kind of said was reset your clocks. The journey will not be short or a straight line, which I think we can resonate with now, but the core of it was idea number one, becoming digital. Talk to me about that. Like that is at the center of, of really the beginning of the book.

John:

Yeah. I think so many people and organizations think about being digital is like, you know, that's your website or your mobile app or cloud computing. And, and to me it's, it's more about how we operate and how your customers and partners would define you and how you work internally. And I really boil it down to two attributes that, you know, on one hand or kind of athletic attributes was on the other hand I think are really organizational attributes. And the first one is speed. And if you think about what speed is, speed is about being very efficient and fast at a repetitive motion. And if you equate that to a core capability that's really operational excellence and it's about becoming perfect in the well-defined, scalable capabilities that an organization should have. And the second attribute is agility and agility is actually the ability to sense and make change happen. And sometimes that's small change, sometimes that's big change. And while those sound the same, they're actually completely different attributes and capabilities within an organization. And what being digital is, is like, it's no longer good enough to be just operationally excellent. You have to continue to push the envelope on what being operationally excellent means. But you also have to become an organization that is great at making change happen at great at sensing from your environment, from your customers, from your competitive base, what are the changes we need to make and how do we continue to do that and actually define and lead in those changes. And so to me that's what really being digital is about. It's about as an organization becoming great at both operational excellence and innovation.

Peter:

And I think that leads us to, to kind of idea four, which is sort of the day one thinking the obsession with customers. But what, what really drew me in, cause I think everyone, you know, customer obsession is a, is a sort of a buzz word that's being used and, and kind of gets glossed over. But what I really loved was the, the starter pack of essential oils for the day one defense. Can you talk a bit one, what is day one just for listeners who may not be familiar with it and then tell us a little bit about that start time.

John:

Yeah. So day one has been this long term kind of headline Quip that Bezos talks about that, you know, Amazon is a day one organization is basically like this optimistic attitude that, you know, we've just begun our journey. We've just begun how the internet and technology is going to impact business and society and culture and we want to be a company that, that is leading the pack in that leading the exploration, not a company that's reacting to it. And so, you know, he was asked like, well, what does it mean to be a day two company? And, and he talks about, well, a day two company is, is one that kind of just optimizes for the status quo and suffers a long, sometimes slow, sometimes fast but eventual death and everything. And so he kind of like offered, you know, and so it's like, well what do I do if I am kind of a day two company, one that just kind of optimizes for today. I'm probably on a little bit of a decline path and I think at first starts with changing the questions that you're asking. And I think a lot of those questions are a, from a, from a customer competitiveness standpoint and I like questions that really like, instead of like, well how do we, you know, grow by 5%, how do we improve by 10%? How do we change cost by X percent? Like a set of questions. It's like it poses a different reality such as how would I make something completely self service? How would I instead of competing on selling for a price, I would sell for an outcome like questions that completely change the nature of the game because those forced you to rethink things. Then I think another part is about communication and, and I think it's an underestimated aspect of being a good leader when you are leading change in innovation is about always being on point. And I think Bezos and Amazon, if you read their 1997 shareholder level letter, it just proves how on point they always are. But you really have to respect the professionalism of communication and figuring out what your headlines are and what goes underneath those headlines and just you and your team committing to always being on point that that's something I learned in spades at an, at a number of clients. And then I think it really about, you know, committing to a path and figuring out like, you know, understanding this isn't going to go as planned. You have to pick a path and commit to it and you know, there's going to be detractors both internally and external. You're going to learn along the way, but you really have to decide, you know, are we playing the short game? Are we playing the long game? And the long game is the one that gives you permission and the runway to reinvent your business and compete for tomorrow.

Peter:

And that, that idea is that the idea that jumped out at me in the culture section, particularly for our audience was the idea of five don't go along to get along. And the subtitle there was the risk social cohesion poses to achieving hard results. And frankly, I think if any any constituency understands that, finding that balance of how hard do you push this thing? It's, it's people that are trying to drive you know, 130 year old brick and mortar industries into the digital realm. And so tell me a bit about that one and sort of how, what's the mindset that's needed to push these, these initiatives.

John:

Yeah. Well I'm just going to read a paragraph from the book short paragraph cause I think it kind of gets that. So idea five make being right the most important thing, set the tone from the top that we will win by doing the right thing. Having honest conversations, leading with customer obsession, with data, seeking perfection through data and ignoring job titles while still treating each other with respect. Many of the ideas in this book will help reinforce the principle. And I think that that notion of not settling just because we want to get along, not settling just because this is the way we've always done, done it this way, not settling because well this is the senior person who has this perspective. You know, those are, you know, and when you use data and you use customer obsession and the best idea is what's featured that helps a team kind of resist all of those other traditional and bureaucratic mindsets that get in the way of getting to the right idea. And you know, it, it really, you know, getting along is important but it's just not the most important thing. And I think what's happened in a lot of corporate America, you know, the pendulum, just swiung towards like, Hey, we have to be collegial and we have to make sure everybody's heard. And that's true, but that can't be where we settle on important strategies and important changes. And the, and the awareness to do that is a really strong cultural underpinning that the best performing companies, they respect getting along. But it is not why we are here. We are here to compete, we are here to win and we have to push ourselves and our ideas in order to do that. Look at any good sports team, right? Like pick the Patriots as an example, right? Like Bill Belicheck respects getting along, but it is not why he is there and they, and they are not willing to settle for good enough just to get along.

Peter:

Yeah. I love the phrase that jumped out at me, which I really took away thinking about how I work within my organization is numerical swords and customer passionate, like use metrics as, as your weapon. And then convince with the your point of view being on the side of, of customer success. And I thought that was really great. And Justin, you've been talking a lot with brand manufacturers out on the front lines during this period. And, and I, I think, you know, tell us a bit about what you've been seeing in terms of, of the mind shifts that might be happening because of the, you know, the current situation, the reliance on digital for the bulk of people's revenue right now. What are you seeing? 

 

Justin: 

I think, I think the focus on digital and customer experience has obviously come to the forefront, right? They average, I think they're saying digital transformation as this real book because this is really about John. Transformation is going to move forward three to five years in some cases. And we're seeing that focus on the front lines with, with companies everywhere. In all different industries, but certainly and B2B. And John, one thing that really struck me as I was talking to some of these manufacturers is your, your distinction between customer experience. You drill on of customer experience, not being about customer satisfaction. Can you talk a little bit about what you mean there?

John:

Yeah. you know, I think that there's a couple of points to make there, which is first we tend to rely too much on kind of customer surveys and competitive results and things like that. And I think that those can be very misleading. What we really want to focus on is like the worst customer experiences and you really need metrics and SLAs in order to do that. And the second thing is that, you know, it really is about getting to customer delight. Like satisfaction is just a weak competitive position to be in and, and it, it will not, you might be able to keep your, your, you know, kind of your current state to some degree, but you can't win new customers, you can't win new markets just by providing satisfaction. Like you have to provide something that isn't, is demonstrably better. And so I think really thinking about super powers and super, and customer delight is a better way and just don't rely on, on surveys for measuring that. Like you need like every experience measured well beyond your product and experience. Also I might add. And then you really need to be focusing on like, you know, featuring the bad news, like where wasn't it perfect and focus in on that. And that's the, the Eagle eye that metrics, you know, allow you to zoom in on and you know, what, what the, you know, kind of like, it's kind of the go along to get along mindset was just, you know, we tend to look at our metrics, we look at our averages and we tell ourselves we're doing a good job and what we need to zoom in on is high bar SLAs and those cases where we didn't hit the SLA on time, on quality, on price, on stock measures and really focusing on why didn't we do it there. And that's where insights come from. Insights come from the bad news where we didn't succeed, not from the good news.

Peter:

And John kind of moving in from, so if we have a culture that's focused this way, that's thinking about, you know, sort of using numerical sports and customer passion to to get results. Then when you think about the overall strategy a main idea, idea 17 was around sort of experiment, fail, rinse and repeat, repeat, which ties right into agile methodology. But the, the I the, which I think is sort of a starting place for being able to do this at scale, you have to be able to try, learn and try again. The, the piece when I think about strategy that might be helpful to our listeners particularly is the idea that because so many of the issues that we're confronting right now as industries are the difficulties when supply chains get interrupted, when the way people's buy getting interrupted, like this is a seminal moment of change here and when, so one of the things that jumped out at me was idea 26, the idea of innovate by reducing friction, that identifying those points of friction and really honing in on them could be where some of these experiments happen and produce value quickly. And I would love it. A, do you agree with that? And then B how, how do you think about how to manage that process?

John:

Yeah. I, in the chapter, refer to an old pink Floyd song, a song which is about, you know, we've all become comfortably numb, right? And friction are those little things that we ask our customers, our or our employees or our partners to deal with because we haven't really solved it, you know, and everything. Right. And yeah. And it's the stuff that we just don't see anymore and it's only by having that true customer passion and really focusing on like, you know Clayton Christiansen talks about the, the job to be run, like, like not really get into like how our customers use our product and service that you can identify the little frustrations, the little compensations that we're asking them to do. And all of those are always opportunities for us to either improve our product or service or to expand our product or service. And it's that mindset that has led Amazon to so many opportunities to serve customers bigger and broader than how they do today. So it both drives improvement to what we provide, but it also gives insight. So just get into the work that a customer is doing, an understanding the friction and the things that we've asked them, and especially focus on when they have a bad day. Again, insights come from not featuring the good moments, but the bad moments will understand when things go wrong for my customer, what happens in their broad day. And you'll find ways to serve them better.

Peter:

Yeah, reading about your experience at Amazon standing up the marketplace and bringing that to market. I was struck that in a way you had to teach the Amazon culture to think of their third party sellers as customers, right?

John:

Yeah. That, that is exactly right. I mean, when I was there, we had a, you know, a great culture on customer obsession, but understanding that we needed to make our sellers as successful and had needed to build seller obsession was, was kind of a new warpath that we had to fight. And so it really was about building that seller obsession was a big part of, of kind of the what needed to be done there. Like we needed sellers to be successful in order for our strategy torque and for our customers to love it.

Peter:

So John, I'm gonna jump over, you have a section on business and technology, which was awesome, really talking about sort of process versus bureaucracy, but I actually wanted to jump to the approach and execution part. I'd love for you to talk about what are the ways in which, what, especially if you're an executive trying to get people on your side and to share your vision, what are the ways in which you recommend in the book techniques that that executives can use to bring their ideas alive get agreement and surge forward.

John:

Yeah. One of the things that struck me about Amazon was how much time we would spend debating topics and not only debating the topic at hand, but then questioners. I was like, well, on what basis are we making that decision and how would we measure it? Right? And so a couple of things that go along there is a, just the whole concept of working in the future, right? Like we spent, we spent so much time talking about things we might do that we would never do. Right? And when you, when you, when you put enough value into what the future might offer and what your brand is and, and not just spending so much time in operating for today, it really shows kind of where your priorities are. So I think that was just one thing I took as like, man, relative to all the things we have to get done. We spend a lot of time talking about things we might do in the future. And when you hear about Amazon being a hardworking corporate environment, so I'm not talking about the fulfillment centers or customer service, I'm talking about that corporate environment. It's because people have to operate both in today and delivering to their metrics. But they also spend so much time working in the future. So there's a few ways that I outlined in the book around this concept of working in the future and the first, and the combination is really one around how we make decisions. And part of how we make decisions is recognizing that there's really kind of one way door decisions and two way door decisions. One way door decision is a decision that you can't reverse a two way door decision is one that we can make, we can get to the other side, we can test it and we can adjust if possible. And what we, what you recognize is that what we tend to do is not understand what decisions are one way versus two way door decisions and we tend to treat everything like a one way door, which slows down an organization. Right? And the second concept is all around writing out ideas. And so I outlined a couple of techniques that Amazon does to write out ideas, but one of them is around this concept called a future press release. And a future press release is, is for internal purposes only. So this isn't to go external, but it's an announcement about the future. It could be a new product, a new service, a new capability. And it helps tease out what delighted my customers about it. And getting explicit about what excited your customers about it and then you really outlined what were the tough things we had to do and getting to honesty about those tough things that we had to do in order to achieve that vision. And it's just a way to help set up how we're going to tackle this mission.

Justin:

John, in this day of you know, disruption and zoom meetings, do you see more value in, in the written word versus meetings and even zoom meetings that we have today? How do you see, how do you see the, and many companies just don't write a lot, right? Or most cultures, right? Do you see that? 

John:

And it's really by forcing yourself. So by writing out what we mean is, you know, full pieces, full paragraphs written to an audience written for a specific period of time, right? That's hard to do. That takes practice, that takes skill, but it forces the team that is writing it to really think through a topic. So the first benefit is teams that are proposing something are going to think things through so much better than if they're just meeting to talk about it or doing a PowerPoint around it. Right? There is no PowerPoint at Amazon for this reason, and the big benefit is for the people that the communication goes to the senior leaders, they actually have to read it, they have to grok it, they have to understand it better and it gives them so much more fuel to actually help change or add to what the idea is so that their expertise can be reflected in the concept that's going forward. It makes teams so much better at defining what the initiative is and then you start on your agile path of like testing, learning and responding. But what happens is we tend to float along at a very vague definition of what the concept or the project is. And then we wait until we get in to it before we figure it out. That's if you think slowing down and writing things is expensive, try building them and then adjusting your way through it because we didn't have a good concept of what we're trying to build. That's the expensive way to go and that's why so many projects and so many initiatives take so much longer and don't work is because we didn't take the time upfront to deeply consider our options and define together what path we were going to take.

Peter:

Yeah. One of the things I love is that in addition to the press release you, you suggested writing FAQs to anticipate the key questions and I love that because you write the press release and then you sit back and you think of the people that are going to receive it inside your organization and what questions or resistance or whatever will immediately pop up and you've thought some of that through already. You start to break some of those barriers down faster than trying to do that over time. I thought that was great.

John:

Yeah, it's really a great technique. You make these FAQs, again available to everybody in the organization. They can ask them, they can read them. The whole, the whole trick is simply stated questions, simply stated answers, right? It should be fire, answer, fire, answer, fire answer. But guess what happens when teams from the very beginning start thinking through, you know, what questions might my customers have? What questions might distributors have? What questions might the field have or questions might legal have? What questions might operations have? Well, they start figuring out things that they hadn't thought through before. So it helps avoid issues and surprises and it helps manage everybody's expectations. And so it just helps initiatives and new concepts go so much better than before. And when you, and when you think about the number of things Amazon watches new in a year, it's mind boggling, but think about their ability to take a crisis like we're currently in and, and be nimble and quickly adjust. It's a combination of quick decision making, betting on the future, not short term results, and then clarity for teams to be able to operate in a very non-bureaucratic way in order to execute upon the decisions and the strategies of impact. Amazon has really shown their nimbleness through the situation. And you know, thank goodness they've been, they've been very helpful. They've been, you know, even some typical naysayers I've had to compliment Amazon on on their reaction through this crisis. But it really demonstrates like you need all of those elements going, crisp decision making. Mmm. Good processes and systems that can get, that can adjust and an organization that communicates extremely succinctly and clearly in order to be nimble in moments like this.

Peter:

Yeah. When you saw their rapid willingness, they looked at the problem they're trying to solve, which is make sure that we're getting essential items out of the market and they were willing to just essentially cut off altogether business knowing that it was going to have impacts downstream and, and frustrate some customers and certainly frustrate some suppliers, but they were able to, as an organization, make that decision quickly. And now, I just saw today as we were going to recording that they're starting to open up third party sellers again, starting to introduce nonessential items into the stream. And so that just, I just have a lot of respect for the way in which they've been able to sort of make those clear decisions and communicate them out.

John:

And, you know, the, the, the I actually had a an interview on that topic and like, the point is like, it doesn't happen by accident, right? Like, it's because that they always operate with those principles and those mindsets, decision making, clarity of thought processes and systems that, that, that are, that are Mmm. That are nimble enough to make adjustments on the fly and they built ahead incapacity in capability so that they can flex when they need to flex. Right. [inaudible] they think more about the longterm than they do about the short term. It's all of those combination of factors that, that allow them to take moments like this. And you know, I think what we've seen in this, in this crisis is that it really is just accelerating changes that were coming anyway. Right. And so I think this cry, you know, I was a partner in a, in a restructuring firm for 13 years and you know, one of the mindsets there is like, you know, never waste a good crisis, right? And, and this really is an opportunity to deal with, you know, the bad news, the changes that you need to make and, and take advantage of it and make some hard decisions and, you know, invest in what the real future is.

Peter:

Hey, Justin, before we close, you want to throw any hard stumper of a question to John? No, I was, I was most curious, John, so you wrote the book and now you've been out there socializing it, implementing it with your consulting customers. What's the best idea that, or the most kind of innovative idea in this book, you have 15 and a half ideas that company that that's the hardest for companies to implement or execute on?

John:

Well, you know, I think it really is about the notion of, of leadership, right? And I think especially leadership for change and leadership for innovation is you know, the, the CEO and the board have to set an environment that actually understands that innovation is about experimentation and experimentation is about failure, right? And, and it's about learned and controlled experiments and learning from that failure. And so it's not about the negative type of failure, it's about controlled experimentation and failure. And it's amazing how many CEOs and boards don't truly understand that concept of innovation is about experimentation and failure. And so if, if I think the hardest thing is to get leadership to understand the game that you have to play, if you want to actually have a culture of innovation.

Peter:

Yeah. So good John. I think that's a perfect place to close. The ideas in the book are fantastic and absorbable and as always, the, the hard part is then to go and put them into practice. But I think you've laid out a roadmap for thinking in a way of approaching culture and strategy and business and execution that I think are valuable for, for any leader who's thinking about and frankly using this time to drive digital transformation at a faster pace than they may have been able to otherwise. So thank you so much for coming on here and sharing your ideas and and putting them due in just such a way that they can be understood and, and practiced. It's really great.

John:

Well, it was a real pleasure. I appreciate the opportunity to come on and talk and Justin, thanks for bringing us together.