Jeff Bezos on Strategic Planning

Written by Sean Murphy. Posted in 4 Finding your Niche, Founder Story, skmurphy

Jeff Bezos was interviewed in the Harvard Business Review in an  October of 2007 article “The Institutional YES.” The focus was on Amazon’s strategic planning process. I had a chance to hear Bezos speak in 2004 at a Stanford Entrepreneur Conference and was impressed at how relentlessly inventive and experimental the culture he had created at Amazon was. It made it less of a surprise that a firm that started by revolutionizing the book selling business is now a leading provider of “cloud computing’ infrastructure.  Here are some excerpts that I found thought provoking and useful (bold added).

  • First, we are willing to plant seeds and wait a long time for them to turn into trees.
  • We may not know that it’s going to turn into an oak, but at least we know that it can turn out to be that big. I think you need to make sure with the things you choose that you are able to say, “If we can get this to work, it will be big.” An important question to ask is, “Is it big enough to be meaningful to the company as a whole if we’re very successful?”
  • What I have found—and this is an empirical observation; I see no reason why it should be the case, but it tends to be—is that when we plant a seed, it tends to take five to seven years before it has a meaningful impact on the economics of the company.
  • It helps to base your strategy on things that won’t change. When I’m talking with people outside the company, there’s a question that comes up very commonly: “What’s going to change in the next five to ten years?” But I very rarely get asked “What’s not going to change in the next five to ten years?” At Amazon we’re always trying to figure that out, because you can really spin up flywheels around those things. All the energy you invest in them today will still be paying you dividends ten years from now.
  • Whereas if you base your strategy first and foremost on more transitory things—who your competitors are, what kind of technologies are available, and so on—those things are going to change so rapidly that you’re going to have to change your strategy very rapidly, too.
  • I think most big errors are errors of omission rather than errors of commission. They are the ones that companies never get held to account for—the times when they were in a position to notice something and act on it, had the skills and competencies or could have acquired them, and yet failed to do so. It’s the opposite of sticking to your knitting: It’s when you shouldn’t have stuck to your knitting but you did.

It can be hard to cultivate a five to seven year perspective in a startup, but I do think the asking the question “What’s not going to change in the next five to ten years” is a good way to try and develop one.

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