Amazon’s Leadership Principles And What You Can Borrow To Innovate & Grow

We can always learn new things from other businesses and apply them to ours. One of the most fascinating business stories of our time is Amazon. John Rossman is a former Amazon leader and now the managing partner at Rossman Partners. He is going to share some of his many takeaways from his time at Amazon that you can use to innovate and grow your business.

Watch This Episode

Listen To The Podcast

Subscribe To The Podcast

• Apple Podcasts
• Spotify
• Google Podcast
• Stitcher
• iHeart Radio

Read The Transcript Here

Podcast Transcription

Amazon’s Leadership Principles And What You Can Borrow To Innovate & Grow

Tim Fitzpatrick: We can always learn new things from other businesses and apply them to ours. And I think one of the most fascinating business stories of our time that we can learn from happens to be Amazon. And our special guest today is a former Amazon leader and he is now the managing partner at Rossman Partners. He is going to share some of his many takeaways from his time at Amazon that you can use to innovate and grow your business. Hi, I am Tim Fitzpatrick with Rialto Marketing, where we believe marketing shouldn't be difficult. All you need is the right plan. I am super excited to have with me, John Rossman, who is the managing partner at Rossman Partners. John, welcome, and thanks for taking the time today.

John Rossman: Tim, great to meet you. Thank you for having me on.

Tim Fitzpatrick: So it's going to be a great conversation. I think there are so many things we can learn from other businesses, not just in our own niche, but especially outside of other niches. And Amazon is certainly a great model to learn from. So I am excited to dig into this with you. Before we do that, I want to ask you some rapid fire questions. You're ready to go?

John Rossman: Fire away.

Tim Fitzpatrick: Okay. When you're not working, how do you like to spend your time?

John Rossman: Well, I've got a great family, and both my boys have been athletes through College. The youngest just graduated. And so it's been a great journey of kind of helping them and participating in them. But I like to exercise and I like to read and listen to books.

Tim Fitzpatrick: What's your hidden talent?

John Rossman: Well, I don't know if it's hidden so much anymore, but I'm a good writer. I like to both tell a story and deliver some simple practical lessons that people can apply to their businesses and into their team. I'm an engineer by education and a consultant. Writing books was never training or a plan of mine. And so I guess kind of my latent talent is writing.

Tim Fitzpatrick: Yeah. Okay. So I was a math major. I never thought I would write as much as I do today.

John Rossman: And we'll talk more about that as we're talking about Amazon and everything.

Tim Fitzpatrick: Yeah.

John Rossman: There's a definite connection there.

Tim Fitzpatrick: What's the best piece of advice you've ever been given?

John Rossman: It was from a client of mine, and it was to write the Amazon way. And so I was thinking about that question. It's like, oh, there's been lots of interesting. But by far, that suggestion, when I really think about it, by far, has changed the arc of my opportunities and how I get to help others innovate and change their businesses. Like that piece of advice, by far has been the most impactful piece of advice for me.

Tim Fitzpatrick: What's one thing about you that surprises people?

John Rossman: As I mentioned, kind of my boys or athletes, they play this game called Water Polo. And it's a small little game. They both played it pretty high levels. And so we've had a great family journey, kind of through that sport.

Tim Fitzpatrick: A lot of people don't realize how brutal Water Polo is.

John Rossman: Yeah. Physical game. There's not a ton of injuries, though, to it. It's kind of this interesting mash of physicality technicality, but there's not a ton of injuries to it.

Tim Fitzpatrick: My guess is that's because you're in water.

John Rossman: Yeah, exactly.

Tim Fitzpatrick: What does success mean to you?

John Rossman: Control, honestly. And that means the ability to choose the work I like to do, do it on the right pace and have the balance that I enjoy, which means time with my family, time for my hobbies, and time to really think about the work I do. The most interesting work I get to do is with clients, and I get to really instead of rushing through whatever the problem statement is or the strategy we're building, I actually take the time to really think about it over a period of time. And that, to me, is the greatest luxury that I've been able to give myself kind of through this career.

Tim Fitzpatrick: Where's your happy place?

John Rossman: Our full time homes in the Seattle area, but we have a place down in San Clemente, California. And San Clemente is just this great little surf town, and that's a place I like to go to.

Tim Fitzpatrick: How often do you get down there?

John Rossman: Four or five times a year, something like that. It kind of varies. We haven't really had a plan, really. So it's been yeah.

Tim Fitzpatrick: When you got the time, you go right, what qualities do you value in the people you spend time with?

John Rossman: You know, I value a wide diversity of personality types and people, but I think underneath all those is when you and I were talking earlier, we were talking like, I have been a partner way a long time ago at Arthur Anderson, and the motto of the firm was think straight, talk straight. And I think I like people who speak their mind and it's simple to understand them. And so I value all types of opinions. But oftentimes people, like, don't really know how to, in a practical, helpful way, put their opinion forward. So I kind of like that think straight, talk straight mantra.

Tim Fitzpatrick: The inquisition is done. All right. Now I want to know just tell us more about what you're doing at Rossman Partners. What kind of people are you working with? How are you helping?

John Rossman: Yeah. So Rossman Partners, we work with business leaders and companies to help compete in the digital era. It's a pretty straightforward mission, and oftentimes what that means is helping them build a growth and digital strategy. Sometimes it means something else, like they're having challenges in executing for today, but it's always kind of centered around, like, new techniques, new capabilities, and incorporating them to create a growth agenda and a strategy for competing. I am a strategist by background, and so I really help people figure out, like, what are we going to do differently, and why do we think that's going to be the plan and thinking through that plan in a refined enough manner that we have options, we're making careful choices, and then we execute in a real agile test and learn manner. I've got a great network of professionals that I can add in as the mission kind of changes, but it typically starts with some type of deliberate strategy setting session to compete differently in the digital era.

Tim Fitzpatrick: So you touched on your book, The Amazon Way. When did you write that?

John Rossman: Yeah. So The Amazon Way first released in 2014. We just released the third edition to it last year. And it is kind of my story from Amazon and the story of the leadership principles, the LPs from Amazon. I've written two other books also. I wrote one called Think Like Amazon, which is like a full playbook of all the little mechanisms and strategies from Amazon. That's a nice compliment with The Amazon Way, which kind of sets it up and is a little lighter weight read. And then I wrote a book about the Internet of Things and kind of business strategy for the Internet of Things, and it's called The Amazon Way on IoT.

Tim Fitzpatrick: Was The Amazon Way the first book that you wrote?

John Rossman: Yeah, it was the first book, and it's also the last one that I just updated.

Tim Fitzpatrick: Updated. So you touched on this that a client kind of pushed you or recommended it, I should say. Any other reason why you wrote the book?

John Rossman: Well, I left Amazon in late 2005. I was then a partner in a consulting firm. And what I saw myself doing was just like being a different type of operator. I learned all these interesting mechanisms and strategies and forcing functions and ways to think through situations. And I just started applying those into my client work. And as you said, it was a client of mine. Five years after I left Amazon, he was a client at the Gates Foundation, and he pulled me into his office one day and he goes, John, you do a nice job of delicately taking little components of Amazon culture and strategy and approaches and inserting them into our business. I think you ought to write a book about it. The smartest thing I did was talk him into being my partner on these books. And so he's been a partner on my books. His name is Greg Shaw. Great guy on these books ever since then. And that's what really prompted me. One of the guys I worked for at the consulting firm, he was very supportive and just said, John, this is going to change how people listen to you and everything.

John Rossman: And that's been very true. A nice book really does change the trajectory of how people listen to you.

Tim Fitzpatrick: Yeah. Have you found that it opens doors that might not have been open?

John Rossman: Yeah. Like complete swim lanes of things that I had never thought about. So about half my business today is keynote speaking. And so I never envisioned being a keynote speaker. These really are like lectures about how do we compete today? And so I'm not an entertainer, I'm not a futurist, but I give people practical tools. That's what I do in my books. That's what I do in my keynotes. That's what I do in my client work and everything. And so that has never been something that I had projected into or had planned on, but that's been completely opened up from writing the book.

Tim Fitzpatrick: Now in the book, you talk about Amazon's 14 leadership principles. What sticks out? What can we borrow from these principles to help our own businesses innovate and grow?

John Rossman: Yeah, it's hard to boil down to one thing, right? I'd imagine, but there is kind of an underlying thing, which is when I was at Amazon, I was at Amazon from early 2002 through late 2005, I got to launch and scale the marketplace business at Amazon. And so that's third party selling at amazon.com that's roughly 58% of all units shipped and sold from Amazon today. It's a big platform, but these principles weren't written down when I was there. We were hammering them out, and we were like, really thinking about, like, well, what does customer obsession mean relative to the marketplace? We could see how we expected people to understand the details of their business. And it was a couple of years after I left Amazon when they codified the leadership principles. And so at a minimum, one thing that I think companies can take away from it is to think about how you think about what's our culture and what are repeatable tenants or principles or guidelines or rules of how do we think through problems, how do we hold each other accountable, what are the priorities relative to our culture so that you're really creating a definable approach for how you operate as a team. That's the underlying principle of the principles is Amazon takes the time to really codify like, hey, here's our culture, here's how we work together, and that's allowed them to scale. So anybody can take something from that, from the actual principles themselves. It really depends on the situation. But the first one is about customer obsession. I think that's a little too easy to focus in on. The third leadership principle is titled Invent and Simplify. What I find fascinating is that simplification is recognized to be as important and as hard as inventing. Inventing sounds really important, really hard, really strategic. But simplifying is that as strategic as inventing as an operational leader at Amazon, the thing we always had our eye to was how do we scale and scale it being able to do more units or equipment in your business on an improving economic order quantity on an economic basis. Right. So more orders, more bits, more units on an improving cost per unit. Well, the factor you have to get right in order to do that is to actually create simplicity in your processes and your jobs and your policies, in your organization, in your paths and your data, in your systems and everything. Right. I think the defining issue in most organizations today is complexity, and they actually don't understand how to go about in a systematic way, simplifying how work gets done so that they can compete and scale better. Some of the edges work I get to do with companies today is actually like, how do we simplify how work happens within an organization so that we can compete better and that we can actually scale? So that's kind of the hidden one that most people focus on the invention part of that I focus on the simplicity part of it, and I think it's a real unlock for companies of any type of size to really be able to take it to the next level.

Tim Fitzpatrick: One of my favorite quotes, and again, I use this all the time because our approach to marketing, again, is simplifying. It's so easy as you touch on to overcomplicate things and make them complex. Leonardo DA Vinci said, simplicity is the ultimate sophistication. Right. It's not easy to make things simple. We need to boil them down to their most basic parts.

John Rossman: And when that's applied, if it's applied, it's usually from a customer experience standpoint, which is key. That's awesome. But most people don't take that mindset and apply it to like, well, how do we actually do the work within our organization? That's a great quote and mindset, and it's absolutely true. And it's applicable to actually how do we work as an organization?

Tim Fitzpatrick: One of the things I also pulled out of what you just said was what we can learn from Amazon, not just the leadership principles, but we need to create for our own business and define our approach of how we operate and work together. Right. And based on the culture that we want to create, our principles, maybe they shouldn't be the exact same as Amazon, right? Maybe there's some that we can take from that, but this is something we're defining for ourselves. Am I getting that right?

John Rossman: Yeah, absolutely. I would never recommend to anyone like that these are the right principles for you in either entirety or even individually. But by going through them, how do we think about that topic and everything and what other topics? One of the additions to this third edition of the Amazon Way that I did was I wrote a new appendix about building your own leadership principles and how to go about doing that. So I gave my lightweight, quick spin on an approach for doing exactly what you're commenting on, which is how to go about defining and building your own principles.

Tim Fitzpatrick: So out of the principles, do you feel like, is there one that really sticks out to you that is most important? I know you touched on customer obsession you touched on invent and simplify, which I love.

John Rossman: I get asked some version of that question all the time, like, hey, that's a lot of things. Which one thing do we need to do or whatever? And it's like business isn't that simple. And I think that's why there is a hefty set of principles from Amazon, because situations dictate a different set of tools and a different set of levers that have to be used for the given moment. And so there's always wisdom that needs to be applied. These are not rigid algorithmic rules based situations and everything. I get people all the time like, oh, well, all we have to do is be customer obsessed. And it's like, you know, that's a good start and is truly very important, I believe, for creating a durable, sustainable business and culture. But it's not everything, and it actually won't deliver enough for you, from a business strategy standpoint. I don't know if there is one thing, one technique that Amazon they always talk about strategies and mechanisms, right? Strategies, like the principle of mechanism is like, hey, a technique that helps create this. One of the things Amazon does better than any place I've ever seen, and almost universally, I can say, like, oh, we can make progress on this topic is how metrics are used in an organization and creating metrics that really bring to life what the customer experience is really bring to life, how operations are delivering. And are we hitting the customer promise and using metrics to drive accountability insights in a forward momentum to change instead of metrics kind of like patting ourselves on the back and kind of saying we're doing a good job and everything. And so I think that there's kind of a metrics playbook. And I talk about that in the book that universally I haven't found a place where we can't make progress talking about metrics and everything. That's not a specific principle, and it's very much a mechanism. And it helps light up so many of these other conversations because metrics are the insights, the fuel that lets you understand, like, where is their opportunity, either short term opportunity, how we operate or longer term opportunity, new customers, new use cases, new products, new innovations to serve.

Tim Fitzpatrick: I want to dig into this because I talk about this all the time from a marketing standpoint. There's so many vanity metrics out there that just don't mean anything. And there's too many businesses out there that don't know whether certain aspects of their marketing is working because they haven't outlined the metrics or they're tracking the wrong metrics. So within Amazon, one, I guess my first question is, were they tracking a lot of metrics or did they really narrow it down to the most important ones? And how many were they tracking? And how did they go about identifying which metrics to track?

John Rossman: Yes. And this is one of the counterintuitive things from Amazon. It was always more metrics, more metrics, more metrics. But they were designed in kind of a hierarchical manner, meaning, like, you would think about a top level objective or experience or commitment, and then you would break that top level down into hierarchical embedded metrics underneath it so that you could go across the metrics, see where there's an issue or substance, and then quickly dive down into the detail. So you weren't looking at all the metrics all the time, but you have them in your hands, so that real time you were able to do it. And that careful crafting of the metrics was part of the art of like, well, how do we actually measure the whole thing? Plus every little aspect of the process or the experience or the progress that we're trying to make? So much of the game of metrics is figuring out, like, well, how do we actually get the data? And how do you make the data and the insights bigger and broader than just how you're maybe participating in the situation. Right. So expanding your grasp and getting data beyond just your customer experience. But I think the real magic is how you find the signals in the metrics of, like, where is there a problem or an opportunity? And then creating culture around using metrics to discuss and debate accountability. Recommended course of action and moving forward on things. I always talk about making metrics a verb. People think of metrics as a noun, like, okay, I've got my metrics. No, metrics mean nothing unless we're taking action on it. Right? Make them a verb. And Amazon has a technique around metrics meetings. There's lots of ways to do that. In some way, you need to create a culture, this habit of diving deep on metrics, having honest, truth seeking conversations, and then rationalizing, well, what are we willing to do to change the course? What are we learning from that metric or typically set of metrics? And what are we going to do relative to that?

Tim Fitzpatrick: I want to pull out a couple of things that you've said here that I think are really important. One of the things you talked about with the metrics is we set and use these metrics to help inform the decisions that we make. Right. I think if we track the right metrics, we are armed with the information that we need to make strong business decisions that are going to help us get to where we want to go. The other thing that you said, I love this is we need to think of metrics as a verb, right. If we have the data but we don't take action on it, then who cares, right?

John Rossman: It's debate in action, right. Because your metrics typically aren't just so obvious. It's just like, oh, go do this sometimes and everything. Right. But the deep intuition comes from consistently and deeply as a group of leaders looking at the metrics and your intuition and going, okay, what is the arrow, the vector that's being pointed out that we need to explore from this.

Tim Fitzpatrick: Yes. I'm also assuming that based on once you have that debate and you choose to take a specific action, you're just like, hey, we're going to pull this lever to see if that impacts this particular metric and you test it.

John Rossman: So one of the leadership principles at Amazon is about bias for action, and it talks about that speed matters in business, and we value calculated risk taking. So one of the keys on that is not waiting for permission. And if we know enough, if we're equipped to make this decision, let's make the decision. But make it a test and learn decision. We call those two way door decisions in Amazon. Right. One that we can quickly do and we can come back for versus one way door decisions. And one way door decisions are irreversible decisions. And so we need to slow them down, bring them center. Well, if too many of our decisions are one way door decisions, then that really slows the business down. And that's an element of the culture is like, yes, you've got the data. Yes, you're having the conversations, and if you're close enough to the customer and you're running the business, in most cases, you need to have good judgment to actually take action on that. With another leadership principle saying, like, yeah, and good leaders are typically right a lot. They're not right all the time, but they tend to be more right than wrong. Right. So they have high expectations for leaders in their judgment, and you have to be willing to use that judgment.

Tim Fitzpatrick: So let me ask you one more question. Looking back at your experience with Amazon, what are the top one to three things that instantly stand out for you?

John Rossman: I would say kind of thinking big. Right. And we never viewed ourselves as a books, music, video retailer. So I was at Amazon from early 2002 through late 2000, and 590 percent of the business was books, music, video. At that point, the marketplace business, the business I helped scale and launch, helped launches into all these other categories that took a lot of time. But that willingness to explore and be patient in letting capabilities in the market and customers come along, that's definitely one of the things like, don't ever define put yourself in a box where you never say never. We will never do something. I think those can be limiting positions and playing the long game. Understanding like, you need to be making investments that sometimes don't have payback for a long period of time, understanding how to calibrate those things appropriately, understanding that those are different types of investments than well understood projects. And so this concept of a bet. Right. Becomes a really important element of like, oh, a bet. Well, that's something we think is a good idea, but I can't prove it. Those are different in business. Right. Those are where innovations oftentimes come from. Companies need to understand how to treat that differently than well understood options that they have. So those are some of the things. And then strategic communication, like how writing and simple, clarity based communications is an absolute essential when you are talking and debating complex topics. And most teams, most companies get pretty lazy. They do it sloppily in PowerPoint. They aren't willing to put the effort into writing ideas out. And so this concept I talked about, like, writing is just a superpower to thinking better and thinking better as a team. Right. So that you can actually get other people communicating to it and other people like, okay, this is what we're doing. And so it helps to scale this complex topic that you're writing about. So Amazon has a whole kind of play book about the different deliverables or techniques of writing that they do. I explained those in the Amazon way. But the essence of taking the time to write out your idea, your plan, your problem, your recommendation, I think that's just a real superpower to operating better.

Tim Fitzpatrick: John, it's been awesome. You've dropped a ton of value here. Any last minute thoughts you want to leave us with today?

John Rossman: Well, It's this. It has been a long time since I've been at Amazon, right? I'm now more of a student of Amazon. I'm always connecting with people like, hey, does it still happen like this? Does it still happen like that? Amazon has changed 10,000 times since I've been there. But how they go about their work is eerily consistent. So my thesis is, I think Amazon is the most interesting company of the digital era. And it's not because of what they do, it's because of how they can do it. And I think that we can all benefit from just reflecting on how they go about their work and asking ourselves like, oh, would we be better off thinking through a strategy or a mechanism like that in our business?

Tim Fitzpatrick: I love it, man. So people are interested in getting the book or learning more about what you're doing. Where do we want them to go?

John Rossman: Yeah, so a couple of places. So I write a weekly newsletter called the Digital Leader Newsletter. You can find that on subsequent you can subscribe for free. So I give a quick little nugget each week, the Amazon Way Book, Kindle, Audible versions on Amazon. And then you can connect with me on either LinkedIn, Johnrossman or Rossmanpartners.com or theAmazonway.com.

Tim Fitzpatrick: Okay, cool. the-amazon-way.com or Rossmanpartners. And John, if you want to connect with him on LinkedIn, is J-O-H-N-I got two buddies that spell it two different ways, John and J-O-N. So I want to make sure you guys find the right John Rossman. So, John, thank you so much for taking the time, and I really do appreciate it. This has been a great conversation. I think there's tons that we can learn from it. If you're watching listening, go get the book, read it and figure out how you can apply some of these principles in your own business. Thank you so much for taking the time to tune in. I do appreciate you if you want access to the 90 day marketing plan that we use for our business and our clients, hop on over to growthmarketingplan.com the templates sample plans, the instructions, all the tools you need to start working on your marketing plan and start getting results are right there. You can also always connect with us over at rialtomarketing.com click on the get a free consult, but I'll be happy to chat with you and give you something clarity on where you should be focusing your marketing right now based on where you are and where you want to go. Until next time, take care. 

Connect With John Rossman

• Linkedin

Links From The Episode

• Rossman Partners

About the Host Tim Fitzpatrick

Tim Fitzpatrick is the President of Rialto Marketing. At Rialto Marketing, we see many businesses battling information overload with marketing. As a result, they aren't sure what their next marketing steps should be to get where they want to go. We help B2B service-based businesses create, implement, and manage a marketing plan to communicate the right message to the right people so they build results that last. Marketing shouldn't be difficult. All you need is the RIGHT plan.