The Secret Sauce of Amazon's Efficiency

Originally Published on May 25, 2021

As I was completing the series on Amazon's annual shareholder letters, the letter from 2017 stood out. The first part of the 2017 letter is an essay by Jeff Bezos on building a culture with high standards. It is a masterclass on culture building, self-improvement and - at meta-level - strategic thinking. This letter deserved a post of its own.

My reasoning behind writing this post remains the same as the original series - play positive-sum games. I have shortened and annotated the letter so that I can understand it better and I have posted it so that others can save time by reading it faster. Everything written in italics is written by me. These three dots "..." (aka. vertical ellipsis) represent the parts that I have omitted.

This is for the lazy ones. If you have some time on your hands, stop here and go read the letter in its entirety. If you don't, read ahead.

A Culture of High Standards

One thing I love about customers is that they are divinely discontent. Their expectations are never static—they go up...How do you stay ahead of ever-rising customer expectations? There’s no single way to do it—it’s a combination of many things. But high standards (widely deployed and at all levels of detail) are certainly a big part of it...I’d like to share with you the essentials of what we’ve learned (so far) about high standards inside an organization.

First, two fundamental questions about high standards.

Intrinsic or Teachable?

...are high standards intrinsic or teachable? I believe high standards are teachable. In fact, people are pretty good at learning high standards simply through exposure. High standards are contagious. Bring a new person onto a high standards team, and they’ll quickly adapt. The opposite is also true. If low standards prevail, those too will quickly spread. And though exposure works well to teach high standards, I believe you can accelerate that rate of learning by articulating a few core principles of high standards, which I hope to share in this letter.

Universal or Domain Specific?

...if you have high standards in one area, do you automatically have high standards elsewhere? I believe high standards are domain specific, and that you have to learn high standards separately in every arena of interest...You can consider yourself a person of high standards in general and still have debilitating blind spots. There can be whole arenas of endeavor where you may not even know that your standards are low or nonexistent, and certainly not world class. It’s critical to be open to that likelihood.

Now, the steps to achieve high standards in a particular domain.

Steps 1 and 2:

Recognition and Scope

First, you have to be able to recognize what good looks like in that domain.

Second, you must have realistic expectations for how hard it should be (how much work it will take) to achieve that result—the scope...Unrealistic beliefs on scope—often hidden and undiscussed—kill high standards. To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be—something this coach understood well.

We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos... Often, when a memo isn’t great, it’s not the writer’s inability to recognize the high standard, but instead a wrong expectation on scope: they mistakenly believe a high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more!... The great memos are written and re-written, shared with colleagues who are asked to improve the work, set aside for a couple of days, and then edited again with a fresh mind. They simply can’t be done in a day or two. The key point here is that you can improve results through the simple act of teaching scope—that a great memo probably should take a week or more.

Step 3:

Skill

Beyond recognizing the standard and having realistic expectations on scope, how about skill? Surely to write a world-class memo, you have to be an extremely skilled writer. Is it another required element? In my view, not so much, at least not for the individual in the context of teams. The football coach doesn’t need to be able to throw, and a film director doesn’t need to be able to act. But they both do need to recognize high standards for those things and teach realistic expectations on scope.

Benefits of High Standards

...most obviously, you’re going to build better products and services for customers—this would 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...The work that gets done when no one is watching.
And finally, high standards are fun! Once you’ve tasted high standards, there’s no going back.

Insist on the Highest Standards

Leaders have relentlessly high standards—many people may think these standards are unreasonably high. —from the Amazon Leadership Principles

In Summary,

...the four elements of high standards as we see it: they are teachable, they are domain specific, you must recognize them, and you must explicitly coach realistic scope.