Approach work from the user’s perspective and work backward.
Amazon is a highly innovative company that has developed numerous industry-leading products and services, including Amazon Prime, Prime Video, as well as hardware devices like Kindle and Alexa. Achieving continuous breakthrough innovations is closely tied to Amazon’s mindset and methodology.
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Long-term thinking and a commitment to customer-centricity have always guided Amazon’s product development process. Unlike the traditional “skill-driven” innovation approach, Amazon starts its product development work by thinking backward from the market and the user’s perspective. This often requires the company to “develop new muscles.”
01 – Reverse Work: Starting from the Best User Experience
Reverse Work Tools: “Press Release” and “FAQ”
The fundamental principle of the reverse work approach is to shift from an internal perspective to that of the customer. Customers are constantly being pitched, so why should they be interested in buying the new product? This is where two efficient “reverse work” tools come into play: the “Press Release” and the “Frequently Asked Questions” (PR/FAQ).
Usually, a company writes a press release after the product development process is complete. Product managers and engineering teams do their part, and then the marketing and sales teams are responsible for crafting a press release that highlights the product’s “killer” features and remarkable benefits to generate buzz, capture consumer attention, and drive purchases. However, this approach can lead to certain disadvantages.
For example, let’s say a company decides to launch a new television, and the sales and marketing teams, after researching customer preferences and market trends, determine that a 44-inch TV priced at $1999 should be introduced. However, the engineering team primarily focuses on the TV’s display quality and doesn’t pay much attention to pricing, with production costs soaring up to $2000.
If these two departments adopted a “reverse work” approach using the “Press Release” tool, they would need to align first on the TV’s features, costs, customer experience, and pricing. The “FAQ” list can provide a comprehensive and clear evaluation of the costs and challenges the company will face in creating the product or offering the service. By establishing what kind of TV they want to launch and anticipating the various challenges they will face during the product development and production process, they can work together to find solutions.
In the reverse work approach, when the product described in the “Press Release” doesn’t clearly outperform existing products on the market (faster, more convenient, cheaper), then it’s not worth building. The PR/FAQ process helps the writers assess the feasibility of creating a new product, forcing them to think about and document various elements and constraints, including (but not limited to) customer demands, potential market size, unit economics, and profit and loss statements. Both tools have mandatory length constraints.
Even if the ideas presented in PR/FAQ are outstanding, there is no guarantee they will smoothly transition into products, as only a small percentage of ideas will be “greenlit.” This is not a flaw of the reverse work approach but rather one of its benefits: it helps determine at what point and how many development resources should be invested. It is a comprehensive, data-driven method that encourages the generation and evaluation of great ideas.
02 – Establishing Effective Mechanisms and Processes for Reverse Work
Amazon believes that only by establishing mechanisms and processes can problems be solved. The core management team needs to strengthen leadership principles and mechanisms by setting clear top-down goals, processes, and plans, ultimately internalizing them as the company’s standards and culture.
Based on an understanding of the functioning mechanism between input and output metrics, Amazon manages input metrics rather than output metrics. It establishes regular meeting mechanisms based on defined metrics and uses efficient methods supported by data (e.g., 6-page memos) for tracking and improvement.
In addition, each team must have clear responsibilities based on the company’s overall goals, and clear leaders should be established to some extent to avoid internal friction.
- Leadership Principles and Mechanisms
At Amazon, you often hear the saying, “Good intentions are not enough; mechanisms are needed.” Problems don’t arise because of a lack of good intentions. If the underlying conditions causing the problems are not changed, issues will eventually surface, possibly repeatedly.
Amazon has always been committed to implementing mechanisms to ensure that leadership principles translate into action. It has three fundamental mechanisms:
- Annual Planning Process
- S-Team (a senior executive team reporting directly to Jeff Bezos) Goal Process
- Compensation System (incentives aligned with the long-term interests of customers and the company)
Amazon’s compensation system emphasizes long-term thinking. Even though leadership principles and annual planning are well-defined, their influence can be overshadowed by financial incentives. An incorrect compensation system can lead to a departure from the goals in two ways: it may reward short-term goals at the expense of long-term value creation, or it may reward local departmental goals regardless of whether they benefit the entire company. Both can drive behaviors that are at odds with the company’s fundamental goals.
Amazon believes that “performance” in performance-based compensation must refer to the company’s overall performance, which is the maximization of shareholder interests, and, in turn, the maximization of customer interests. As a result, the compensation for Amazon S-Team members and all executives focuses on stock ownership to be gained within a few years. The standards for the highest compensation at Amazon are set much lower than those of American industry peers.
- Communication Mechanism: 6-Page Memos
Amazon eschews PowerPoint in favor of narrative text for work communication. The goal is to increase the quantity and quality of efficient organizational communication. According to Amazon, the denser the information with causal, multivariate, comparative, and evidence-backed analysis, the more detrimental PowerPoint becomes. In addition to the PR/FAQs mentioned earlier, “Six-Pager Memos” are another form of narrative text used to present, evaluate, and propose various ideas, processes, or businesses.
Meetings require attendees to read the six-pagers and presenters to answer questions from members at the meeting. This method of communication enhances participants’ involvement and responsibility. It forces all members to objectively and comprehensively evaluate the idea itself rather than the team or “sales language.” Presenters and attendees become a single entity responsible for the subsequent success or failure of the plan and the accuracy of the team’s business analysis.
A “Six-Pager Memo” should possess the following characteristics:
- The argument is persuasive, based on the six-word motto for writing: “point, evidence, conclusion.” A successful narrative memo should clarify the reader’s thinking, create compelling arguments, and not simply list a bunch of unrelated points and pictures, leaving the audience to connect the dots.
- It not only introduces an idea but also demonstrates that the idea has been carefully considered and analyzed. Unlike PowerPoint, a solid narrative memo can (and must) show how numerous, often highly variable facts and analyses are related.
- A complete narrative memo should also anticipate possible objections, doubts, and different views that we hope the team will offer. The writer has to anticipate tricky questions, reasonable counterarguments, and even common misunderstandings and proactively address them, adding FAQs as supplementary content to the six-pager to answer potential questions that attendees might raise.
Critical Reading of “Six-Pagers”
Jeff Bezos has a trick when reading memos: assume that every sentence is wrong until proven otherwise. He questions the content, not the author’s motivation. This critical thinking approach encourages teams to question themselves: Is the current memo well-written? Are there other important facts that need to be included? Does it align with Amazon’s leadership principles?
For example, suppose a memo says, “Our return policy is customer-friendly, allowing returns within 60 days of purchase, whereas our competitors typically allow returns within 30 days.” At first glance, this might seem fine, but a critical reader would question the underlying assumption: Is a longer return window really customer-friendly? This policy may be better than competitors’, but is it genuinely customer-friendly?
During the discussion, the critical reader would ask, “If Amazon is truly customer-centric, why do we inconvenience the honest 99% of customers who want to return something by making them wait until our returns department receives and confirms the item is undamaged?” It is this kind of thinking—assuming something is wrong—that led to Amazon’s “no questions asked” return policy, where customers can get a refund even before Amazon receives the returned item. This example illustrates that a company does not need a “Jeff” to adopt this critical, fault-finding, and questioning approach to ideas.
- Organizational Management Mechanisms: Performance, Organization, and Recruitment
In performance setting, Amazon focuses on input metrics rather than output metrics. The company believes that only with the right metrics can it provide clear and feasible guidance.
Input metrics track factors such as selection, pricing, and convenience—areas where Amazon can take action. For example, adding product categories, lowering prices through cost reduction, and improving delivery speed through inventory placement. Output metrics (orders, revenue, profit, etc.) are important but are typically not directly and consistently controllable in the long term. Input metrics measure the things that lead to desired output metrics.
Output metrics indicate performance, while input metrics provide guidance. Input metrics are much more indicative of trends than output metrics. For example, a chart may show that the declining growth rate is due to a decrease in the speed of acquiring new customers, which is not apparent when examining a revenue trend chart. For larger businesses, if you only focus on output metrics like “revenue,” you may not discover the impact of a decrease in the number of new customers for quite some time. However, by focusing on input metrics like “number of new customers,” “revenue from new customers,” and “revenue from existing customers,” you can detect this signal early and take action sooner.
Case Study of Input Metric Evolution
When Amazon expanded from books to other product categories, it made a mistake with the input metrics related to selection (the number of products Amazon sells).
Initial Metric: Number of new “pages” created – Initially, Amazon believed that the more “pages” they created for new products, the better their selection efforts were. As a result, the retail team sometimes purchased products with low demand to increase the number of product pages. This approach led to an increase in an output metric, inventory cost.
Optimized Metrics: The metrics were optimized to focus on more relevant factors. These included:
- Customer visits to “page” products – The number of customers visiting product pages. If a product page had no customer visits, it received no performance score.
- Ratio of inventory products to “page” products – This metric encouraged the addition of new products to pages, but it also considered inventory. Simply adding new product pages without inventory wouldn’t earn a performance score.
- Ratio of fast-track inventory products to customer-visited “page” products – This metric measured the availability of products for two-day delivery in relation to customer-visited product pages. It was called “Fast Track In Stock.”
Organization: Single-threaded Leadership with Clear Team Objectives and Responsibilities
As an organization grows, team collaboration and communication can become more complex and time-consuming, often slowing down innovation. Amazon places great emphasis on independent, single-threaded teams (independent closed-loop teams) to allow teams to focus on specific business areas, clearly define their boundaries from other teams, and maintain agility and strong execution throughout the company. It’s important to note that the autonomy of these teams must be coupled with precise goal setting aligned with the company’s overall objectives.
In contrast to single-threaded teams, multi-threading presents issues such as a lack of a single accountable leader and ownership, making it difficult to allocate resources and hindering the launch of new initiatives. Amazon Fulfillment by Amazon (FBA) serves as an example. Originally known as “Seller Self-Order Fulfillment” (SSOF), this initiative was intended to provide Amazon’s warehousing and delivery services to sellers. Managers from both the retail and operations teams thought it was a great idea, but more than a year passed without any significant progress. It was always “coming soon,” but in reality, it had not even started.
As a company transitions from small to large, founders should also consider establishing single-threaded teams (independent closed-loop teams) for key projects or new initiatives. This can reduce communication overhead between teams, improve decision-making efficiency, and ensure that business responsibility is assigned to individuals within a single team rather than collective decision-making, ultimately preventing a situation where no one is accountable for the results.
Recruitment: Raising the Bar Process
Traditional recruitment processes can suffer from a sense of urgency in filling positions and personal biases that lead to skewed judgments.
Amazon employs a “raising the bar” approach in its recruitment. The core idea is to raise the standards with each hiring, leading to increasingly stronger teams and improved performance. “Raising the bar” assesses whether an interviewee exceeds 50% in terms of skills and leadership principles compared to current employees at the same level.
In the hiring process, a “bar-raiser” cannot be the hiring manager or recruiter. Bar-raisers have a veto power and can overturn the hiring manager’s decision. However, the title of bar-raiser isn’t confined to a single function; it’s more of a hiring model and process.
The bar-raising recruitment process consists of eight steps, playing a crucial role in reinforcing Amazon’s leadership principles and maintaining high-quality talent during periods of rapid expansion.
The bar-raising process becomes more pronounced over time. As the bar for entry into the organization continues to rise, existing employees are also unlikely to become complacent. The constant influx of outstanding new hires pushes everyone to hold themselves to higher standards, ensuring that the entire organization remains dynamic and driven.
Behind Amazon’s high business growth lies a powerful organizational foundation. The Reverse Work Method, as a driving force behind the success of this organization, possesses strong replicability. It is a universal methodology that can be adapted and applied to other companies in various stages and fields. Hopefully, it can provide valuable insights for entrepreneurs.