How Amazon’s “Day 1 Culture” Can Propel Growth for Small and Medium Businesses
Imagine a world where every move you make resonates with your customers, where your success is built on understanding their needs, desires, and pain points. This isn’t a farfetched dream—it’s a customer-obsessed approach that can transform your business. In fact, think about when and why your small or medium business (SMB) was founded. It was likely because there was an unmet need in the market that your company was created to solve. Customers needs are constantly changing, and at an even faster rate with a new generation of consumers, entrepreneurs and founders that grew up on smartphones, social media, and the cloud, who are quickly becoming a larger share of the market and starting businesses of their own.
I often think about my own kids—a 21-year-old and a 13-year-old that will not buy any product or service if it is not available by their phone. Even as my eldest joins the corporate world, they will discredit anything that they can’t look up in the palm of their hand. Moreover, they likely won’t find the product or service in the first place. Needless to stay, even if your company has experienced consistent, year-over-year growth over the last 20 years, or you feel that you know your customer as well as can be; emerging technology and a new generation of consumers will quickly outpace and defy what you thought you knew. So how might you re-frame how you operate and think about innovation?
Amazon’s culture and operating model revolves around putting the customer at the center of everything we do. As such, we attribute all of our innovation and growth to customer obsession. In fact, every Amazon Annual Report includes Jeff Bezos’ original 1997 shareholder letter, as it reinforces the mindset that every Amazonian carries: to relentlessly focus on customers, create long-term value, and make bold bets. These principles have remained consistent for over two decades and form the basis of what Amazon refers to as its “Day 1” mentality. We believe for SMBs, adopting a Day 1 mindset can be a game-changer by allowing you to deeply understand your customers and develop innovative solutions that address their needs effectively.
Let’s explore the key elements of Amazon‘s Day 1 culture and how small businesses can adapt them to drive their own growth and success.
What is a Day 1 culture?
At the heart of maintaining a Day 1 culture is an unwavering commitment to customer obsession. For an SMB, this means going beyond providing a product or service—it’s about understanding your customers on a personal level. Consider a local bakery that prides itself on crafting artisanal pastries. To truly obsess over customers, the bakery could engage with customers on social media to understand their favorite flavors, experiment with new recipes or add gluten-free and vegan options to accommodate frequent requests, and even offer personalized pastry subscriptions based on individual preferences. Using e-commerce tools on the Amazon Web Services cloud can make this possible.
By actively seeking customer feedback and listening to your customers’ pain points and aspirations, you will be able to learn from your customers to identify opportunities for improvement and innovation. This approach ensures that innovations are customer-driven, rather than isolated solutions looking for a problem. Similarly, it is likely that your teams will become more open-minded to think bigger and invent solutions your customers didn’t even know they needed. They won’t be constrained by limiting thoughts like “how will we accomplish this?” but rather focused on “how can we surprise and delight our customers in new ways?”
How SMBs can make high-quality, high-velocity decisions
Another component of a Day 1 culture is how an organization approaches decision-making. As businesses grow, decision-making processes may become more complex, leading to slower responses to market changes and customer demands. To accelerate quality decision-making, we propose adopting mechanisms or tools. One effective approach we use at Amazon is a concept called one-way and two-way doors.
A one-way door decision is irreversible, often requiring more research or significant expenses and resources. Whereas, a two-way door is a quick and reversible decision, with minimal consequences. Two-way door decisions enable rapid testing, learning, and adaptation without fear of failure. For these types of decisions, it is not as necessary to gather loads of data and proof points to justify benefits to the customer or ROI. Most decisions are two-way door decisions and only need about 70 percent of the information you wish you had. If you wait until you know it all, you’re likely being too slow.
For instance, imagine a small a retail store that wants to grow their business. One consideration is expansion—opening up new locations across the city. This would be a one-way door decision that requires a detailed analysis of high-traffic locations and available real-estate, as well as significant investment. If the expansion fails, the business is sure to suffer a substantial loss.
Another option was to change the store’s current window display to see if it could attract higher spending shoppers. This enhancement is a two-way door decision that can be implemented relatively quickly, with minimal disruption to the business. The key here though, is to embrace experimentation and failure. Be intentional with your experiments by defining your hypothesis, your control and your test, the duration of the experiment, and what metrics will be assessed to measure success and validate your hypothesis. In this case, the hypothesis is to evaluate if changing the window display to include professional and event attire will attract more customers that will spend more than today’s average. The store could decide to run the new display for six weeks, and measure store traffic, total spend, and spend per customer. At the conclusion, the store will compare metrics and determine if the change had the intended impact.
These types of decisions may delight customers in a new way, grow customer base or reach and increase revenue. Or they may create a frustrating customer experience and minimal business outcomes—in which case, you can undo the change and take the lessons learned into the next innovation or experiment.
Embrace external trends and resist the status quo
Organizations with a Day 1 mindset will insist on fostering curiosity and constant experimentation. They also resist the tendency to prioritize familiarity, internal processes, and business outcomes over delivering great experiences or driving outcomes for customers. Staying agile and innovative requires SMBs to be constantly aware of external trends, technological advancements, and changing customer demands.
Let’s consider a manufacturing business. Monthly reports suggest business is booming with solid month over month growth rate. Some customer reviews, however, include feedback that the store is losing its edge—that there are no real-time shipment tracking capabilities or that the inventory often arrives with defects. A Day 2 business would chalk up the reviews as outliers, as the data is clearly showing growth and demand. Compared to a Day 1 business that would further investigate the customer anecdote and identify ways to improve transparency with customers or better utilize data to predict defects or issues in products before they happen. Day 1 businesses will focus on reviewing feedback regularly and proactively attending industry conferences to stay updated on latest technology or ways they can continue to create friction-less experience for their buyers.
Adding a Day 1 culture to your SMB
Maintaining a Day 1 culture is a continuous effort, especially as businesses grow. SMBs must remain committed to customer delight, high-velocity decision-making, and a willingness to embrace change. Find a few leaders within your business who can lead these efforts and filter to all employees over time. If you’re trying to inject more creativity and out-of-the-box thinking into your business, the Day 1 approach could invigorate your staff and positively impact your operations. With the right approach, entrepreneurs and founders can build a thriving company based on these principles in a small business context. Learn how you can make your business a Smart Business with help from AWS.