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'Invent and Wander' — Lessons in Innovation From Jeff Bezos

November 06, 2020 Leadership
myles suer
By Myles Suer

In 1998, I started my first venture financed startup, eBalance.com. Our goal was to make it easier for people to view and manage their financial positions across all of their accounts. Another goal was to be the Amazon of fintech. We never achieved our goals and were forced into bankruptcy by the dot.com bust as our sources of capital dried up. Given this experience, it was with a great interest that I read “Invent and Wander,” which comes out Nov. 17. The book collects the writings of Jeff Bezos, with an introduction by author and journalist Walter Isaacson, and is co-published by Harvard Business Review Press and PublicAffairs.

The book was of interest on many levels, especially for its chronicle of technology history over the last several years. Its letters to shareholders provide rich insights into the evolving thinking and strategies of Amazon. And its collection of speeches and writings from Bezos provide insights into who he is as a person and a business leader. Shareholder letters are typically dry affairs, but Bezos’s letters to shareholders are impassioned summaries of his strategic thinking and business insights. They should be of interest to business leaders and CIOs alike.

Bezos’s letters to shareholders covered a broad range of topics:

  • The value of personalization.
  • Creating shareholder value over the long term.
  • Being a customer-centric company.
  • Using the present value of future cash flows to evaluate future earnings.
  • Hiring missionaries vs. mercenaries.
  • Utilizing machine learning.
  • Applying web service APIs.
  • Enabling internal invention.
  • Driving intuition, curiosity and the power of wandering.
  • Managing through a crisis (COVID-19).

I found Bezos’s personal story particularly interesting, including his move from aspiring astrophysicist at Princeton to computer science and engineering. While there is a lot to share from the book, I will focus on two things: his 10 best ideas for innovators and his thoughts regarding technology choices.

10 Innovation Ideas From Bezos

Many have written about innovation. Michel Schrage, for example, in the “Innovators Hypothesis” shared the value of cheap experiments. But Bezos shares on innovation from the trenches. Here are 10 of his top ideas regarding innovation.

  1. Focus on creating value over the long-term. According to Bezos, this allows leaders to make decisions and weigh trade-offs differently. In fact, in one shareholder letter, Bezos made the case in great detail for why Amazon is focused upon free cash flow per share and not earnings.
  2. Relentlessly focus upon customers and their needs. Bezos shares year after year how he has kept Amazon's focus on being a customer-centric company. This includes concepts like personalization and delivering continuous improvement in customer experience. It includes, as well, being obsessed over customer needs. Bezos wrote in his 2007 letter to shareholders, "if we can identify a customer need and if we can further develop conviction that need is meaningful and durable, our approach permits us to work patiently for multiple years to deliver a solution." So many companies have a year or two when things do not work perfectly.
  3. Be committed to constant improvement, experiments and innovation in every initiative. Bezos stresses the importance of leaders creating a pioneering spirit in order to continuously succeed. From his 2017 letter to shareholders: "experiment patiently, accept failure, protect saplings and double down when you see customer delight."
  4. Face mistakes. In 2000, the year eBalance failed, Bezos openly described the investments Amazon had made in Pets.com and Living.com that would no longer be part of creating a business return at Amazon.
  5. Evaluate the big ideas. In his 2014 letter to shareholders, Bezos wrote, "A dreamy business offering has at least four characteristics. Customers love it, it can grow to be very large, it has strong returns on capital, and it is durable in time. When you find one of these, don’t just swipe right, get married."
  6. Be a "Day 1" company: Don’t move along the product lifecycle curve. The 2017 letter to shareholders stated "Day 2 is stasis. Followed by irrelevance. Followed by an excruciating painful decline. Followed by death. And that is why it is always better to be a Day 1 company."
  7. Set an appropriate company focus. Again from the 2017 letter: "You can be competitor focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.” In "Winning the Long Game," Steven Krupp argues strategic leaders anticipate changes in market conditions by staying closely connected with customers, partners and competitors rather than becoming disconnected and reactive.
  8. Make high-quality decisions faster. Continuing on his Day 1 vs. Day 2 comparison in his 2017 letter: “Day 2 companies make high-quality decisions, but they make high quality decisions slowly. To keep energy and dynamism, you have to somehow make high-quality, high-velocity decisions.”
  9. Retain high standards. Bezos discusses the application of standards in decision-making and hiring. One interesting choice he made was to not use PowerPoint for any of these. Instead Amazon uses six-page narrative memos. Leaders read them together before they have a discussion with the proposing stakeholder.
  10. Failure needs to scale too. Bezos, in contrast to many IT leaders, stated in his 2018 letter to shareholders, “everything needs to scale including the size of failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at size, which can actually move the needle for the business.”

Some of these may be unexpected perspectives on innovation for you. But the amount of innovation coming out of Amazon has been amazing over its lifetime. Walter Isaacson said that Bezos has four key qualities that distinguish innovators. These include being passionately curious, a childlike sense of wonder, an audacity of vision and a focus upon the long game.

Related Article: Innovation Can Be Taught. And Measured

Take Inspiration From Amazon's Technology Choices

Being that this is a book about Jeff Bezos and the tech powerhouse that is Amazon, it is filled with detail on the technology decisions Amazon has made over the years. Given this, I will summarize here the key ideas from the book that I walked away with.

  1. APIs power customer fulfillment. Bezos wrote in his 2006 letter that, "fulfillment by Amazon is a set of web services APIs that turn fulfillment center networks into a gigantic and sophisticated computer peripheral. We make web service calls to alert us that expected inventory is about to arrive, to tell us to pick and pack one or more items, and to tell us where to ship those items."
  2. Service oriented architecture as a business advantage. Bezos claimed in his 2010 letter that Amazon’s “technologies are almost exclusively implemented as services; bits of logic that encapsulate the data they operate on and provide hardened interfaces as the only way to access their functionality. Service-oriented architecture (SOA) is the fundamental building abstraction for Amazon technologies. Amazon requirements reached a point where many of our systems could no longer be served by any commercial solution. To do so, we leaned heavily on the distributed systems and database communities and invented from there.” 
  3. Data centers make for less agile businesses. Bezos asserted in 2014 that "IT is so high leverage. Every company has a list of technology projects that the business would like to see implemented as soon as possible. The painful reality is that tough triage decisions always have to be made, and many projects never get done. Even those that get resourced are often delivered late or with incomplete functionality. IT departments are recognizing that when they adopt AWS, they get more done. They spend less time on low-value activities."
  4. AWS reinvents how computation is done. In an interview with the Economic Club, Bezos discussed where the idea of AWS came from, “AWS has become a very large company by reinventing the way companies do computation. Traditionally, you would build a data center and you would fill the data center with services, and you would have to upgrade the operating system of those servers and keep everything running. None of that added any value to what the business was doing.”
  5. AWS was built for internal needs first. Bezos goes on to share the lineage of AWS in great detail. He stated, "At Amazon we were building data centers for ourselves. We saw a tremendous waste in effort between our application engineers and network engineers because they were having lots of meetings on all these non-value tasks. We said look, what we can do is develop a set of hardened APIs that all these groups can use, the application engineers and the network engineers have now roadmap meetings instead of these fine-grained meetings. We wanted to build a SOA where all services were available in hardened APIs that were documented enough that anyone could use them."
  6. The AWS ‘ah-ha’ moment. Bezos shared the value of AWS became quickly apparent: “As soon we hatched this plan for ourselves, it became clear that every company in the world was going to want this too. Yet we faced no like-minded competition for seven years. Nobody gets a seven-year head start.”
  7. Machine learning core to everything at Amazon. In his 2010 letter to shareholders, Bezos shared in great detail how Amazon used machine learning. He wrote, "Amazon, in many cases uses advanced machine learning techniques, provide more accurate classification and can self-heal to adapt to changing conditions. For example, our search algorithm employs data mining to identify attributes and extract entities from unstructured descriptions, allowing customers to narrow searches and quickly find the desired product."

Related Article: What You Can Do to Build an Innovative Ecosystem

Final Thoughts

In his introduction, Walter Isaacson writes that he's often asked which living person he would put in the same league as those he has written about as a biographer, a group which includes Albert Einstein, Leonardo da Vinci and Benjamin Franklin. ”My answer to the question is Jeff Bezos.”

Bezos is clearly in rarified air here. And his ideas on business innovation and technology strategy give us much food for thought. But I would like to leave you with one thought from the book that moved me. Jeff’s grandfather told him, “One day, you’ll understand that it’s harder to be kind than clever. Cleverness is a gift; kindness is a choice. Gifts are easy, they are given after all. Choices can be hard. You can seduce yourself with your gifts if you’re not careful.”

So, may you innovate continuously, and in an increasingly divided world, work hard to be kind.

About the Author

Myles Suer, according to LeadTail, is the No. 1 leading influencer of CIOs. Myles is the global enterprise marketing manager at Boomi, he's also the facilitator for the #CIOChat.

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