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S3 Summer Edition - Steve Anderson
14 Plays18 days ago
In this episode of Dial It In, Trygve Olsen and Dave Meyer have a conversation with Steve Anderson, a leading expert on growth, business, risk, and innovation. Steve discusses his book, 'The Bezos Letters: 14 Principles to Grow Your Business Like Amazon,' which breaks down Jeff Bezos's shareholder letters to reveal the strategies behind Amazon's global success. Key topics include the principles of 'Successful Failure,' 'Return on Risk,' 'Customer Obsession,' and the importance of experimentation and innovation. Steve shares insights into how businesses can apply Amazon's growth strategies to scale, innovate, and thrive. The episode also touches on Amazon's unique approaches to logistics, marketplace dynamics, and customer service.
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Transcript
Introduction to Dial It In Podcast
00:00:08
Speaker
Welcome to dial it in a podcast where we talk to fascinating people about marketing sales process improvements and tricks that they use to grow their businesses. Join me Dave Meyer and Trigby Olson of busy web as we bring you interviews on how the best in their fields dialing it in for their organizations.
00:00:26
Speaker
Let's ring up another episode.
Summer Series Recap and Staff Picks
00:00:30
Speaker
We're recapping all of our summer favorites on our summer series at Dial It In. And today we have staff picks. So Nicole on our team actually picked Steve Anderson today, and he covers the Amazon way that everything that you learn from Amazon or that he learned from recapping Amazon's board meetings over the years.
00:00:53
Speaker
few of the special quotes that she pulled from this episode, return on risk is thinking about risk taking the same way you think about return on investment. you'll never You'll never be able to grow like Amazon if you're not willing to risk failure.
00:01:07
Speaker
And most organizations punish failure. Successful failure recognizes that while something might not work the way you think, the key is learning why that didn't work and what you can change to make adjustments for the next experiment.
Steve Anderson's Business Frameworks
00:01:23
Speaker
She highlighted straight talk on risk and failure, and Steve reframed the failure as something that businesses should expect and learn from, not avoid, bringing clarity to a topic many leaders still tiptoe around.
00:01:35
Speaker
And Nicole's actionable takeaways were that Steve gave real examples and clear frameworks, like successful failure and return on risk, that businesses can start using right away.
00:01:45
Speaker
Enjoy this episode of Dial It in and we'll see you next week.
00:01:51
Speaker
I don't get it. We're supposed to be recording now. Do you know where David is? Well, I don't know. I thought he left a note on your desk. I don't know if he's here, but I think he'll be back shortly. That's what that is. All right. Hold on.
00:02:06
Speaker
Seems kind of odd. He wrote me a full letter. Well, maybe it's the same.
00:02:13
Speaker
Dear Trigvi, hi, it's me, Dave. I'm going to be a little late today, but I wanted you to be prepared for our podcast guest today. His name is Steve Anderson.
00:02:26
Speaker
He is a leading expert on growth, business risk, and innovation. He has authored a new book called The Bezos Letters, 14 Principles to Grow Your Business Like Amazon, a Wall Street Journal, USA Today, and International Best Seller.
00:02:41
Speaker
He has deconstructed Jeff Bezos' 21 shareholder letters to reveal the strategies behind. That's probably why Dave wrote me the line. yeah is the strategies behind Amazon's success.
00:02:54
Speaker
With decades of experience in strategic risk management management, Steve has been recognized as one of LinkedIn's top global thought leaders. Today, he helps businesses of all sizes apply Amazon's growth principles to scale, innovate, and thrive.
00:03:10
Speaker
I'll be there in a minute. Please say hi and add to cart our guest today, Steve Anderson. Hi, Steve.
Interview with Steve Anderson
00:03:18
Speaker
Hello. Great to be nice. Hey everybody. I'm back. I'm here. Welcome come back, Dave.
00:03:24
Speaker
Yeah. Well, it's nice to meet you, Steve. I got you. Thank you for the letter. Perfect. That's, you know, the, the art of letter writing is really just a loss. Okay. Here's the question. Was it cursive or was it printed?
00:03:38
Speaker
It was, it was, it was time. Dave, Dave, Dave's handwriting is not great. Right. Actually, you know what? For a guy, Dave really does have nice handwriting. I have terrible handwriting. it's My handwriting is at least legible, but I wouldn't call it pretty. There you go. Yes, that's true. yes That's true. Well, Steve, I'm super glad to meet you. The book is absolutely fascinating, and I can't wait to get into it. But before we do that, Dave, do we have a sponsor for today's episode?
00:04:06
Speaker
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00:04:28
Speaker
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00:04:39
Speaker
Cool. Well, thank
The Bezos Letters and Amazon's Success
00:04:40
Speaker
you, Dave. So, yeah Steve, your book is called The the Bezos Letters, 14 Principles to Grow Your Business Like Amazon. And you started writing this based on Jeff's, I'm going to call him Jeff because he he doesn't return my calls, Jeff's shareholder letters.
00:04:57
Speaker
I think this is a fascinating process and i want to get into some of the lessons learned, but what on earth possessed you to come up with the idea to do a deep dive on shareholder letters? It was a little bit of a ah roundabout journey. So my kind of my career background is in the insurance industry, but specifically with insurance agents and brokers, helping them with their technology. And I've been doing that a long time.
00:05:21
Speaker
And we know technology continues to develop rapidly, more rapidly than ever, it feels like. And every year feels like more rapidly than ever. But I started asking a question a number of years ago, yeah is the biggest risk that they face actually not taking enough risk?
00:05:39
Speaker
Which is pretty counterintuitive because, as you know, the insurance industry is all about reducing risk, mitigating risk, transferring risk to an insurance policy, not taking more risk.
00:05:51
Speaker
But with technology, and because it's developing so rapidly, you can't sit around and wait to see what's going to happen. And we certainly are experiencing a lot of that now around generative AI and eugenic tools and write all the stuff.
00:06:08
Speaker
If you're not getting in and experimenting, then you're going to be behind. And so I started talking about that and then started researching.
00:06:20
Speaker
Companies that had once been very successful and are no longer here, literally bankrupt, gone, out of business, sold. And also then companies that have been successful and seem to have some ability to continue to be successful.
00:06:38
Speaker
Well, I think we know a lot of the names around the ones that aren't here. So I won't belabor that point. he But I came across Amazon. I kind of say now, make sense, but at the time it was, okay, how does Amazon do it?
00:06:57
Speaker
I came across the shareholder letters, which typically CEO shareholder letters are boring. Totally. And in touting the company, they're, you know, puff pieces, typically.
00:07:13
Speaker
You've read them, I've read them. Yeah. And so I've written, I've written one before. Oh, we even saw what was it? Was it boring? used to be on the board of directors ah of an arts foundation here in Minnesota. And so I had to write the letter of summarizing the last year. And so I found it really difficult to, to try and synthesize all the good things that were happening down to like two paragraphs. And I felt like I had just sort of skimmed the surface. It was actually challenging writing in a project.
00:07:40
Speaker
It's a very, I got hold of the Amazon and i read ah I had read a couple over the years, so I kind of knew there they were there. But I ended up getting every letter that he wrote up to that point, which was 1997 through 2018. He subsequently finished 1920, but the book covers 97 to 18.
00:08:02
Speaker
And what I realized when i sat down and read them as a narrative, one right after the other as a book, almost 50,000 word narrative, book at that point, I realized there were threads going through the letters, that the letters certainly did say, here's, you know, our sales, here's how to increase. I mean, it it did do that.
00:08:23
Speaker
But in addition, it talked about how he did it. And that's what really intrigued me, those different threads that went through. and they And a lot of them were consistent from the very beginning, first letter, all the way through to the last letter.
00:08:41
Speaker
And so that's what intrigued me. And first... my first I call it iteration. My first thought was to do an executive summary of each of the letters because there's a lot of good stuff there. So it was, you know here are kind of some milestones they hit this year.
00:09:00
Speaker
Here's some some key takeaways that that you might be able to to think about as a business owner, you know, and some quotes. One page for each letter. Lead gen.
00:09:12
Speaker
Created it, downloaded it, give me your address. Here's some good stuff, you know, to help you. And there.
00:09:20
Speaker
fortunately my wife is in the book publishing business and has been for many years so yes i did get a sweetheart deal for a publisher okay so we get that question out and would she i said it to her kind of to proofread what do you think and you know because she's really good at editing and that kind of stuff and she wrote back and said this isn't a legion this is a book and i had been talking about writing a book so then i went oh, I don't know how to write a book.
00:09:52
Speaker
I'm going to write articles, right? Thousand word, 1500 words. The book ended up being a little over 65,000 words, and it's a very different animal in terms of strategy. How do you pull the reader through the book and get them to want to go and read the next chapter? So that's a whole long, but that was the the impetus.
00:10:16
Speaker
And there were a whole lot of bumps in that process of actually getting the book published. I imagine there's a little bit of, as as you were going through the letters, Steve, that there's a little bit of historian that you had to kick in, right? To add context and here's what was happening. And the read comes through like a story of the life of Amazon, as well as all the business lessons that you get. So how did you find the historical context behind those letters? So of the things I do and have done pretty well is research.
00:10:49
Speaker
And so it was literally every interview I could get my hands on, even some like really old ones that were kind of hard to, you know, but I'm i'm pretty good at that. So I transcribed them, listened to them.
00:11:05
Speaker
And I have to tell you, my so my wife and I did this together. Her name's on the book for a reason. yeah The reason it reads well is because of her.
00:11:16
Speaker
My idea her strategy. My first draft, which in the business is called the shitty first draft, because every first draft is bad, was like still chronological.
00:11:33
Speaker
1997, he said this, 1998, you said that. And she, I would still remember coming home, you know, kind of finally sent it to her, some trepidation. What's she going to think? I can't, you know, and but blah, blah, blah.
00:11:46
Speaker
But she I came home and she said, we need to talk. Now, as a husband, that's generally not a good phrase. Right. It happens all the time to me. Yeah.
00:11:57
Speaker
So we sat down and she said, thank you for sending
Amazon's Innovative Culture
00:12:00
Speaker
this. There's a lot of great information in it, but nobody cares when he said what. So we talked through it and she said, it's boring.
00:12:09
Speaker
You know, can you come up with principles? Now that was pretty afflated. This what I'm getting back to the sweet deal from your wife. I mean, I think that would, set that sounds horrible. Like, well, Hey, we'll read my galleys. Well, Hey, why don't you empty in the dishwasher? Well, this is,
00:12:25
Speaker
and and i i said And at that time I said, I don't know. But literally a few days later, i had eight. And then we ended up expanding it to the 14 that ended up in the book.
00:12:37
Speaker
But that's part of why... Again, I said earlier, right, what's the strategy for getting the reader to want to continue, not jump at some point?
00:12:51
Speaker
And that was that was brilliant on her part. And that's why she's so good at what she does. So.
00:12:59
Speaker
And that's clear in in the lessons that you put forth. So I guess my my next question is, how what what are your favorite lessons inside of the principles and what what can we learn?
00:13:15
Speaker
So there are 14, that's a lot. That is a lot. And ah I think I can, I pick out a few because I always ask, a get asked, you know, Kyle, what's your favorite or what do you think is the most impactful? or And part of what's really interesting, because they're 14, we broke them down into four cycles.
00:13:38
Speaker
We call test, build, accelerate, and scale. And I believe businesses, large and small, are going through those cycles continually. maybe a department's testing something new, a region's doing something, but they're and they're scaling, et cetera, et cetera.
00:13:56
Speaker
So that was one way to help people grasp more the principles. and And I didn't realize this at the time, but I've realized that in talking to a lot of people about these, the principles stand on their own and they interact with one another.
00:14:13
Speaker
So, I would say the first principle I think is unique to Amazon. And one of the major reasons they continue to be successful is the very first one the test cycle, which is encourage successful fail.
00:14:30
Speaker
Now, typically you don't see those two words together. So that's intriguing. And I think it's it's, for Amazon, very practical. Bezos said in a couple of the early letters that Amazon is the best place for an employee to fail because they don't punish failure.
00:14:49
Speaker
They encourage failure. So here's the process. In order to invent on behalf of the customer, that's a Bezos phrase, we invent on behalf of the customer, you have to experiment.
00:15:03
Speaker
And what he said was, an experiment, you don't know if it's gonna succeed or not. So your failure rate is pretty high with experimenting. So experimentation leads to invention, which allows innovation.
00:15:21
Speaker
So I think the current business thing right now of companies have to innovate, I agree, but they're missing the first two steps.
00:15:32
Speaker
They've gotta experiment and invent before they can innovate. And it really goes back to Clay Christensen's kind of groundbreaking book on, I just lost the title, Innovator's Dilemma, right? You can innovate your way out of business because when you're innovating what's already there, you're not looking at what new you need to create.
00:15:57
Speaker
So that whole concept of encouraging experimentation and recognizing that failure is a part of the process and you don't punish employees for that. That's not a normal business culture today.
00:16:15
Speaker
And I say in the book, i i I believe employees are not afraid of failure, but are afraid of the consequences of failure. I mean, think about my career being derailed because of this thing didn't work, this product, whatever.
00:16:31
Speaker
And Amazon, if you look at their history and they still do it today, they kill a lot of projects. They try things. I mean, and and Amazon now is at a scale where they can, you know, spend money, but even a small business. And I always want to remind people when talk about Amazon, Jeff Bezos started in a garage on his hands and knees, putting a book package and driving it to the post office.
00:16:59
Speaker
You know, yes, they scale. And they started like every other business. Well, I think historically what's been so interesting about Amazon is just is is the ever evolving nature of a simple question of what is Amazon.
Amazon's Evolution from Book Seller
00:17:15
Speaker
And I think if you ask if you ask people who have the hair color that we have, they would say that it was a book delivery business that then grew into other things. But if you ask other people who are like under the age of 35, what is Amazon?
00:17:30
Speaker
They don't think of it that way. They think of it as a delivery service for everything under the sun. Probably easier, faster, and quicker. Yeah. And now we are of the of the age, and I had this experience with my wife's mother the other day where her traditional method of shopping was to go to all sorts of stores. She had an idea of what she wanted. She'd go to all these different stores.
00:17:57
Speaker
And then look at it and feel it and figure out if she wanted to buy it and then figure out if she wanted to have a coupon or not. She'd go to three more stores because she felt like i would get it. She'd waste, i don't know, $30 worth of gas in order to get the one thing she wanted.
00:18:12
Speaker
But the other interesting thing about Amazon is I think not only have they changed the nature of what their business is, I think they've by and large changed the nature of what is shopping. Because now if I need something, I pick up my phone and bink, bink, bink, I order it. And then it's either here, it's it's here two hours to two days later. Exactly.
00:18:33
Speaker
Well, and I think the thing to keep in mind too is Bezos started with a vision bigger than books. um Books were just a starting point because what he said was, what he looked for, he had a list of like 20 different types of products that he thought could be sold on the internet. Now remember, this is like 1994.
00:18:55
Speaker
Internet was brand new. In fact, it's really similar to today around, oh, AI is nothing. It's not going to do anything and you know blah, blah, blah. Well, is it the same? We'll see. I don't know yet.
00:19:07
Speaker
I tend to think it is. But he started with books because every book's exactly the same. There's no differentiation. And online, he could have an unlimited inventory.
00:19:25
Speaker
whereas the largest bookstores at the time maxed out at 150,000 175,000 titles. And so if you had an obscure title, you know, and and even in the beginning, if you wanted out-of-print book, they would go search for it for you and you could buy it.
00:19:45
Speaker
right But they very quickly went to video. they I mean, they went to other product lines because again as they were building and i think again part of bezos genius i will say that word is he also saw that the internet was the wild west so there was advantage for first first movers and he realized pretty quickly that logistics getting the
00:20:19
Speaker
book, product, whatever it is, to the consumer as fast as possible would give them a moat against other retailers. I mean, to the point, let me give you an example.
00:20:34
Speaker
Again, take an early internet, your early experiences with going online. Your big fear, my big fear, was putting my credit card information in a website.
00:20:45
Speaker
Oh, yeah. Right? Amazon was the first to create and popularize one-click shopping. The first to store delivery, where where do we send it?
00:20:58
Speaker
How do you pay for it? And literally that button where you were on a product page, you could click it and it was ordered. So it was so unique that they got patent on the one-click shopping.
00:21:16
Speaker
And that patent just expired a few years ago. And so early on Barnes and Noble, for example, tried to copy the one click patent. Amazon sued and won.
00:21:28
Speaker
Apple licensed the one click. prop Really? your what fight Wow. Uh-huh. I didn't know that. Isn't that fascinating?
00:21:39
Speaker
Yeah. And again, Mesos was very intentional about protecting IP and, you know, and what they were doing. And and then then we go to other, you know, so Amazon's this big thing, right?
00:21:51
Speaker
Most people experience through the shopping and delivery where you have AWS. A whole new business. um all Completely different. Completely different. And it grew out of Amazon's needs.
00:22:06
Speaker
They were growing so fast that all their different developers, departments, were creating the same thing over and over again. They all had to create a database. They all had to create a web whatever item, all of the stuff to make all that work.
00:22:23
Speaker
By the way, for those who are wondering what AWS is, it's Amazon Web Services. So it' so it's cloud storage. And in Amazon had a like a seven-year lead before other Google, Microsoft, others caught kind of caught to this idea.
00:22:40
Speaker
But they built it for Amazon. And somebody realized, hey, there's got to be developers out there like us. that want compute, but don't want all the expensive infrastructure.
00:22:53
Speaker
So that's where it grew out of. Whole different regions. Actually, any anyone listening to this podcast right now, I'm almost certain that you're getting it off of an Amazon server because AWS publishes most of the podcasts.
00:23:07
Speaker
Yes. of my favorite Amazon books before this one was a book called 21 Dog Years, which was a guy who worked at Amazon in customer service. And he it it's sort of a satirical look at things. And one of the things that he looked at was that one of the things that was really big in the early 90s was a company called Pets.com. Yeah.
00:23:27
Speaker
where you could get pet supply and Steve's laughing because I'm sure he's going to know the story. But one of their big things and pets.com also was really innovative in that they sold subscription models to things. But one of the things that that was really big ah it for them was kitty litter.
00:23:45
Speaker
That you you can click a button and you can subscribe and you can get kitty litter, which is great. So the the the idea perfect, right? You don't have to go the store and buy it. But Dave, I know you're allergic to cats. So if anybody who's not allergic to cats understands, kitty litter typically comes in about a 30-pound box and it is essentially dirt.
00:24:09
Speaker
So at the end of the day, one of the big galactic failures of pets.com was they were trying to ship you giant boxes of dirt. So along those same lines, and because it was but laid it laid out in your book so much more eloquently, Steve, what are some of the, and you talked about failing forward and success and failure. What are some of the key principles that Amazon was able to leverage in order to get to the success points that they're at and how other businesses can can look at them?
00:24:41
Speaker
You know, what comes to mind, ah kind of a maybe an overall idea with Bezos specifically, he's really counterintuitive. He doesn't do what other businesses do.
00:24:54
Speaker
and And a couple examples come immediately to mind.
Customer Satisfaction as Amazon's Priority
00:24:57
Speaker
Crime. All right. So free shipping, two days or less. Again, as you said, maybe an hour, it may get, you know, it's gotten better.
00:25:07
Speaker
But at the time, Bezos said, we're going to do free shipping, but they experimented. They had what they called super saver shipping, which was buy $25 and then the shipping's free.
00:25:18
Speaker
But here's here's the point. The biggest friction for shopping online, especially early on, it was you went to the checkout, And all of a sudden there was this big number for shipping.
00:25:30
Speaker
And then it became easier just to go to the store. So they worked to try and reduce that. The team at Amazon, especially the financial team, thought it was crazy.
00:25:41
Speaker
We can't afford to do this. Kind of back to your point of shipping dirt. We can't afford to do this. And what he said, and he would he would say this over and over again, he said, if it's better for the customer, it will eventually be better for Amazon and for our shareholders.
00:25:59
Speaker
And so that's the core reason why they built out such a massive and efficient logistics system. The number may be off a little bit for what I remember is the last year, 2024,
00:26:16
Speaker
amazon shipped 95% of their packages through their own network. Not UPS, not FedEx, not the postal service. They still do some of that, but not a lot because they have spent billions and billions of dollars building out this infrastructure.
00:26:36
Speaker
Here's another example of thinking differently. Amazon Marketplace.
00:26:43
Speaker
Third-party sellers. Again, this was early two thousand s What CEO in their right mind opens up their web property, their website, selling everything they have available to their competitors?
00:27:03
Speaker
That's what Marketplace is. Yeah. That's crazy. Again, what Bezos said was, If a third-party seller has a better price than we can get, it's better for the customer.
00:27:17
Speaker
If a third-party seller has it in stock and we don't, it's better for the customer. And those third-party sellers pay a fee to Amazon to access their warehousing and their logistics network to deliver packages so they don't have to build it. Again, crazy idea.
00:27:38
Speaker
And correct. Yeah. So counterintuitive, I guess is, and that feels like over and over and over again, you see examples of really delving into why, whereas most businesses, but we can't do that.
00:27:56
Speaker
But why? Yeah. bro And I think this is something that we experience at BusyWeb all the time when people come to us and say, well, we we want to sell through the internet.
00:28:08
Speaker
Well, the problem is the Amazon standard is what it is right now, which is you have to four clicks to buy. Somebody has to come to your website to be able to find your product, evaluate it, and then they need to buy and they need to do that four clicks or less.
00:28:21
Speaker
Which if you're building something from nothing is very expensive to do and very hard to do. And one of the things that Steve mentioned earlier that I don't think people have a really innate understanding of is the most dangerous and risky thing that Amazon ever did was hosting credit card information.
00:28:40
Speaker
I share it at that time. Yeah, especially at that time. But now yeah even now, there's a galactic liability concern for companies to do that. And so credit card, so then...
00:28:53
Speaker
credit card processors now offer that service of, well, we'll store the information for you. But what happens then is it makes the website slower because if we build, we have BusyWeb builds you a really nice e-commerce site at the end of the day, when we get to that one click buying, the website essentially calls the credit card company gets your credit card number and then pings the website back to say, okay, go ahead and buy it, which then in effect makes makes the website slower, but it reduces the risk.
00:29:25
Speaker
So getting back to the 14 lessons, Steve, Dave asked you what what your favorite is. What are some of the ways that businesses can learn from from the Bezos letters and figure out their own risk management tolerances when it comes to this kind of stuff?
00:29:41
Speaker
I had like a three minute question. but I'm going to point to another principle called obsess over customers. And I always have been intrigued. So by that phrase, right. Or that word in particular, obsess.
00:29:57
Speaker
The very first the letter he wrote was 1997. And there were three big sections in it. One of those sections was set. Well, the whole letter sets the stage for literally the next few decades.
00:30:11
Speaker
Here's what Amazon will do. One of those is we will obsess over customers. Now, every business knows they need to take care of customers. They need to have good customer service. They to have a customer journey that reduces friction.
00:30:30
Speaker
But obsess is a different way to think of it. And I don't think most businesses obsess over customers. And the way I look at it is friction.
00:30:44
Speaker
And do you even know as a business owner where your customers have friction in your process? I want to stop you right there, Steve, because I think this is an incredibly ah important idea of friction in the buying process that we need to, to before you continue to answer, i need I think people don't understand what really what that means. i do understand.
00:31:06
Speaker
but and i i Well, da your your example just a few minutes ago of third-party payment system, you've got to send information back and forth. That takes time, and it might be milliseconds, it might be longer, depending on what's happening, and the bandwidth of the buyer, right? They're all kind of factors there.
00:31:27
Speaker
So that's potentially a friction point. Or a friction point, I mean, I'll use a non-friction e-commerce example at the doctor's office.
00:31:39
Speaker
What's a friction point? Going in for an appointment and getting handed the clipboard with the paper and a pen. yeah by Filling out the exact same information every time.
00:31:50
Speaker
Not like I'm seeing more and more now, either an app or a website portal, you go in and can fill out the paperwork electronically before you go to the appointment.
00:32:06
Speaker
So then you're just checking in.
00:32:10
Speaker
Of course. Or the doctor saying, well, what what are we doing here today? like Right. All the way back. Don't you know? lookp Look at me. I've got snot coming up my nose or whatever. And but you have yeah i mean but the doctor's notes now show up. So you get a notice of their notes. Now, I have to say, that's kind of where I might use ChatGPT to go, okay, interpret these for me into English. But...
00:32:36
Speaker
Still, get the information it with less friction than ever. And so in your business, though if you're listening, do you even know? And the only way to know is get out of the building and and and have somebody else who doesn't know your business go through the process and take notes or record it.
00:32:58
Speaker
Find out where they stop, find out, because you're not going to know internally because you know the way it's supposed to work. Or you'll make excuses. Well, we we can't really fix that or we haven't, you know, blah, blah, whatever it is.
00:33:11
Speaker
But that if that's a friction point, that's not obsessing over customers. And Amazon has been fanatical in this area. And that's one of the reasons why they continue to be successful.
00:33:23
Speaker
I think one of the things that if we're talking about obsession over customers, it's really about the buying experience. Because yeah we talked about, hey, there's four clicks to buy. So that's why it's so much easier to buy from Amazon than just about anywhere.
00:33:38
Speaker
I think a good lesson that a lot of businesses can learn is there needs to be a healthy balance between your processes and your customer's ability to buy. If it is considerably hard to say yes, and this is even something I think Dave, you and I struggle with is you need to make the opportunity to say yes, be as easy and, ah and the road to there as the easy as possible. I I'm thinking we were at Fred's house last night for dinner and simple conversation, but it just illustrates this point.
00:34:09
Speaker
yeah ah One of the people there was saying, you know they've been looking for the, the rock sea salt so you can put it in a grinder like pepper. Couldn't find it.
00:34:22
Speaker
and And I just made the off comment of, you know, did you check Amazon? Huh? No, and you probably haven't been, you part of the problem, you might have more selection than, you know, you want to be able to make a decision, but ah still it's that idea of it's always available. And again, i don't want to, I don't want this principle to be only an e-commerce website. I think however you are dealing with your customer, physically in person,
00:34:51
Speaker
Whatever it is, it's that the principle's still there. And I think that's, frankly, what's so powerful about the principles is they apply in a lot of different situations.
00:35:02
Speaker
Do you think there could ever be another Amazon? It would be really hard for somebody else to come in because Amazon has built such a strong moat around your business.
00:35:15
Speaker
Now, could there be another like Amazon in something else? Absolutely. Another disruptor that- Another industry, another process, another, but I think the e-commerce and cloud computing. and And again, you look at AWS we talked about before.
00:35:32
Speaker
i mean, Microsoft has come in with Azure, Google's come in, ah few others. Amazon still has a lead in terms of market share, but others are trying to compete with Amazon in that arena.
00:35:48
Speaker
It feels like some of the AI things might be a good lead in or or something that would change the world significantly enough that it would be similar where to to Amazon. Like OpenAI and ChatGPT really opened the floodgates of interacting with software and information in a completely different yeah way. Yeah, that's a good example. Yeah, I think the the big lesson from from Amazon and especially what we've been talking about so far, Steve, is yeah if if we apply and You know, you know, the concept of flywheels, right? So, you know, gaining more things. i I actually remember a graphic where they were talking about Amazon's flywheel and how they reduce prices, reduce friction, and then increase scale. And that leads to ah bigger moat around what people can get into.
00:36:37
Speaker
Well, flywheels can apply to your business just just the same. Figure out ways to connect with your audience better, easier, and reduce that friction. And things get easier. Again, one of my principles is understand your flywheel.
00:36:50
Speaker
And the background for Amazon is before Jim Collins' good good book, Good to Great, was published, just a few months before, he was invited by Bezos to an off-site senior leadership team meeting and they for a day.
00:37:07
Speaker
And the entire day was spent... building Amazon's flywheel. And you're right. If you've seen the graph, they call it the virtual cycle. You've seen the graph. I mean, it's there. It was on a napkin. They prettied it up a little bit.
00:37:21
Speaker
And it really was, okay, you know, we've already talked about these elements. If we have... Low prices, if it's easy to do business, that brings more people because, and Amazon relied on word of mouth more than anything. They did very little advertising early on. They're doing more now, but...
00:37:44
Speaker
But that brings more people. More people get allows them to negotiate better pricing for the manufacturers of the products they sell, which, again, brings in more people.
00:37:55
Speaker
And then they added the third-party sellers kind of in that cycle to even accelerate that further. And that that flywheel is still turning. So, yes, totally agree.
00:38:08
Speaker
And I do think that principle, I think the flywheel is the hardest to understand and the hardest to implement. Cause you, you, you need to get it right. you know, if one piece of that flywheel breaks or is off, then the flywheel has problems.
00:38:25
Speaker
Right. You just fly it apart. Yep. course. And the other challenge that I think a lot of businesses have is that they don't appreciate the idea that every part of the business is customer facing in delivery, in sales, in marketing, even in accounting.
00:38:40
Speaker
If there are hitches in the giddy up, people are gone and they're just going to go somewhere else to find, find other business. Steve, I know you you're also a consultant and I think customer obsession is a really important thing to consider. So what are what are some other examples in your life that you've seen beyond Amazon that and obsessing over the customer turns into real world?
Savannah Bananas as a Fan Experience Model
00:39:01
Speaker
The one that comes to mind and I don't know if it is banana ball, Savannah bananas. Are you familiar with it?
00:39:08
Speaker
Love bananas to Savannah bananas. Yeah. That to me is one of the best examples of customer obsession. Now, Jesse Cole calls it fans first, but I have to think how many years, maybe two or three years ago, maybe four years ago, pretty early on after the book was published, I got, actually it's radio because I have it, a personal handwritten thank you note from Jesse Cole.
00:39:38
Speaker
Yell easy. And also a personal video shot he shot in the savannah stadium thanking me for the book and you know and you look at the in fact i just was watching yesterday kind of what he calls banana ball 3.0 right kind of their progression as they were experimenting with crazy stuff and his whole goal was how do we make baseball more fun for the fans
00:40:10
Speaker
And, you know, I've been to actually, I've been to a show and that's what he calls it, right? It's a show. The point actually, and i he had nothing to do with this, but my wife and I, because you can tell I'm, we're a bit older. We've been married a long time.
00:40:27
Speaker
We actually were asked if we wanted to come out in the field for a kiss off. And so we we participated in the show. It was so fun. That is such, ah to me, a great example um continuing to push.
00:40:45
Speaker
continuing to do crazy things, understanding some will work and some won't. So what works, we do more of what doesn't work, we get rid of and adapt quickly and easily.
00:40:57
Speaker
So yeah, that's a great, I think Jesse is definitely a great example of how you work that out in a whole different business.
00:41:09
Speaker
And for the listeners who aren't familiar with the Savannah Bananas, it's it's it's a gross understatement to call them the Harlem Globetrotters baseball. But it's probably the easiest connection people can make, I think.
00:41:22
Speaker
Yeah. yeah Yeah. And I think, yeah you know, the ah the other interesting thing is that along those same lines is we have a team based here in Minnesota that was built on a lot of those principles. And it was run by Mike Beck for a long time. Is that there minor league baseball team called the St. Paul Saints? It was.
00:41:40
Speaker
okay And Mike had identified that. The team is basically, the the team is is a bunch of kids and it's not that interesting. And what is interesting is the experience of going to the game. And so they instituted all sorts of weird things, all sorts of fun traditions, this kind of thing. And the the the place that you used to go to the game it was a dump.
00:42:05
Speaker
And it was a terrible stadium, but it was a joy to be there. And it was our dump. And one of the things that that that always happened was the entirety of left field was ah ah was ah and an active train track.
00:42:22
Speaker
no And so no matter what point in the game, if a train came by, and it came by probably 20 or 30 times in the game, the entire stadium would shout, train! And even the announcers would be like train.
00:42:34
Speaker
And I, 10 years ago, the saints moved to downtown St. Paul. They have a gorgeous stadium that is incredibly green and the whole thing just feels corporate. And it's not nearly as much fun as it used to be.
00:42:47
Speaker
And I don't think I've gone near nearly as much as I used to, because there was, there was this wonderful joy of, yes, it's a dump, but it's our dump and it's fun. And we love it. Right.
00:42:58
Speaker
Okay. You know, do you want to go to a nice dinner party or do you want to go party at at party at at the animal house? The animal house. Yeah, every, because everybody's having a blast all the time. So I think the book is great. it It's amazing.
00:43:11
Speaker
I think it's an important lesson on on risk. It's important lesson on change management and the how scary it is to rein to be constantly reinventing yourself. So I think everybody needs to to go out and find it. Steve, ironically, is your book
Global Impact of The Bezos Letters
00:43:26
Speaker
available on Amazon? Yes, it is actually. And actually there are all versions, I guess. So Kindle, audio and physical are all available there.
00:43:35
Speaker
And I, you know, when, when I say I, I say international bestseller, but it's been translated into 20 languages. 20 languages? is Holy guacamole. Yeah, so it's resonated actually surprising to me, right? I didn't set out to do all of this.
00:43:55
Speaker
I just had an idea that seems to resonate with people. So yeah, Fantastic. It's the same customer obsession, I think, because you're focusing on what people really want to know, instead of, you know, a dry history lesson on Amazon, you came up with 14 points that are essential for any business to grow and thrive.
00:44:19
Speaker
Exactly. Dave, any anything classy and inspirational as we as we wind up? Yeah, we talked a lot about retail in in our conversation thus far, but I think the important thing for a lot of our clients, which tend to be morbid to understand, is that this does apply to them. And to get into your customers' heads and to think about what that friction is that's you know just stopping them on their conversation or not delighting them, or if you're getting stuck in, well, we've always done it this way.
00:44:51
Speaker
You need to be okay with disrupting yourself and refocusing on your customer to thrive in today's world. And so, Steve, thank you for this lesson and this book. It's been fascinating. pleasure. It's been a great conversation. Thank you both.
00:45:04
Speaker
thank you Thank you, Steve. Thank you to Nicole and Andy of the broadcast, the producers here at Dial It In. Thank you, Dave. And much like Tony Kornheiser, with apologies to the man himself, we will try to do better the next time.