Every year, Amazon.com's CEO Jeff Bezos writes a letter to the company's shareholder to review how his decisions and actions affected the business. This is indeed an example of a blueprint for building a durable franchise in technology (hat tip David Lee).
It is also a testimony to the effectiveness of communications in demonstrating how a company can continually make better promises as it closes the gap between the promises it makes and those it keeps -- even when working with razor thin margins.
A choice selection from Lee's excellent list of nuggets for a 15 year narrative of building long-term value in technology and why the letters are a good example of business intelligence:
- Focusing on customer experience creates operating leverage, another theme throughout the letters. (2002)
- Even though “the heavy lifting is done by math”, when making business decisions, the prime ingredient is human “judgment.” (2004, citing a research paper that inspired his thoughts.)
- The Kindle launches. “We humans co-evolve with our tools. We change our tools, and then our tools change us.” (2007)
- “Start with customers, and work backwards.” This sounds like a punchline but he explains in prior letters how the company applies this rigorously. (2009)
You can view all the letters between 1997-2011 at Lee's blog#.
I'm most interested in the 2012 letter#. In it, Bezos illustrates why he believes taking the long-term view on customer experience and keeping an eye on closing the gap on promises gives back strength, resilience, and endurance to Amazon as a business (emphasis mine):
Our heavy investments in Prime, AWS, Kindle, digital media, and customer experience in general strike some as too generous, shareholder indifferent, or even at odds with being a for-profit company.
“Amazon, as far as I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers,” writes one outside observer.
But I don’t think so. To me, trying to dole out improvements in a just- in-time fashion would be too clever by half. It would be risky in a world as fast-moving as the one we all live in.
More fundamentally, I think long-term thinking squares the circle.
Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.
You will recall some highlights of Amazon's secret to online dominance. In that post, I omitted references to Amazon Fire as the new retail experience, which was further proof of Amazon's business strategy to make money through sales of digital content, rather than through the device itself.
The letter is an excellent example of how a CEO can lead the conversation on what the business itself needs -- strength and resilience. It is a powerful artifact to keep employees and investors focused on the long-term value -- endurance.
Amazon investor Benjamin Graham is quoted, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
You do want your business to be weighted. A sound strategy holds through the test of time. And that is especially remarkable in an ever changing industry like technology/retail/publishing... well, all of them.
Valeria is an experienced listener. She designs service and product experiences to help businesses rediscover the value of promises and its effect on relationships and culture. She is also frequent speaker at conferences and companies on a variety of topics. To book her to speak click here.