Leading and Innovating with Leadership Principles

Leading and Innovating with Leadership Principles

Article | 7 min read

Daniel Slater, Worldwide Lead, Culture of Innovation, AWS

by Daniel Slater
Worldwide Lead, Culture of Innovation, AWS

CEOs often implement a set of principles that define their company’s culture, values, and how they will achieve the business’s long-term objectives. CEOs are responsible for leading a company’s direction from the top-down, and for setting the priorities and focus of the business—a set of guiding principles often help express their strategic aims and galvanize employees around a unified purpose.

There are many formats these principles can take: vision statements that articulate a company’s long-term objectives and what it aspires to be; missions that define the business and its focus; statements of purpose that help a company align roadmaps with its strategy.

These different forms of principles provide a transparent and codified expression of where—and how—a business will focus its attention, resources, and energy. Companies rightly spend a lot of time thinking them through. Principles convey the core values a company believes in and the belief system it will follow in serving their customers and executing its business.

A company’s principles need to form the bedrock of a culture of innovation, and a touchstone that leaders and their teams can come back to daily to help them make better decisions quickly, and at scale. They provide consistency in aligning the workforce to the top business priorities and its customers.

But in order to be truly effective in promoting innovation, these sets of principles can’t just be stated—they need to be used. They can’t simply exist, passively posted on a company website and as placards in conference rooms, occasionally revisited at corporate retreats and employee all-hands meetings. They need to be infused in everything employees do, and leveraged by new hires walking in the door, to teams and their management, to the CEO and their leadership team. Principles need to guide decisions that are made, from day-to-day operations to broad corporate strategic planning.

Establishing this innovative culture through a set of principles is easier at a start-up or small company. Executive leaders, management, and the company’s builders are more accessible and often located more centrally. There is greater opportunity for stakeholders to be together in the same meetings, where a company’s principles can be reinforced face-to-face as decisions are being made in real time.

However, reinforcing principles becomes harder as a company scales. As the business grows and becomes more complex, and as the number of employees swell across different locations and time zones, it is harder to maintain the same energy and emphasis on your principles. The decision-making process that often relies on a company’s founders and senior executives in startup or small business environments becomes weightier—and takes more time—as the business and its operations grow. If there isn’t a purposeful effort and the right mechanisms to help distribute effective, autonomous decision-making, lines of decision-making can become bottlenecks that grind a company’s ability to rapidly innovate to a stand-still.

Amazon is no different, and we went through our own growing pains as the company scaled—geographically and across multiple, diverse businesses. A primary reason why Amazon has been able to maintain our culture of innovation, focusing on customers and working backwards from their needs, is through how we employ Amazon’s Leadership Principles every day.

Amazon's Leadership Principles

Amazon’s Leadership Principles

At Amazon, we hold ourselves and each other accountable for demonstrating 16 Leadership Principles in our daily actions. Our Leadership Principles have a few accompanying sentences that not only describe what each means, but how they should be practically applied. They guide how Amazon approaches business decisions, how we want our leaders to lead, and how we keep the customer at the center of every decision we make.

Many of these Leadership Principles have existed at Amazon from the very start, notably Customer Obsession. The notion of remaining close to your customers, of truly obsessing over their needs and understanding the context behind them, was inherent in Jeff Bezos' very first Letter to Shareholders in 1997, and in Amazon’s mission: to be Earth’s most customer-centric company.

This Leadership Principle states, “Leaders start with the customer, and work backwards.” Ensuring that you remain close to customers and singularly focused on solving their problems helps inspire you to constantly innovate—often in areas you may not have otherwise. At AWS, 90% of what we build is driven by what customers tell us matter to them; the other 10% come from things that may not be directly articulated, but where a deep knowledge of customer needs and pain points allows us to invent new features and services that will surprise and delight them.

While this Leadership Principle acknowledges the need to pay attention to competitors and trends, it prioritizes focusing on your customers’ needs over the long term, and creates a call to action of working vigorously every day to earn and keep customer trust.

While Customer Obsession has existed at Amazon since the company’s literal Day 1, other Leadership Principles have been introduced over time, such as Learn and Be Curious, which was added in 2015. This principle states that “leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act and explore them.” A CEO’s bold leadership can help set the tone, encouraging talent to experiment, learn, and iterate new ways to meet—and stay ahead of—customers’ needs.

The ability to be open to learn, adapt, and constantly grow your capability to satisfy customer needs also helps keep a company agile in an ever-changing environment. It better equips you to not just respond to what customers want, but proactively invent on their behalf.

High-quality and high-velocity decisions

High-quality and high-velocity decisions

As the Leadership Principle Bias for Action states, “Speed matters in business." In his 2020 re:Invent keynote address, AWS CEO (and, as of this writing, soon-to-be Amazon CEO) Andy Jassy pointed out speed as one of eight key ingredients for companies who want to build a culture of invention and reinvention, and one that continually drives value to customers.

“Speed is not preordained; speed is a choice,” Jassy said. “You can make this choice, and you’ve got to set up a culture that has urgency and actually wants to experiment…you’ve got to be doing it all the time.”

 Watch Andy Jassy's keynote at AWS re:Invent

Maintaining a Bias for Action—and ensuring priority and urgency behind it—also requires us to Think Big, another Leadership Principle that reminds leaders to communicate a bold direction, inspire results, and look around corners for ways to serve customers. Thinking Big is where executives can often make the biggest impact in driving an innovative culture and leading the business to think differently and audaciously. To not just focus on core competencies, but challenge the status-quo, risk disruption, and push boundaries to create a vision that is bigger than current reality. Leaders can help an organization Think Big from the top down, and encourage relentless, customer-focused innovation at speed.

The initial launch of Prime Now is an example of innovation driven by applying Bias for Action and Thinking Big. We knew customers valued fast delivery and thought ultra-fast delivery within 1 hour (or two hours with free shipping) would be an attractive service. But scaling reliably for a very large number of customers was difficult, with existing constraints of how orders and delivery were already optimized via our website.

We did not let current capability prevent us from Thinking Big. By focusing on tens of thousands of products that customers valued, rather than the entire catalog, and decoupling from some constraints by launching as an app-based service, Prime Now may have been a different experience than ordering from Amazon.com, but one that didn’t change the core Amazon experience, keeping a high bar for service levels and quality. It enabled us to realize that Think Big idea of how we could deliver to customers in just an hour. And we were able to do it with extraordinary Bias for Action, moving from idea to launch in just 111 days.

Thinking Big and having Bias for Action aren’t the only variables to successful innovation; you naturally want to make sure you are making the right decisions. But there are no guarantees of success in business; in fact, to truly be innovative you are going to need to constantly experiment, iterate, and fail—a lot.

Amazon is no stranger to failure—around one year after its launch, we ceased production of Amazon’s Fire Phone and announced a $170 million write-down. But the learning we captured from the Fire Phone—of building hardware, working with suppliers, and more—helps us today in our devices business. Many of the people who worked on Fire Phone went on to work on Alexa and our Echo family of devices. To drive a culture of innovation, you need to foster a willingness to experiment and allow tolerance for inevitable failures, and the structure and rigor to capture and apply learnings to help you pivot and iterate.

Amazon pushes customer-centric innovation by applying both Thinking Big and having Bias for Action, and making room for both invention and the failure and learning that comes with it. But to consistently achieve both high velocity and high quality decision making, another part of Bias for Action—and applying another Leadership Principle, Dive Deep—are instrumental.

Bias for Action also states that, “many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.” Decisions that are reversible—ones you can quickly launch, test and, should you find that the decision was suboptimal, reverse without huge consequences—are decisions you should empower your teams to make quickly. The learning that comes from these decisions is often invaluable, and the cost of undoing it if it is a mistake is low. Prime Now was a great reversible decision as it enabled experimentation in one geographical area in a way that did not alter the core experience offered on Amazon.com. We didn’t have to deeply explore every facet in order to launch—we could quickly move with about 70% of the information we wish we had, test customer response, and iterate rapidly.

On the other hand, decisions that are irreversible—ones that are hard to unwind and get back to where you were before—need to be made with careful and methodical deliberation and thought. These decisions require the necessary time to Dive Deep and ensure we have the right data, key information, and careful validation to inform the approach before implementation.

Being right-a lot

Being right—a lot

By using our Leadership Principles—not just as ideological doctrine, but as actual tools in decision-making—Amazonians are able to get to quicker and higher quality decisions. We need to gauge a decision and understand how to best balance Dive Deep and Bias for Action. Is it a reversible, two-way door informed by initial data where we can have Bias for Action and make a well-reasoned calculated risk? Or is it more of a one-way door that’s harder to reverse, and requires more Dive Deep and requisite time to dig further into details before acting?

There is no single answer as every decision will be different. But leaders can accelerate innovation by empowering teams to make more two-way door decisions independently. By leveraging our Leadership Principles as decision-making tool, teams at Amazon who obsess over customers and are closest to their needs can have more autonomy with reversible decisions, and constantly experiment and invent on their customers’ behalf.

Amazon’s Leadership Principles

Amazon's Leadership Principles

One output of enabling autonomy around two-way door decisions is that it helps teams build strong judgment and good instincts—a key component of another Leadership Principle: Are Right, A Lot. This Leadership Principle isn’t about being right all the time, but about developing intuition and being able to be as right as possible at the time that a decision is needed. It’s also about adjusting rapidly with new evidence that comes in after you’ve launched. It enables teams to get comfortable making tough decisions quickly—knowing when to move forward without deeply investigating every detail, or freely escalating to leadership when a more careful and thorough approach is required.

Hiring and Developing the Best

Hiring and Developing the Best

All 16 Leadership Principles are used every day across Amazon—by executive leaders and builders alike—as both a unifying belief system and a tool to make rapid, quality decisions. Leadership Principles are easily distributable, and can help guide thinking towards the right direction more often. Are we Thinking Big enough? Is the solution truly Customer Obsessed and based on something we know customers need? Did we Dive Deep sufficiently to inform direction and know that we are driving the most important customer benefit? Are there elements we can move fast with Bias for Action to safely validate assumptions and iterate? Are we Insisting on Highest Standards and raising the bar with the customer experience we are creating? Are we ensuring we Are Right, A Lot and seeking diverse perspectives and disconfirming tightly-held assumptions with the right data?

Amazon’s Leadership Principles are great tools that help us foster autonomous decision making as the company scales, and helps leaders lead beyond their immediate line of sight. However the use of Leadership Principles isn’t confined to just making decisions at Amazon. They are embedded in our hiring processes: we give them to candidates prior to their interview, and evaluate their examples by how their decision-making and problem-solving demonstrates different Leadership Principles. They are used to frame the feedback we give each other—for the Think Big ideas we present, or in growth and development conversations between managers and employees.

In this way, Leadership Principles become a common vernacular that help frame conversations where decisions are hard and complex. They force us to look at problems from many different angles, and balance priorities at the time we need to make a decision. They provide a way for us to challenge and test assumptions, foster diverse perspectives, and raise our own bar on behalf of our customers.

It is not just what the Leadership Principles say, but how we utilize them—every day, in myriad ways—that make them an integral part of the fabric of Amazon’s culture. Developing your company’s own principles and creating purposeful, meaningful ways they can be used will help you create an enduring culture of innovation that grows with your business, and allows you to drive customer-centric innovation at scale and speed.

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About the author

Daniel Slater, Worldwide Innovation Programs, AWS

Daniel Slater, Worldwide Lead, Culture of Innovation, AWS

Dan Slater oversees Culture of Innovation as a part of AWS’s Digital Innovation team which uses methodologies inspired by Amazon’s innovation mechanisms (e.g. Working Backwards) to help customers develop and deliver new solutions on AWS. Dan joined Amazon in 2006 to launch the company’s first direct-to-customer digital content offerings. He helped launch the Kindle device and Kindle’s global content marketplaces, as well as Amazon’s self-publishing service, Kindle Direct Publishing (KDP). After overseeing the digital business of the top 60 trade publishers, Dan led content acquisition, demand generation, and vendor relations for KDP. Prior to Amazon, Dan was a Senior Acquisitions Editor at Simon & Schuster and Penguin, and led sales for a publishing IT firm (Vista, now Ingenta). Born in Toronto, Canada, Dan lives in Seattle with his wife and two children. He earned his MBA from the Fuqua School of Business, Duke University, and completed a dual Bachelor of Arts degree at Cornell University.

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