Inside amazon's 'culture of metrics'.


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Inside amazon's 'culture of metrics'.

  1. 1. Knowing, beyond a doubt, what customerswant requires a zealous commitment tometrics. And no one commits better thanJeff Bezos, CEO of Amazon.Here’s what a “cultureof metrics” has allowedBezos to do as a leader:1. Keep all eyesfocused on the customer.Amazon tracks its per-formance against roughly500 measurable goals, andnearly 80% of those have to do with cus-tomer objectives.(Bezos also has a habit of keeping aseat empty at the conference table to rep-resent the customer, “the most importantperson in the room,” he says.)2. Allow for feisty debate, knowingthe best idea will triumph. Amazonemployees often debate about which ofthe many metrics is worthwatching.“If you can stand a bar-rage of questions, thenyou have picked the rightmetric,” says ManfredBluemel, a former seniormarket researcher at Ama-zon. “But you had better have your stufftogether. The best number wins.”3. Weed out customer turn-offs.Because nearly everything is measured,Inside Amazon’s ‘culture of metrics’Leadership Snapshot(800) 543-2055 www.ExecLeadership.comContinued on page 2As one of the most well-known womenin technology, Google VP Marissa Mayerturned a few heads when she announcedthat she doesn’t believe in burnout.How can the woman who was hiredin 1999 as Google’s 20th employee, whoonce worked 130 hours per week, now saythat she doesn’t really believe in burnout?Avoiding burnout isn’t about sittingdown for three meals a day, getting homeat a decent hour, or getting eight hoursof sleep, she says. (Indeed, Mayer pulledher share of all-nighters in her earlyGoogle days.)“I have a theory that burnout is aboutresentment,” the tech maven says. “Andyou beat it by knowing what it is you’regiving up that makes you resentful.“I tell people: Find your rhythm. Yourrhythm is what matters to you so muchthat when you miss it you’re resentful ofyour work.”For some, the thing that’s importantmight be a vacation, for others it’s movienight, and some people may just wanteight hours of sleep per night.When it comes to leading, Mayerdeploys her theory regularly. After notic-ing signs of burnout in one recent collegegrad, she approached him and askedabout his “rhythm.”He replied that he had a standing din-ner night with friends on Tuesdays. WhenGoogle VP tells how to avoid burnoutPersonal ProductivityVOLUME 27 • JUNE 2012Get it done with virtual assistants.Task services are the new office assis-tants. You post odd jobs online forpersonal assistants to bid on. Do iteither where your business is basedor on the road. Examples: TaskRabbitand— Adapted from “Hop to It,” John Brandon, Inc.Real research shows. When mak-ing research-based decisions, howto tell when research is sound? Ask:Where is the independent confirma-tion? Are these fancy acronyms orreal outcomes? Does this approachhave a solid record of replication? Ifa researcher won’t admit mistakes,beware.— Adapted from “Research Shows,” DouglasReeves, American School Board Journal.New paradigm. Science writer JamesGleick thinks the basis of the uni-verse isn’t matter or energy, but data.The author of Chaos says physicshas started to think of the bit as theultimate fundamental particle. Themore we understand the role infor-mation plays, he says, the more skill-ful we’ll be.— Adapted from “The ballad of the bit,” KevinKelly, Wired.Leadership TipsTransforming HoneywellNew culture doubles profits...............2How We Think About StrategyDoes your company matter? .............3Make Faster DecisionsStand-up meetings speed it up..........4Power QuestionsUse Socratic Method to lead..............8INSIDEEven a minuscule0.1-second delay in awebpage loading cantranslate into a 1% dropin customer activity.Continued on page 2
  2. 2. 2 • Executive Leadership • June 2012 www.ExecLeadership.comWhen David Cote took the reins atHoneywell in 2002, the company wasstill reeling from a series of unfortunateevents.In 1999, Honeywell was bought byAllied Signal, a company twice its size.The newly formed company didn’tmesh well. In 2001, the company’s planto be acquired by General Electric wasrebuffed on antitrust grounds.Enter Cote.Having trained under GE’s JackWelch, Cote began the task of forminga new Honeywell culture. He startedby identifying 12 measurable behaviorsthat he wanted to see within the busi-ness—including customer focus, self-awareness and championing change.To allow those new behaviors totake hold, he launched a new trainingprocess, called “One Honeywell,” or“One Hon.” Then he shook the earth bylaunching the “Honeywell OperatingSystem,” or HOS, which is really a cus-tomized version of the Toyota operatingsystem.The new system has transformedthe company from one of the country’smost messed-up firms to one of its best.Managers say that without the focus oncontinuous improvement, the companywouldn’t be nearly so productive, orprofitable. Since 2002, the company’sprofits have doubled to $4 billion.Every day begins with a 15-minuteor less shop-floor meeting, where em­­ployees try to pinpoint problems andpossible improvements, which are sentup to managers. The company expectsevery employee to come up with twoimplementable ideas for improvement,per month.That’s the sort of focus that hashelped improve every action taken atthe factory. For example, it used to take42 days to make and deliver a toxic-gasdetector for clients such as Intel. Now ittakes 10 days. And whereas the processused to occupy the entire factory floor,now it uses only one-quarter of it. Theother three-quarters can be used formaking other products.In other words, the factory makesmore stuff and generates more revenue,using essentially the same head count,square footage and energy consumption.— Adapted from “From bitter to sweet,” TheEconomist. ■Honeywell thrives under new cultureTurnaround TacticsAmazon’s metricsContinued from page 1Bezos can tell when the site begins tofunction in a way that will irritate andturn off customers.Bezos relentlessly conveys to his teamthat even small issues are far from trivial.For example, one of Amazon’s metricsshows that even a minuscule 0.1-seconddelay in a webpage loading can translateinto a 1% drop in customer activity.4. Take risks. Because the data speaksto him, Bezos feels more secure when hetakes innovative risks.“We are comfortable planting seedsand waiting for them to grow into trees,”says Bezos. “We don’t focus on the opticsof the next quarter; we focus on what isgoing to be good for customers. I thinkthis aspect of our culture is rare.”Example: Synthesizing hundreds ofdata points, Bezos came to believe thatconsumers would want an e-reader thatcould download a book in less than 60seconds. The idea of the Kindle was born,though Bezos left it to engineers to figureout the technical challenges, a processthat took years.Bezos didn’t waver. When one financeexec asked how much he was preparedto spend on the project, the CEO replied,“How much do we have?”— Adapted from “Inside Amazon’s Idea Machine:How Bezos Decodes the Customer,” George Anders,Forbes. ■FREE TO SUBSCRIBERSExcel tips for every levelDo you have a love/hate relationshipwith Excel? Thenewest specialreport by BusinessManagement Dailyoffers you helpfulshortcuts, tips and tricks to opti-mize your Excel productivityand ease your frustrations. Asa thank you for subscribing,Microsoft Excel Help: ExcelTipsfor Every Skill Level is absolutelyfree to you at to avoid burnoutContinued from page 1he missed it, he spent the rest of theweek feeling resentful.So now, she knew that he couldn’tmiss a Tuesday dinner again. She knewhe’d be more productive for the entireweek, if he could make it to that Tues-day dinner. It was that simple.Another employee, who was run-ning Google Finance and had a teamin India, seemed stretched thin. Theemployee, Katie, had been running con-ference calls at 1 a.m.But when Mayer expressed her con-cern, Katie said, “Don’t worry aboutthe 1 a.m. calls to Bangalore. I love myteam. It doesn’t bother me a bit. Whatbothers me is missing soccer games orhaving my child see me walk in late tothe recital.”From then on, Mayer made sureKatie was empowered to leave for thethings she loved.What matters to Mayer? A one-weekvacation she takes every four to sixmonths. If she has to cancel a trip orpostpone it, she starts to feel resentful.Lesson: Find your rhythm, under-stand what makes you resentful, andprotect it.— Adapted from “Marissa Mayer Offers FiveTips for Young Women Entering Tech,” MattRosoff, Business Insider; “How to Avoid Burnout,”Marissa Mayer, Bloomberg Businessweek. ■
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