High Standards

This time last year, I wrote about the 2017 letter from Jeff Bezos to Amazon shareholders. It focussed on his belief that businesses need to consider every day on what they would do if this was day 1. He wrote “Hold onto “day 1” as long as possible. Fight the idea that “day 2” has arrived. “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” And it certainly works for Amazon.

The recent American Customer Satisfaction Index positioned Amazon in first place for the 8th year in a row. The UK Customer Satisfaction Index ranked them in first place for the 5th year in a row. And the proof of the pudding is in the eating. Amazon Prime has over 100 million paying global customers. Last year they shipped more than five billion items from a selection of over 100 million items to these people. In Q4 2017 they made a profit of just under $2bn. Not huge given their turnover but in line with their plans. So, what is the secret of their success? Is there anything a small or medium size owner managed business can learn from them? I think the answer is yes.

Bezos believes that there is no single way to stay ahead but “High standards (Widely deployed and at all levels of detail) are certainly a big part of it. And he asks: Are high standards intrinsic or teachable? His answer is that they are teachable and that many people can learn high standards simply through exposure. High standards are contagious. Bring a new person into a high standards team and they’ll adapt quickly. Of course, the opposite is also true. If low standards prevail they will spread swiftly. I guess most of us have seen examples of both.

If you have high standards in one area does that mean you will have them across the business? Bezos believes not. He points to the early days of Amazon where he had high standards on inventing, on customer care and on hiring. But he didn’t have such standards on operational process; how to eliminate problems, how to eliminate problems at root and so forth. He had to learn and develop standards on all of that; his colleagues were his tutors. Understanding this point is critical. We can consider ourselves to be people of high standards in general but still have debilitating blind spots.

So, what do we need to do to develop high standards in a particular area? First, we need to understand what good looks like in that domain. Second, we need to have realistic expectations as to how hard it will be to achieve the result. Bezos call this the “scope”. And he points to a couple of real life examples. First: “The Perfect Handstand” A close friend decided to learn to do a free-standing handstand; no leaning against the wall. Instagram grade! She was finding it difficult so she hired a handstand coach (only in the US!) He gave her some key advice. “`It takes about six months of daily practice. If you think you can do it in two weeks you are going to end up quitting” Unrealistic beliefs on scope – often hidden and undiscussed – kill high standards.

The second example really resonated with me. After twenty years of consulting I was amazed and thrilled to discover that Amazon do not use PowerPoint or other slide based presentations. Instead, they write narratively structured six-page memos and they silently read one at the beginning of their regular meetings. Unsurprisingly, the quality of the memos varies widely. In the handstand example, we can all recognise high standards. It would be very difficult to document the requirements that make a great memo. But you know it when you see it.

Bezos suggests that the problem can be a wrong expectation of scope. The writer believes that a six-page memo can be written in one or two days, or even a few hours when really it may take a week or more. They are trying to perfect the handstand in two weeks. Great memos are written, re-written, shared with colleagues who are asked to improve the work, set aside for a couple of days and re-edited with a fresh mind. His point is that you can improve results just by teaching scope. A great memo should probably take a week or more

What about skill? Do you need to be a highly skilled writer to create a world class memo? Not in the context of a team. The (American) football coach doesn’t need to be able to throw and the film director doesn’t need to be able to act. But they both do need to recognise high standards and teach realistic expectations on scope. Even in the example of the six-page memo, someone needs to have the skill. Incidentally. By tradition at Amazon, authors’ names never appear on the memos – the memo is from the whole team

How relevant is Bezos’s thinking to you to you? I think it is both relevant and important. This is the key extract: “Building a culture of high standards is well worth the effort, and there are many benefits. Naturally and most obviously, you’re
going to build better products and services for customers – this could be reason enough! Perhaps a little less obvious: people are drawn to high standards – they help with recruiting and retention. More subtle; a culture of high standards is protective of all the “invisible” but crucial work that goes on in every company. I’m talking about the work that no one sees. The work that gets done when no one is watching. In a high standards culture, doing that work well is its own reward – it’s part of what it means to be a professional. And, finally, high standards are fun! Once you’ve tasted high standards, there’s no going back”

Makes sense to me.