Advice from Amazon's CTO: Experiment More, Measure Relentlessly and Learn
Published: 26. Apr 2019
Dr. Werner Vogels talks about the drivers behind Amazon’s success and gave useful advice to companies for growth and innovation. He emphasizes the importance of a clear vision, being highly experimental and having ownership within organizational teams.
As CTO and Vice President of Amazon Web Services when Dr. Werner Vogels took the stage as the headline speaker for the Oslo Business Forum 2019, the conference hall seating almost 2000 participants were eagerly and silently waiting for him to deliver his keynote address.
Amazon, now the largest company in the world, was founded in 1994 as an online book store and in just 25 years, it is the second-largest employer in the United States. The company continues to be a leader in its innovative nature, creating a learning curve that is an inspiration for organizations around the world.
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Innovate, Experiment and Analyze
Vogels explains how innovation is extremely important, not only in technology but across the company like the operations, services, hiring, and management. And as an example, he spoke about how Amazon's vision for creating a market for e-books led to the company developing a tablet as there was no good device in the market that would enable e-reading. “We had never intended to go into the hardware business, but it was a successful and surprising experiment”, he reveals. It was a tremendous revolution for e-books and “the e-reader was really a device for people to read more”, he says.
He claims however that in order to be an innovative company, “Innovation needs to be part of the company’s DNA,” and stresses on hiring innovative minds.
Stressing on the significance of experimenting, he said that Amazon is highly experimental and this is how both successful and failed services and products are developed. He reminds us that before getting into an experiment, the outcome is always unknown and that is risk companies need to take in order to succeed or fail. And while success gives numerous returns, failures are extremely important as they are an opportunity for critical learning, which is in fact value gained.
Finally, he advises, while innovating and experimenting are important it is also crucial to be highly analytical, without in-depth analysis of an experiment, there is no learning. Every success and failure needs to be measured, starting from planning until the end as this gives good insight for future decisions.
How to Make Decisions
Vogels said that all decisions need to be aligned with the company’s vision and that Amazon’s vision “Is to be the earth's most customer-centric company.” Therefore, all decisions are taken to “innovate on behalf of the customer,” and must be worked from the customer backwards. Whether it is new products or existing services, they constantly need to be reviewed to check if they add or take away from value to the customers.
These decisions are not always easy, he said, as they can take a long time to show results and convince important stakeholders, therefore it is important “to be stubborn on the vision but flexible on details”.
“Decisions about experiments are two-way doors and you can back out of them,'' he explains and you have to go in without knowing 100% information as the opportunity can quickly pass but you can also step out. Therefore it is important to reduce the cost of failure by “running the experiment as cheaply as possible”, advises Vogels.
“Failures need to become a badge of honor,” he encouraged, as it means that “Only if you have learned from your failures, you will become better in the future,” he explains that sharing experiences of failures can be more productive than stories of success as they teach what needs to be avoided.
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Organization and Planning for the “Institutional Yes!”
Company organization is key, he said and that it is important to build small teams of 10-12 persons which are more efficient as every team member is on the same page. Additionally, each team should have ownership of innovation and a desire to be independent from other teams. He discourages from creating hierarchies in an organization as they are impediments to fast change.
In addition to ownership, the proposal for anything new needs to be meticulously and collaboratively planned by teams. He explains the process of planning at Amazon for the “institutional yes” which includes many stages that ensure that the idea was proposed after a collective and detailed discourse.
“Experiment more, measure relentlessly and learn,” were the closing words from Vogels that summed the success of Amazon and marked the end of the Oslo Business Forum 2019.
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Posted by Daniel Gauslaa