Lessons from understanding Amazon’s secrets

Thanks to a mentee for sharing with me this article recently from Stratechery, looking to analyse Amazon’s motivation for buying Whole Foods.

“it was only two years ago that Whole Foods founder and CEO John Mackey predicted that groceries would be Amazon’s Waterloo…Mackey….{now} has to call Amazon founder and CEO Jeff Bezos…boss. Mackey’s misunderstanding….Amazon and Jeff Bezos have their sights set on being the most dominant company of all time. Start there, and this purchase makes all kinds of sense.”

The article proper then begins with this statement :

“If you don’t understand a company’s goals, how can you know what its strategies and tactics will be?

Simple and profound ! Understand their true goals, their vision, and you have their secrets.

Now let’s look at Amazon’s Why/What/How and then consider lessons for ourselves in leadership and business.

“If you don’t understand a company’s goals, how can you know what its strategies and tactics will be?

Feels similar to my statement : “Get clear on the WHY and the HOW is easy”

The statement in the article focusses on predicting the WHAT (strategies) and HOW (tactics) based on the WHY (commercial vision). So, to simplify the article (which is well worth the read !), for Amazon :

WHYWe seek to be Earth’s most customer-centric company

The article posits that Amazon wants a “cut” of all economic activity

WHATTo provide infrastructure at (huge!) scale

Amazon already does this with cloud services and distribution of products

Now with Whole Foods, they can launch into fresh products

HOW : First and best customer

This is a brilliant take from the article. Whole Foods is being acquired to be a “first and best customer” for fresh product distribution.

Really ? Read the article for more, but for now simply rethink the original Amazon business (books, remember ?) as the “first and best” customer for their distribution business. As of 2017, 58% of Amazon Marketplace sellers use “Fulfilled by Amazon”. Amazon takes a cut once again.

This gives a new take on Amazon through first understanding their vision (WHY), then we can not only understand their current strategies (WHAT), but also predict future ones they will take (and those they won’t), then even drill down to tactics (HOW).

The lesson ? Focus on understanding goals first before looking at strategies and tactics. Come back to “get clear on the WHY and the HOW is easy”.

What, though, is the secret to understanding the “WHY” of our own business ? a competitor’s business ? other people ? ourselves ?

understand thinking

I begin with Stephen Covey’s 5th of his “Seven Habits of Highly Effective People”, at the core of which I’d call “Deep Listening“, or as he puts it “listening with the intent to understand, not to reply”.

With Deep Listening,  we truly tune in to another person, using empathy and all our presence and faculties to understand them, their motivations, their drivers, their goal, who they are at essence.

For the writer of the Stratechery article about Amazon, that deep listening is towards a business not an individual, yet the approach is broadly the same. Really “listen” to the business, which means research, read, perhaps interview key people in a business.

Some businesses are really overt with their WHY / WHAT and HOW, such as Vernon Hill of MetroBank, who keeps his business very simple and is achieving stratsopheric growth in the UK. For more on his WHY / WHAT / HOW, see : “Smashing Paradigms – Stupid Banking Rules“.

Others are less so, so you may need to “listen” first.

An example from regular life that is relevant to most is borrowing money from a bank. I’ve often been asked by people to support them around this, whether it is a personal mortgage or a complex business financing.

I have had lots of experience with is raising finance and some success. At one point many years ago I sat with my boss, Captain Kel Thompson (see article on Kel here) and he assessed this with me. His take was simple. “You focus on the person lending you money and what drives them and the bank they work for. Then, and only when you are clear on that, you craft a proposal that  makes it easy for them to say “yes” to.”

Using that as a metaphor, ask yourself this. When you are looking to borrow money, do you look at their offer, their terms, then leap in to complete the application and convince them you are a “good risk” ? For some transactions that works, but for others, particularly raising funds for business expansion, often it doesn’t. Instead, once you know what you need, then look to what THEY need. “Deep Listening”, understand the drivers of others. Be patient. When you are clear as to their goals, then you can craft a proposal that matches their needs with your own.

As I was taught by my friend Tony Cooper, “business is simple, people are complicated”. Listen, and you will understand.

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