Case Study: Culture and Hiring at Amazon

Learning Objectives:

• Reflect on culture, motivation, and ability by applying understanding of these concepts to Amazon’s processes and mechanisms for growth

We have explored strategies for effective innovation leadership in three categories:

• Culture: What do you prioritize, and how do you interact to accomplish those goals?
• Motivation: Who are the teams, and how are they rewarded?
• Ability: Are teams allowed to focus on growth, exploration, and learning from failure?

Let’s explore these abstract concepts through the concrete example of Amazon. According to president and CEO Andy Jassy, Amazon likes to hire builders. What does this term mean to you?

If we look at a lot of other companies and companies we compete with, I would say that many of them tend to have a culture and a center that's competitor-focused, where they look at what competitors are doing and then try to find a way to one-up them or to fast follow. Or some of them are product-focused, where they say it's great that you, Mr. and Mrs. Customer, have an idea on what this product should be, but you should leave that to the experts.

And by the way, those are completely reasonable approaches. They just happen not to be ours. We consider ourselves very unusually clever and innovative product innovators. However, the center of what we build and what we go try to invent in is what customers tell us matters to them. And so we just try to keep that in the center of everything that we do.

So first we try to hire for it. We try to hire what we consider builders. And we think of builders as people who like to invent, people who look at a customer situation and try to understand what's wrong with it and what isn't working for customers and then seek to reinvent it. People understand that launch is the starting line and not the finish line because there are so many people in the technology space who love getting to launch and then lose interest in it thereafter.

So we try really hard to hire people who are going to keep looking at different customer scenarios and experiences and figure out what's wrong with them and keep seeking to reinvent them.

According to Andy Jassy, builders not only act as inventors, but also look beyond the initial launch of a new offering and consider how it can be improved and continuously refined.

The people you hire will define your organization’s culture in the long term. However, there are a number of stresses and distractions that can make this critical foundation difficult to establish.

Which of the following factors makes hiring difficult to prioritize in your own organization, or a past one?

If none of these factors applies to your experience, select the one that you think most commonly interferes with the hiring process more generally.

• Rapid growth
• Misalignment between HR and functional departments
• Lack of excellent candidates
• Budgetary considerations

All the factors in the previous poll can affect how an organization hires and establishes its culture. As an innovative organization, Amazon has frequently been in a state of scaling and growth. Despite this, Amazon has processes and mechanisms to prioritize hiring (and hiring well), even during rapid expansion. Andy Jassy explains in the following video transcript.

We very consciously try to disproportionately hire builders. And so that's the first piece—we know we want to hire builders.

Then you have to decide, how do you hire builders? What are the characteristics in the builders that you want? For us, it's very much about the leadership principles that we built around the company. We tend to interview with five or six people for each candidate, and each interviewer is assigned a leadership principle.

When we get back together to do the candidate debrief, that interviewer has to be accountable for assessing how strong the candidate is on their assigned leadership principle. We try to pick leadership principles that we think are integral to having builders.

Then you need a hiring process that keeps the bar high. Most companies will tell you that they want to keep the hiring bar high, but many accidentally lower it. Sometimes this happens when they are trying to move fast and need to hire a large number of people in a short amount of time, or when competition for labor is intense.

It's really hard to maintain the discipline to keep that bar high and not compromise. One of the mechanisms we use to keep the bar high is something we call bar raisers. In every hiring loop, there is one person assigned to be a bar raiser. This person runs the debrief and constantly asks the group, "Are we sure that this person raises the bar for this position at this level in the company?" If we can't be sure, we try not to hire that person.

We're always trying to raise the bar. The bar raiser also has the ability to veto a hire, even if everyone else is inclined to move forward. Becoming a bar raiser requires a strong track record of hiring well and training in how to run hiring debriefs. This has been a very important mechanism for us over the years in hiring great people.

If you're scaling your hiring, it’s usually because you're onto something and your business is starting to do well. This means you have to deal with the dueling priorities of running the business, growing the business, and hiring people. It seems fairly obvious that you have to prioritize the hiring, but you'd be amazed how many teams don't prioritize it or can't figure out how to manage hiring while operating the business.

The truth is, there's no easy way out of that box. You have to find a way to allocate your time very intentionally to do both.

Recall two of Teresa Amabile’s innovation inhibitors from earlier:

• Hiring based on functional rather than creative skills
• Lack of opportunity, recognition, and rewards

Amazon partially addresses these inhibitors through the creation of bar raisers: people who are specifically trained to hire with a comprehensive view of the candidate’s fit for both the role and Amazon’s organizational culture. Moreover, the designation of “bar raiser” is itself a path for recognition and reward outside the typical promotion pathway.

With builders in key roles, Amazon’s leaders know that its strategy of “customer obsession” will be the focus of product and offering development beyond initial launch. How can managers also maintain a high-level view of customer needs, even in processes like monthly business review meetings? Which of the following actions would be most likely to keep the focus on customers?

• Report and discuss quantitative satisfaction metrics
• Dedicate time to both qualitative and quantitative feedback
• Re-evaluate mission, vision, and values at each meeting

Reviewing both qualitative and quantitative feedback would be most likely to keep the focus on customers. Andy Jassy said that he frequently reads emails from customers, in addition to his numerous business-related emails. This may seem surprising for someone at the CEO level, but Amazon’s culture reinforces that attention to detail, even at the upper management level.

Andy Jassy explains how Amazon Web Services’ weekly reviews balance both quantitative and qualitative reports and reinforce the cultural priority of customer experience.

In our AWS business, which is our cloud computing business, if you were to sit in on our weekly business review, it's pretty different from most business reviews. That team probably spends only about two total minutes of the 90 minutes on the numbers, on the metrics of the business because they actually have ways of seeing, every day, how they're doing in the business.

Instead, they really focus on the inputs that tell them how the business is doing. There are lots of potential inputs, including what your delivery schedule is, whether you're on track, and whether you're going to make your goals.

Where that meeting starts is it spends really about the first 15 to 20 minutes, depending on what's happening, on what we call key customer issues. If you have a really large business, it's easy to look at these very large numbers like service-level agreements and performance against it and decide that you're doing well. But those very large numbers can obfuscate what's happening for individual customers within lots of these different experiences.

That key customer issue section highlights any key customer that's having some customer experience issue, and the team comes ahead of time, explaining that issue and then what they're doing about it. It’s a way for us—because we tend to have a couple hundred people in that meeting—to both understand where we may be having issues that we didn't realize and make sure that we reprioritize resources to go fix that for people.

But it's also a way as a leadership team for us to teach what matters to our teams, which is that, for us, security and customer experience come first all the time. If you have an issue with one of those, you drop everything you're doing to fix them.

If you don't have ways to highlight and surface where customers are having pain, you can convince yourself by looking at that big aggregated SLA number that you're doing great. It turns out, you may have four or five customers in any one time period who are having pain that are often harbingers for bigger issues. So I think you've got to get those types of mechanisms in place.

When you have the right teams in place, and they are all focused on the qualitative and quantitative metrics of the customer experience, they still need the ability to perform. Recall these two elements of the growth mindset:

• Persevere in the face of setbacks
• Learn and grow from criticism

Amazon is known for its high standards for employee performance. But innovators aren’t measured solely on the successful launch of a new offering. Andy Jassy describes Amazon’s approach as “strategically patient but tactically impatient.” Failure is an acceptable part of innovation, provided that the inputs to the project are strong, and people can apply what they learned to future strategic initiatives. Andy Jassy explains more in this final video transcript.

If you're going to have a culture that focuses on changing what's possible for customers, you have to be what I would say is strategically patient and tactically impatient. And it means you have to hang in there for a while. You don't solve these problems overnight.

When we decided back in 1998 or 1999 that we wanted to provide third-party sellers the opportunity to sell on our retail site because we knew customers want a broader selection and lower prices, we tried lots of things that didn't work. We tried an auction site that was too much of a me-too with respect to eBay, and that didn't work. And then we tried offering third-party sellers' selection in this cul-de-sac called zShops, and it turned out that nobody was going to the cul-de-sac.

It wasn't until what turns out to be blindingly obvious, but was not to us at that time, that we put that same third-party selection on our own inventory high-traffic retail pages that we got a marketplace going.

You can look at a more recent example with games, where we've been trying to build our own original games. We have several game studios, and we've launched a number of games, and it turns out it's pretty hard to launch hit, original games, and it's pretty different from what we've been doing as a company in lots of different areas. The first several games that we launched didn't work. Some of them failed kind of spectacularly.

There was a lot of noise and a lot of attention on the fact that we were failing. There were articles that said things like "why can Amazon build everything except games" and lots of theses on why we weren't good at building games. But if you feel strongly that there's an opportunity to change a customer experience that you believe can really be meaningful and where you have some kind of differentiated approach, you have to be willing to fail. You have to be willing to persevere and stick at it for a long period of time.

That's what happened in games. We launched our first hit game called New World, which has been one of the largest games for concurrent users in the history of games. It's just off to an amazing start. What's most important to me is the reinforcement in our culture that if you're going to pursue a customer experience that you think can be better with a different approach, you may not get it right the first time, or the second time, or the third time. You have to keep trying.

You try to hopefully have a plan that gives you a better chance. If you're going to pursue a lot of things that you're not sure are going to work, you are going to fail. You have to find a way to accept when you fail. We try to look at it by looking at the outputs and the inputs of anything. The ultimate outputs for a company are the share price, free cash flow, revenue, profit, or things like that. But you can't really manage the outputs.

What drives the outputs are the inputs. We spend most of our time holding ourselves accountable for the inputs. With new inventions, there are certain things that won't work. A good example is our phone. Our phone did not work. The output was not successful. But we looked at a lot of the inputs, and we thought we had a thoughtful product plan with a point of differentiation, strong technology, a great team that built it and launched it on time.

There were a lot of good inputs. It just turned out that the point of differentiation that we thought would matter, didn't. So we didn't get the output we wanted. But when we fail, and we like the inputs, we make sure that the people who worked on those initiatives have a good place to land in their next job. Otherwise, the good people will never work on anything risky.

We try to take what we learned from the successful inputs and use them on other initiatives. I think having a culture that can tolerate failure and evaluates the inputs as well as the outputs is also very inviting to the types of people that we like to hire.