The Amazon Way, with John Rossman – Episode 433 of The Action Catalyst Podcast

Business strategist, leadership expert, and former Amazon executive John Rossman explains some of the principles essential to how Amazon became the consumer and media giant they are today, including customer obsession, keeping a broad vision, keeping an eye on OKR’s (objectives and key results), setting the right incentives to create movement, making sure leaders are never done learning, and always taking the next best available action.

About John:

John Rossman is the Managing Partner and Founder of Rossman Partners. He is a business strategist, operator, and expert on digital transformation, leadership, and business reinvention. He has consulted with many great brands including Novartis, Fidelity Investments, Microsoft, Walmart, and Nordstrom. He served as senior innovation advisor at T-Mobile and senior technology advisor to the Gates Foundation. He is an operator and builder whose love is diving into business problems and customer needs designing solutions and business opportunities. 

At Amazon, Rossman was responsible for the launching and scaling the merchant integration team and played a key role in launching and scaling the Amazon marketplace business, which is now over 50% of all units sold at Amazon.com. Also responsible for the enterprise services business with responsibilities for Toys R Us, Target.com, NBA.com and other great brands.

As an author, Rossman has released “Think Like Amazon: 50 1/2 Ideas to Become a Digital Leader”, “The Amazon Way on IoT: 10 Principles for Every Leader from the World’s Leading Internet of Things Strategies”, and “The Amazon Way: Amazon’s 14 Leadership Principles”, introducing readers to the unique corporate culture of the world’s largest Internet retailer, with a focus on the fourteen leadership principles that have guided and shaped its decisions and its distinctive leadership culture — as only an insider could do.

Additionally, Rossman is a keynote speaker on innovation, leadership and digital transformation. John leads workshops on a wide variety of innovation, internet of things, digital strategy, and creating a culture of agility, trial and error, scaling and accountability. His goal is to give audiences tools they can immediately use to operate differently.

Learn more at JohnRossman.com.

The Action Catalyst is presented by the Southwestern Family of Companies. With each episode, the podcast features some of the nation’s top thought leaders and experts, sharing meaningful tips and advice. Learn more at TheActionCatalyst.com, subscribe below or wherever you listen to podcasts, and be sure to leave a rating and review!

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(Transcribed using A.I. / May include errors):

John Rossman:
What are we talking about today?

Dan Moore:
Your whole life history in 30 minutes or less?

John Rossman:
That won’t be interesting for anybody.

Dan Moore:
Really great to meet you today. But I feel like I already know you since about half our household budget goes to Amazon Marketplace, which of course, you were the executive responsible for launching and scaling that.

John Rossman:
Yeah, some people see that as a real feature. Some people see that as a bug. So yes.

Dan Moore:
I’m so interested in your story, I know you started off at at Jasmine High School, I’m a real fan of Jesuit education.

John Rossman:
The real quality that I got out of that was they just had high expectations for me, right. And I had never been in an environment where people had high expectations for me, in general, like, I would say, the environment I had come from people kind of had low expectations. And so wow, you know, start thinking about making a bigger impact. I went to Oregon State was lucky to get a degree in Industrial Engineering joined a consulting firm, but I think one of the big pivot points was joining the Amazon. So I joined Amazon in early 2002. I was there for about four years, I launched the marketplace business, which is third party selling at Amazon.com. And what I learned from there just completely reformed me as a problem solver as a communicator, as a leader that helps companies and leaders reimagine you know what their business should be in the digital era. And then, you know, writing the books that I’ve written, the Amazon way, been the one that we’ve done three editions of, you know, that combination of taking the learnings from Amazon and sharing them with others, that’s really become, you know, my mission, which is helping companies win and compete in the digital era. And I use Amazon and a bunch of other reference points to give people not monumental shifts that they have to do, but little nudges little things that we can do to help us take advantage of the situation we’re in and to learn, like what it means to compete in the digital era.

Dan Moore:
You know, one thing that can be a bit daunting is when we have a company that is not the size of Amazon to think how in the world could ever get some lessons from a company that large and that successful? What What would you say to say a small business owner would be one real key finding for somebody that is at a very competitive marketplace and try to figure it figure their way out.

John Rossman:
I’m gonna answer that bigger than just one thing. So first of all, you know, what everybody remembers is kind of about Amazon is like, you know, where they are today, the last 10 years where it’s just been exponential growth in the stock has reflected that in everything. Amazon wasn’t always the size, right. And there was about a 10 year period where stock was flat, a lot of doubters and naysayers relative to their business model, and they earned everything that they got these principles came from that era. And so these are not big company principles, these can be applied a lot of them as an individual, as a team as an enterprise. And it has nothing to do with either the industry you’re in, or the size of the teams. But you know, there’s there’s no 16 leadership principles at Amazon. The first is probably the most famous, it’s about customer obsession. And it reads, leaders start with the customer and work backwards, they work vigorously to earn and keep customer trust. And while they pay attention to competitors, they obsess about customers. Now, you can’t have just customer obsession, but leading with customer insights, being curious about your customer bigger and broader than just maybe how you intersect with them today, how you serve them today, your products or services really sets up so many great things for a business and for a team. And so if there’s one thing if I if I’m forced to deliver one thing from Amazon, the one thing would be be extremely curious about your customers, the jobs they’re doing the frustrations they have like what happens on a bad day, you know, everybody who tends to when you’re in business, you kind of focus on like, well, how things work in general right now not be curious about what happens when things don’t work. In general, when they don’t work and be a problem solver, be a builder to build better approaches for helping your customers in those moments. And that’s the essence of everything from Amazon is start with the customer and work backwards.

Dan Moore:
Which any size business or organization that’s involved with people can do exactly, because we can get into their bad days we can figure out ways to make those days not so bad. And that’s when they want to work with us for a long period of time.

John Rossman:
And again, think about a broad customer experience, not just how your product or service is being used. You want I understand that intently. But understand upstream and downstream to it will give you better insight into your product and service. And you’ll probably gain ideas of how to serve them bigger and broader than just what you do. And that’s really been, you know, if you think about when I was at Amazon 90% of the business was books, music video, right? Think about where Amazon is today, the conglomerate business that Amazon has today. And it was really that mindset of exploring different types of customers and the broad customer experience, not just how you’re working with them today, that’s really been the catalyst that has taken them on to a journey that there was no plan, there was no vision, nobody predicted that Amazon would be the world’s biggest cloud technology company in the world. Nobody predicted that Amazon would be the most dynamic and innovative logistics company in the world. Like nobody saw those things coming. It was because they explored customer experiences.

Dan Moore:
Customer obsession doesn’t have a time stamp on it.

John Rossman:
No, I think that patience element, understanding what to be patient for and what to be impatient for is a real business superpower for leaders and Amazon. I think one of their real superpowers is the ability to be patient in the right way uncertain investments. Bezos has been quoted several times of saying, just because on some investments, he can be patient for seven to eight years before payback versus his competitors, which have 18 to 36 months, it allows him to compete completely differently, he can do things that his competitors can’t follow. So that patients can be a real if you think long term can be a real defining feature of how you create legacy and how you compete and enduring business that competes for the long term.

Dan Moore:
John, even though your career is full of stars on it, I know that you’ve had some brick walls along the way. What kind of strategies would you share with us regarding when something unexpected, completely out of the blue obstacle, just derails everything, knocks you flat on your butt?

John Rossman:
Well, understand what’s within your control. You know, the 14 leadership principles at Amazon is deliver results. And what it talks about is that leaders deliver hard results despite setbacks despite dependencies. And that we focus on the the controllable inputs more than we focus on the uncontrollable outputs. And so in life in business, especially if you’re doing hard, unpredictable, innovative things, you need to have a plan, but things never go to plan, right? You better love setbacks, especially if you’re going to be an innovator and a game changer. Just always be thinking about what’s your next best available step, right? Understand your controllable inputs versus, you know, kind of the outputs, you want the goals that you have, but realizing, you know, there’s a lot of factors that go on outside of your control relative to achieving those goals. Just understand your next best available step.

Dan Moore:
Yeah, I’m glad you blew that up for us. Because when you look at the words, deliver results, it seems to be outcome based on what you’re saying is if we look at what we control, which are the inputs, ultimately, the outcomes are going to happen the way we want them to provide, we’re doing the inputs correctly, and with the right focus.

John Rossman:
And you do want those to have those outputs, as you talked about, in fact, one of the leadership principles is about thinking big and encourages leaders to create inspiring visions for you know what a product or a service would have business could be. But that’s why you need the complement of Yes, but break it down to the small controllable steps that you’re going to take this year, this quarter, this month, this week today, in order to get there. And that’s how you build towards those things. And sometimes the outputs come or the outcomes come into different flavors. Sometimes they take longer, sometimes you get outcomes that you never intended or saw. But that balancing factor of thinking long term thinking big, but bringing it back to like, a manageable timeframe, and what are we in control of what can we do next? That’s that’s where, you know, action matters. And and you know, where you’re in full control.

Dan Moore:
I like that, you know, I think that vision is kind of the fuel in the tank. And what we do with our hands on the steering wheel and the shifter and the turn signals are the control was it really cut that fuel to get someplace we want it to go?

John Rossman:
Yeah, there’s a good business planning tool goal setting tool that’s that’s pretty popular these days. That is in line with this notion we’re talking about it’s called OKRs objectives and key results. And it’s essentially says you set your goals, your objectives, which could be a year long or two year long objectives, but then you create key results that are probably no more than 90 days, right? And well, those these are the key things we’re going Gonna get done over the next 30 to 90 days that we believe will lead to this objective. And so it just helps create this kind of zoom out zoom in, you know, kind of mindset that we’re talking about.

Dan Moore:
When I started out in sales at the age of 18. They said, You want to have a great summer you want to do really well, but the main thing you’d focus on is the next two hours.

John Rossman:
Yeah, I’ve got two boys that have just graduated college. And, you know, one of them asked me, like, what’s one thing you do that you think you think I should do? And I said, on Sunday nights, I sit down, and I write my to do list for the week, you know, that’s, that’s the timeframe that helps me out is thinking about the big things I need to get done this week. And I actually think forward to the next week, because so many things are like setting up meetings, and you typically need two weeks to kind of get a meeting set up and everything. And that that, you know, kind of to do list orientation is, you know, a real healthy little habit.

Dan Moore:
Right? Would you say that’s one of the ways that you keep yourself in a strong motivated mode, instead of just going into the coasting mode, and sitting back and enjoying all the accolades?

John Rossman:
I love problem solving, like I love helping a team see a path where today they don’t see a path, that’s that’s ultimately, it’s, it’s kind of my superpower, it’s what I really enjoy doing. And, and seeing a team achieve success and see potential where they were kind of stuck before. That’s what really is the fuel in my tank. These are just kind of some of the tools that help keep me prioritize relative to to achieving that. And I love sharing it, I love writing the books that I do. And that helps me think better, and helps pass it on.

Dan Moore:
So problem solving is a really cool thing to talk about for a second because you have the ability to take a perspective that maybe person too close to can’t really see what other kinds of insights would you put to people that are faced with problems? In general, I guess, what’s the mindset you would adopt toward what people would say as a problem instead of throwing their hands up in the air?

John Rossman:
Well, there’s lots of little tricks, right? Problem, reframing can be a really powerful tool. And reframing just basically says, like, restate the situation, your problem in different terms. And that can help you see things from a different perspective, I think, again, understanding kind of like what you’re in control of, versus what you’re not in control of is a helpful thing relative to problem solving. And so many times, especially in business, one aspect that doesn’t get explored enough is incentives, creating the right incentive systems, especially when you need to get people you know, in your ecosystem moving to help accomplish something, thinking through incentive systems is a is a real interesting way of exploring, like, oh, a different way of creating action, right. And so that’s where, like, systems dynamic is a powerful framework and study to use, because it helps show the forces between different organizations capabilities, factors that are in play. And so you start to see the relativity and how these things work together. And you’ll spot opportunities. Amazon has a famous version of kind of their system dynamic. It’s the Amazon flywheel, and it basically was a simple articulation of their business strategy. And so it allowed us to state our business strategy, both to our team and to the market to the investors and so that everybody could get it. It was a simple but not simplistic point of view of communicating what we were trying to get done, by adding selection by adding sellers to create growth, which created a great customer experience, which spun the flywheel that’s a system dynamic mindset at work. And some of those tools for some of the more complex and dynamic situations can be really helpful.

Dan Moore:
And flywheels are all based on momentum and keeping that momentum strong.

John Rossman:
Partly, it’s like, what’s the most leverage position where we insert energy that can be resources, time, effort, energy to help create that moment? Because oftentimes, like, Oh, we don’t, we’re not getting that momentum, or we need to create that momentum or accelerate that momentum. And by having an understanding of that flywheel, then you understand well, that’s my point of leverage. If I put a little bit of pressure there. The theory is, the hypothesis is, is that that will create momentum that we get to take advantage of.

Dan Moore:
You spoke about an incentive systems job. What about incentives that don’t involve cash?

John Rossman:
There’s all sorts of incentive systems that don’t involve cash. And you know, so when I think about like the Amazon market place of business, we had to think through incentives of, well how other than just sales, how do we create incentives that help our sellers do that? right thing on behalf of our customers, which was a key part of the flywheel. So we, we developed a set of tools and a set of measures, KPIs, key performance indicators, metrics, that gave the sellers in a very scalable way, meaning we didn’t have to put a lot of ongoing effort to it. We built tools and technologies that helped them do the right thing. And then some incentives to motivate them to do that, for example, if they started slipping on in stock percentages, or on time delivery percentages, guess what their search results started to dwindle down a little bit, you know, in everything. So you could say, well, that’s a cash incentive. It’s kind of an indirect cash incentive. But it’s not a direct penalty. It’s a subtle, like you do the right thing, we’re going to help you add a little bit more you don’t treat our customers well, we’re going to penalize you a little bit.

Dan Moore:
So that’s an example using the right kind of leverage all focus on what’s best for the customer, that obsession with the customer experience, right? You know, a lot of our listeners are in pretty good pathways in their lives right now. Things are joyful, and they’re feeling good about things, got some others that are kind of discouraged, and they’re kind of down, what advice would you give to somebody that has just hit a point where they don’t know where to turn, they don’t know what to do next, I guess seeking words of encouragement.

John Rossman:
You know, I’d say you learn something that you can put to work today, right. And that could be in your job could be in your life, that would be one thing. And then when you feel good physically, it tends to help you just be more optimistic, like I believe in the power of exercise, not just because of the physical benefits, but because of the positive mental benefits out of it. And so if you’re not feeling great, go get a good workout in.

Dan Moore:
It gets the endorphins moving in the bloodstream in the right direction. But also, it’s a feeling of pride and satisfaction that we did something that maybe the moment we didn’t feel like doing. That’s right, you get something done. Kind of a reminder that if we can get one thing done, we can maybe get another thing done just breaks that logjam of not going into your action at all.

John Rossman:
It’s just the habit of kind of taking the next best available action, right like that back to something we’ve already talked about, which is like, you know, when something’s got you down, will perplex just be leaning forward and asking, well, what’s the next best available step?

Dan Moore:
That’s a good one, because often, the next step is not going to look like the best one, but he’s the only one available. If it is we’re going to take it otherwise, we’re going to assess and take a better one. But we opened up by you sharing that your early schooling helped you understand the importance of high standards, people with high expectations that you’ve not experienced that before, at a more of a societal level, is there something we can apply from that to our nation to help people be the shining city on the hill that was once envisioned?

John Rossman:
I think the ability to have open discourse, respectful discourse, and welcome contrary views insincere ways, that is the basis for so much that can be accomplished nationally, internationally, whenever you can understand others better, I think that you learn and you figure out where you can make progress. So one of the leadership principles, talks about this, learn and be curious as the leadership principle, leaders are never done learning and always seek to improve themselves. They’re curious about new possibilities and act to explore them. They seek diverse perspectives and work to disconfirm their beliefs. And what we tend to do is just live in a echo chamber, right, like people telling us what we already believe in. And I think in both business, as well as societal that that’s, that’s a danger when all you’re hearing is the stuff that you absolutely believe in, that you need to be open towards discourse and hearing things that you may not necessarily believe in. And that’s what real communication is.

Dan Moore:
Avoiding those subtle forms of conformational bias.

John Rossman:
That’s right, that I mean, that is what confirmation bias is is just listening to stuff that tells you what you already believe.

Dan Moore:
John, thank you time with you goes really really fast. I appreciate your insights. Appreciate the life that you lead, and the good things that you’ve done for our world and know that you will continue to do.

John Rossman:
Thank you and back atcha, thanks for everything that your show does and the conversation.