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The Culture of Innovation at Amazon Driving Customer Successes

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Customers often ask us how they can innovate "like Amazon". From its humble beginnings as a startup in a garage, Amazon has not only innovated across e-commerce, but also introduced new, diverse businesses beyond e-commerce. Over the years, Amazon has improved its ability to take on hard problems and find innovative ways to solve them. AWS is one such example. We have taken something as central and specialized as operating a datacenter, and pushed it to the edge as a utility. When technology becomes a utility, it becomes ubiquitous, allowing more people to participate in innovation. This talk will discuss how Amazon approaches innovation, with its mechanisms, architecture, culture, and organization, with an emphasis on how some of these factors can help other organizations. Our customer will also share how this approach has helped them inspire change within their businesses.

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The Culture of Innovation at Amazon Driving Customer Successes

  1. 1. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. The Culture of Innovation at Amazon: Driving Customer Success Leo Zhadanovsky Principal Solutions Architect Amazon Web Services
  2. 2. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Culture of Innovation Enabling Innovation for Everyone
  3. 3. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Jeff Bezos CEO, Amazon.com “Invention comes in many forms and at many scales. The most radical and transformative of inventions are often those that empower others to unleash their creativity – to pursue their dreams.”
  4. 4. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. To our shareholders Amazon.com passed many milestones in 1997: by year-end, we had served more than 1.5 million customers, yielding 838% revenue growth to $147.8 million, and extended our market leadership despite aggressive competitive entry. But this is Day 1 for the Internet and, if we execute well, for Amazon.com. Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established
  5. 5. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Amazon Started with Books…
  6. 6. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Innovation has Manifested Across Many Domains… Drone Development Advanced Shopping Kindle Reader Home Entertainment Grocery Delivery Video Streaming Home Automation Cloud Computing
  7. 7. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. « …innovation is now recognized as the single most important ingredient in any modern economy…In short, it is innovation – more than the application of capital and labor – that makes the world go round »
  8. 8. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. OUR MISSION We want to be earth’s most customer centric company
  9. 9. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. OUR COMMITMENT We make our customers’ lives easier
  10. 10. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. WHERE INNOVATION STARTS We start with the customer and work backwards
  11. 11. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  12. 12. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  13. 13. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  14. 14. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  15. 15. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  16. 16. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Our beliefs for building a culture of innovation »Customer obsession “Start every process with the customer and work backwards” »Long term thinking “Be stubborn on the vision but flexible on the details” »If you want to be inventive, you have to be willing to fail “We are willing to go down on a bunch of dark alleys and occasionally we find something that really works” »You have to be willing to be misunderstood for a long time “We are very comfortable being misunderstood”
  17. 17. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Amazon’s Growth Flywheel Value Selection Convenience
  18. 18. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  19. 19. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  20. 20. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. STUBBORN ON THE VISION But flexible on the details
  21. 21. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  22. 22. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. WILLINGNESS TO BE MISUNDERSTOOD For a long period of time
  23. 23. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  24. 24. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. » Mechanisms Working Backwards Process Press Release FAQ & Visualizations » Architecture Micro-services Architectures Loosely Coupled Applications Self Service Platforms – No Gatekeepers » Culture Our People: we hire builders, innovators, entrepreneurs Our Beliefs: Amazon Leadership Principles » Organization Experimentation Two Pizza Teams How do we organize for innovation?
  25. 25. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. ALWAYS WORK BACKWARDS FROM THE CUSTOMER CUSTOMER OBSESSION © 2018, Amazon Web Services, Inc. or its affiliates. All rights
  26. 26. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Write the press release
  27. 27. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  28. 28. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Include both Customer FAQs and Stakeholder FAQs Include the hard questions Share your press release early to gather questions Customer FAQs - Customers ask the best questions because they are fundamental to any experience: How much will this cost? What type of support will I get? Where can I find this? How do I cancel this? Stakeholder FAQs - What will your VP, partner teams, internal Amazon resources ask about your idea? What is the underlying technology? What will customers be most disappointed about in your initial release? How does this impact current systems? What is the business impact? How do we know what the customer needs? How can we launch this more quickly? What is provoking the most internal debate? write the FAQs
  29. 29. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Visualize the user interaction and write the manual
  30. 30. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Is Working Backwards Optional?
  31. 31. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. » Mechanisms Working Backwards Process Press Release FAQs & Visualizations » Architecture Micro-services Architectures Loosely Coupled Applications Self Service Platforms – No Gatekeepers » Culture Our People: we hire builders, innovators, entrepreneurs Our Beliefs: Amazon Leadership Principles » Organization Experimentation Two Pizza Teams How do we organize for innovation?
  32. 32. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. “We have the good fortune of a large, inventive team and a patient, pioneering, customer-obsessed culture – great innovations, large and small, are happening everyday on behalf of customers, and at all levels throughout the company. This decentralized distribution of invention throughout the company – not limited to the company’s senior leaders – is the only way to get robust, high- throughput innovation. What we’re doing is challenging and fun – we get to work in the future.” Jeff Bezos 2014 Annual Letter to Shareholders
  33. 33. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Amazon.com Services (theory)
  34. 34. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Single-purpose Connect only through APIs Connect over HTTPS Largely “black boxes” to each other “Microservices”
  35. 35. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Self-service Platforms without Gatekeepers “We are creating powerful self- service platforms that allow thousands of people to boldly experiment and accomplish things that would otherwise be impossible or impractical."
  36. 36. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. HYBRID ARCHITECTURE Data Backups Integrated App Deployments Direct Connect Identity Federation Integrated Resource Management Integrated Networking MARKETPLACE Business Apps DatabasesDevOps Tools NetworkingSecurity Storage Business Intelligence ENTERPRISE APPS Virtual Desktops Sharing & Collaboration Corporate Email Backup IoT Rules Engine Device Shadows Device SDKs Registry Device Gateway DEVELOPMENT & OPERATIONSMOBILE SERVICESAPP SERVICESANALYTICS Data Warehousing Hadoop/ Spark Streaming Data Collection Machine Learning Elastic Search Queuing & Notifications Workflow Search Email Transcoding One-click App Deployment Identity Sync Mobile App Testing Push Notifications DevOps Resource Management Application Lifecycle Management Containers Triggers Resource Templates API Gateway Streaming Data Analysis Business Intelligence Mobile Analytics Single Integrated Console TECHNICAL & BUSINESS SUPPORT Support Professional Services Account Management Partner Ecosystem Solutions Architects Training & Certification Security & Billing Reports GAMING 3D Game Engine Character Designer Multiplayer Service Twitch Integration Cloud Integration Regions Availability Zones Points of Presence INFRASTRUCTURE CORE SERVICES Compute VMs, Auto-scaling, Load Balancing, Containers, Cloud functions Storage Object, Blocks, File, Archivals, Import/Export Databases Relational, NoSQL, Caching, Migration CDN Networking VPC, DX, DNS Access Control Identity Management Key Management & Storage Monitoring & Logs SECURITY & COMPLIANCE Resource & Usage Auditing Configuration Compliance Web application firewall Assessment and reporting AWS: Most Robust, Fully-Featured Technology Infrastructure Platform
  37. 37. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Public Sector Innovations Powered by AWS 70PB of Earth data Analyzes 75B financial record daily Enables 1000s of online businesses in Asia Unite a global research community Digital services for constituents Fighting child trafficking
  38. 38. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. » Mechanisms Working Backwards Process Press Release FAQs & Visualizations » Architecture Micro-services Architectures Loosely Coupled Applications Self Service Platforms – No Gatekeepers » Culture Our People: we hire builders, innovators, entrepreneurs Our Beliefs: Amazon Leadership Principles » Organization Experimentation Two Pizza Teams How do we organize for innovation?
  39. 39. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Every one of us is a leader on our mission.
  40. 40. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Amazon Leadership Principles Customer Obsession Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers. Ownership Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say “that’s not my job". Invent and Simplify Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here". As we do new things, we accept that we may be misunderstood for long periods of time. Are Right, A Lot Leaders are right a lot. They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs. Learn and Be Curious Leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act to explore them. Hire and Develop the Best Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization. Leaders develop leaders and take seriously their role in coaching others. We work on behalf of our people to invent mechanisms for development like Career Choice. Insist on the Highest Standards Leaders have relentlessly high standards - many people may think these standards are unreasonably high. Leaders are continually raising the bar and driving their teams to deliver high quality products, services and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed. Think Big Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers. Bias for Action Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking. Frugality Accomplish more with less. Constraints breed resourcefulness, self-sufficiency and invention. There are no extra points for growing headcount, budget size or fixed expense. Earn Trust Leaders listen attentively, speak candidly, and treat others respectfully. They are vocally self-critical, even when doing so is awkward or embarrassing. Leaders do not believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best. Dive Deep Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdote differ. No task is beneath them. Have Backbone; Disagree and Commit Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly. Deliver Results Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle. Amazon Leadership Principles
  41. 41. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. » Mechanisms Working Backwards Process Press Release FAQs & Visualizations » Architecture Micro-services Architectures Loosely Coupled Applications Self Service Platforms – No Gatekeepers » Culture Our People: we hire builders, innovators, entrepreneurs Our Beliefs: Amazon Leadership Principles » Organization Experimentation Two Pizza Teams How do we organize for innovation?
  42. 42. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. The Institutional YES! To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment To our shareowners (2015)This year, Amazon became the fastest company ever to reach $100 billion annual sales. Also this year, Amazon Web Services is reaching $10 billion in annual sales. One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.
  43. 43. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Learn from Failures…
  44. 44. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Decompose to Primitive Problems Single-threaded Focus Enables Self-directed Teams Fosters Ownership & Autonomy
  45. 45. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. INNOVATION AT THE EDGE Enable everyone to innovate
  46. 46. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Interested in innovating like Amazon? Let’s build something people will love. EXPLORE innovation at Amazon – the principles behind our organization, architecture, mechanisms and culture DEFINE a new service or enhance a digital experience that will delight your customers; start with the customer and work backwards BUILD, prototype and experiment, in the cloud to bring your new digital offering to life; test it with your customers 1 2 3
  47. 47. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. CLOUD INNOVATION CENTERS Enable everyone to innovate
  48. 48. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. CIC Mission: Customer Innovation Capability Community leading public sector sponsors & AWS collaborate to: 1. minimize technology costs to constituents, 2. expand technology alternatives, 3. ‘learn by doing,’ 4. spur economic and workforce development, and 5. accelerate repeatable public sector cloud successes to improve digital experiences for citizens everywhere..
  49. 49. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
  50. 50. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Lower Costs Expand Technology Options Spur Economic Development Accelerate Replicable Success Student Experience DxHub Mission
  51. 51. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. “The Cal Poly Digital Transformation Hub applies proven innovation methodologies in combination with the deep subject matter expertise of the public sector and the technology expertise of AWS and it’s partners to solve real-world problems in ways not contemplated before.” DXHub Anti-Human Trafficking Aerospace Engineering Smart Cities Agriculture Kinesiology CSU Cloud Migration
  52. 52. © 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved. Innovation Flow Focus of the Innovation Challenge Introduce Digital Innovation Solution Innovation Workshop (Working Backwards) Engage Define Solution Vision (PRFAQ) Value Proposition Prototype Deliver new digital offering Realize Value Scale architecture Establish operating model & capability Visual PrototypeFrame the Design Challenge STAGE Identify Customer Interest Customer Executive Review Agreement to Proceed
  53. 53. We had three big ideas at Amazon that we have stuck with for 20+ years, and they are the reason we are successful: put the customer first, invent, and be patient. Jeff Bezos Founder and CEO Amazon.com, Inc.
  54. 54. © 2019, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Thank you!

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