Amazon’s first leadership principle is “customer obsession”. I’ve spent time recently with Amazon employees and have gotten a strong sense that, more than most tech companies, Amazon internalizes this value. Of course, every company says they are customer obsessed. But this often goes no deeper than all-hands meeting speeches and posters in the hallway. It’s a marketing program, and companies want customers to believe the they are king. But they’re not. I recently commented to an Amazonian that the Leadership Principles can seem from the outside like “motherhood and apple pie”. But on reflection, truly living them is hard.
Dominance, the Enemy of Customer Obsession
It’s especially hard once a company has leverage over its customers. Does Google really need to be customer obsessed? Not really, because advertisers and users have few options. Has Microsoft Windows (or the whole Microsoft enterprise system) really needed to be customer obsessed? Does Facebook? Once dominant, companies are often faced with tradeoffs between their interests and their customers and have the luxury of favoring themselves.
This really becomes apparent when a dominant company tries to branch into a new area where they don’t have leverage. Then the company has lost the “muscle” of focussing on customer needs and instead spends its time lecturing analysts, partners, and customers about how they think things/customers should see things.
Amazon has – until recently – had relatively little leverage over their customers because the competition is always one click away. The only way Amazon could win was to do a better job at offering the same products at a better price. Of course, it’s often obvious (and costs little) to do what the customer wants. I’m most interested in cases where it was not obvious Amazon had to invest to solve a customer problem. Package theft, which most companies have historically treated this as the shipper’s problem, provides some examples:
- Amazon Lockers. Amazon saw it as an opportunity to differentiate from all other e-commerce players and offer a nationwide network of secure delivery locations. Then they considered how else the lockers could serve the customer through easy returns, and as a delivery point for traveling customers.
- Amazon Key. Another solution to package theft. It’s creepy to many, but it’s opt-in and it’s a good solution for some customers. Again Amazon could have just passed this along to UPS and Fedex, but they didn’t.
Note that these didn’t directly contribute to the Amazon bottom line. No spreadsheet said the Amazon locker P&L could someday be huge or would save Amazon vast costs. But they do contribute to customer satisfaction and make Amazon a more attractive option.
But my favorite cases required trading off internal interests, potentially at the expense of the customer:
- Kindle on iOS and Android. Remember, Kindle launched as a hardware product with a service component. Somewhere in Amazon, there’s a single-threaded owner of Kindle hardware sales who lost out when they launched apps on other tablet platforms. This in stark contrast to Apple’s approach of using services as lock-in on their hardware platforms (a good P&L approach for them, but not what customers want) and Google’s using Google Play as leverage over OEMs. I think this decision is also what’s best for Amazon, but the customer won out in a way they might not at other companies.
- Amazon Prime Video on Apple TV. This just launched after a long delay. I suspect Apple rejected it as competing with iTunes video, but Amazon could have (stupidly) resisted favoring Fire TV sales. Eventually, the feud ended and the customer won. Again, also best for Amazon but the Fire TV team could have fought vigorously to protect their interests, and at some companies, they’d have won out.
- 3rd party retailers in the Amazon Marketplace. Amazon wants to sell you everything, so why let the competition in? And they’re pretty gracious about how 3rd parties are placed in the product pages – not hidden at the bottom or locked out of Prime. They’ll even help with logistics and delivery! This is probably a good financial decision, too, but it’s pretty counterintuitive.
- 3rd party Alexa devices. I’d bet that there was an Echo team that felt pain the day Amazon launched the Alexa devices SDK. First party devices generate sizeable gross margin and were growing rapidly, as were Amazon’s marketing investments. Why literally give that away to 3rd parties? Isn’t this the equivalent of Apple licensing MacOS or iOS to Samsung? But the hardware team lost out vs. the customer (and larger Amazon goals).
In retrospect, these were also strategically smart moves. But many companies struggle to build consensus around internal tradeoffs.
Customer Obsession vs. Internal Politics
This is the true (hidden) power of this leadership principle: It’s a secret weapon against internal politics. When a company is making decisions, there are usually multiple internal interests that conflict. iMessage on Android? The iPhone team hates that idea. Halo on Windows? The Xbox guys scream. Office on iOS? Windows objects. Digital e-commerce on iOS? Nixxed by the iTunes team. YouTube on Windows phone? No way, says the Android team.
It’s hard to make these decisions, and harder to get objecting teams along without malicious compliance getting in the way. When I talk to Amazonians about how they get alignment among 500k(!) employees, they consistently cite this leadership principle as a central part of the discussion.
Of course, Amazon isn’t perfect. A big one is the sales of 3rd party TV devices on Amazon. Amazon won’t sell me an Apple TV, Chromecast, or Google Home device. When I search for them, I get Echos pushed at me. This feels like an example of “typical dominant player” behavior, not customer centricity. But such glaring examples are rare.
It will be interesting to see how this proceeds moving forward. The biggest threat to this cultural value is Amazon’s success. Amazon retail is becoming devilishly sticky among Prime users, and Amazon’s scale is giving them huge price and supply chain advantages over all competitors. If Amazon started mistreating me in small ways would I go away? I don’t think so. Amazon will have to work hard to keep this leadership principle alive as more than morale posters.