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Ram Charan. The Amazon Management System
Advance Praise
—Larry Bossidy, former CEO of Honeywell and coauthor of Execution, which spent more than 150 weeks on the New York Times bestseller list
—Geoff Colvin, bestselling author and Senior Editor-at-Large, Fortune
—Johnny C. Taylor, Jr., President & CEO, Society for Human Resource Management (SHRM)
—Charlene Li, bestselling author of The Disruption Mindset and Senior Fellow at Altimeter, a Prophet company
—Dave Ulrich, Rensis Likert Professor, Ross School of Business, University of Michigan coauthor of Reinventing the Organization
—Thomas A. Stewart, Executive Director, National Center for the Middle Market and co-author of. Woo, Wow, and Win: Service Design, Strategy, and the Art of Customer Delight
—Michael J. Graff, Chairman, CEO and President, American Air Liquide
—Jack Welch, former Chairman of GE
—Ivan Seidenberg, former CEO of Verizon
—John Reed, former CEO of Citicorp
Our purpose
Chapter Highlights. Why this book? Why now? Why Amazon? What’s the Amazon management system?
Why does this matter to you, and everyone?
Why this book? Why now?
Why Amazon?
What is the Amazon management system?
Building Block 1: Customer-Obsessed Business Model
Building Block 2: Continuous Bar-Raising Talent Pool
Building Block 3: AI-Powered Data and Metrics System
Building Block 4: Ground-Breaking Invention Machine
Building Block 5: High-Velocity and High-Quality Decision-Making
Building Block 6: Forever-Day-1 Culture
Why does this matter to you, and everyone?
It’s a must, not optional. Founders and business owners
Senior executives
Junior to middle managers
The young and fresh
The entrepreneurs
Chapter Highlights. Building Block 1
What’s Amazon business model?
What’s its underlying logic?
Building Block 1: Customer-Obsessed Business Model
What’s Amazon’s business model?
1.0: Online bookstore
2.0: Online everything store
3.0: Unstore — online platform
4.0: Infrastructure and online and offline platform
What’s Amazon’s central idea?
Customer obsession
Invent for the customers
Long-term thinking
Earnings vs. cash generation
How to make it work?
Chapter Highlights. Building Block 2
Define the right talent
Recruit the right talent
Motivate and retain the right talent
Building Block 2: Continuous Bar-Raising Talent Pool
Define the right talent
The builders
The owners
The mental toughness
Recruit the right talent
The bar raisers
The rigorous process
The self-selecting mechanism
Motivate and retain the right talenT
dreamland for the builders
Paradise for the Ambitious
The High Standards
Fight for the top talents
Chapter Highlights. Building Block 3
The answer starts with numbers
The liberating data and metrics
The powerful AI-powered tools
Building Block 3: AI-Powered Data and Metrics System
The answer starts with numbers
Ultra-detailed
End-to-end
Real-time
Track inputs
Trust but verify
The liberating data and metrics
The executives
The frontline people
The continuous bar-raising
The AI-powered tools
The examples
Automation enabled pricing
Chapter Highlights. Building Block 4
Relentless drive to invent
Seek big ideas continuously
Build the idea patiently
Construct the team carefully
Building Block 4: Ground-Breaking Invention Machine
Relentless drive to invent
Daring to learn new skills
Daring to kill own business
Daring to fail, in a big way
Daring to be patient
Seek big ideas continuously
Seek ideas from everyone
Must be big, really big
Must invent on behalf of customers
Must be distinctively differentiated
Build the idea patiently
Who are the customers?
What are the goals?
What are the hurdles?
Construct the team carefully
Build a total-immersion team
Pick the right team leader
Enforce end-to-end accountability
Chapter Highlights. Building Block 5: High-Velocity and High-Quality Decision-Making
Type 2 decisions: speed matters
Type 1 decisions: focus on a few
Scale up good decision-making
Building Block 5: High-Velocity and High-Quality Decision-Making
Type 2 decisions: speed matters
Don’t do one-size-fits-all
Don’t make all decisions yourself
Don’t wait for all the information
Let the metrics owner make the call
From sequential to parallel approval
Digitize math-based routine decisions
Type 1 decisions: focus on a few
Find the best truth
Imagine the possible change
Combat group thinking
Have Backbone; Disagree and Commit
Minimize regrets
What if a decision goes wrong?
Scale up good decision-making
Crystalize consistent principles
Specify consistent methodology: narratives
Enforce consistent approach in every decision
Chapter Highlights. Building Block 6: Forever-Day-1 Culture
Why Day 1?
How to fend off Day 2?
How to build a Forever-Day-1 culture?
Building Block 6: Forever-Day-1 Culture
Why Day 1?
Day 2 is not an option
The divine discontent
How to fend off Day 2?
The starter pack
True customer obsession
Resist proxies
Embrace external trends
High-velocity decision making
Fight complacency
Kill bureaucracy
Budget control
Indirect headcounts
Simplify processes
Own dependency
How to build a Forever-Day-1 culture?
Operationalize the culture
Create forcing mechanisms
Weekly check-in
Empty chair
Press release
Call-center training
Feedback tracking
The Andon Cord
Automated refund
How does this work?
Live and breathe them yourself
Pricing
Question mark
The Pink iPod
Invent memorable symbols and rewards
10,000 Year Clock
Just Do It Award
Door Desk Award
Checklist of the Amazon Management System
To Leaders in the Digital Age
Appendix 1: Amazon 9-Point Management and Decision-Making Approach
Appendix 2: Amazon 14 Leadership Principles
About the Authors
Notes. Building Block 1: Customer-Obsessed Business Model
Building Block 2: Continuous Bar-Raising Talent Pool
Building Block 3: AI-Powered Data and Metrics System
Building Block 4: Ground-Breaking Invention Machine
Building Block 5: High-Velocity and High-Quality Decision Making
Building Block 6: Forever-Day-1 Culture
IndeX
