July 4, 2022
Lessons in Leadership and Marketing at amazon.com with John Rossman
In episode 119, host Eric Dickmann talks with John Rossman - Founder and Managing Partner of Rossman Partners, a digital transformation marketing agency. Previously, John served as an executive at Amazon.com where he played a key role in launching the Amazon Marketplace business as the Director of Merchant Integration and went on to have responsibilities for the enterprise business. He leverages Amazon's leadership principles to help others innovate, compete and win in the digital era.
John is also the author of "The Amazon Way: Amazon's 14 Leadership Principles" and writes a weekly newsletter titled "The Digital Leader Newsletter" on Substack.
For more information and access to the resources mentioned in this episode, visit: https://fiveechelon.com/leadership-principles-amazaon-s8e4/
Send us your questions or comments
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WEBVTT
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Welcome to The Virtual CMO podcast.
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I'm your host, Eric Dickmann.
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In this podcast, we have conversations with marketing professionals who share the strategies, tactics, and mindset you can use to improve the effectiveness of your marketing activities and grow your business.
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Today, I'm excited to have guest John Rossman on the program.
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John is the Managing Partner at Rossman Partners, a consulting agency dedicated to helping leaders innovate, compete, and win in the digital era.
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He is also the author of The Amazon Way: Amazon's 14 Leadership Principles, a book where he shares his leadership insights from his tenure at Amazon helping launch Amazon's third party marketplace.
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John, welcome to the show.
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Eric, great to be here.
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Thanks for having me.
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I'm excited to have you on the program.
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This is podcast really dedicated to marketing.
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And I will say that as we talk about marketing, two companies always rise to the top as examples, Apple, certainly from a marketing standpoint, some of what they do and Amazon from a customer experience perspective.
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So I'm gonna enjoy today's discussion, we're gonna get your insight on all of this, but to kick things off, I'd love it if you could share with the audience a little bit about your background.
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How did you get to Amazon and then from there to starting your own firm
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So I was a partner at Arthur Anderson in the consulting business.
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I then went to a startup technology company, wound that down in 2001, one of my former Arthur Anderson colleagues was a Finance Director at Amazon.
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And he was like, you know, you should come over and talk to us, we've got a strategy we're thinking about.
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And so over the next three months, think I had 21 interviews.
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And really it was a consulting project to some degree, right?
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Like they were getting to know me, I was getting to know them and like where this strategy was at.
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And so I joined in March of 2002 and we launched the marketplace business then late that fall.
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So I was at Amazon for about four years, launched the marketplace business.
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I also ran enterprise services at Amazon, so I had responsibility for target.com, ToysrUs, Marks Spencer in the UK, Sears Canada, a bunch of other great brands.
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And I left Amazon in late 2005.
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I was a partner at another firm and I started working with my clients on digital strategy operations, you know, clear thinking work.
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And one of my clients was the gates foundation, and I wrote this one piece called- Future ready self-service and it was all about the power of making capability self-service both internally and externally, and like what it has so many healthy benefits to it.
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It forces you to build better simpler capabilities and products.
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And one of my clients at the Gates foundation pulled me into his office and this is like six years after I left Amazon.
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And he is like, you know, you, you wrote a really good paper, then he gave me like the 10 things I should have done better on it and everything.
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He was an editor by background, it was pretty funny.
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And he goes- You know, I've seen how you take all the little strategies, the nuggets, the insights from Amazon, and you delicately put'em into our work.
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You don't hit us over the head with them.
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You, you kinda, you're working us to think a little harder.
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And he goes, I think you ought write a book about Amazon because it's such a fascinating company.
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So the smartest thing I did was talk him into being my partner on these books, we still work together today.
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And we just rereleased the third edition of the Amazon Way, which is about the leadership principle.
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So it's a pretty short, easy read.
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My whole design principle was somebody could read it on one plane ride with a glass of wine, you know, and everything, right.
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It's no academic book, but it's kind of my story at Amazon.
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And some of the things you can take from Amazon, I then wrote a bigger book called Think like Amazon, 50 and a halfway to be digitally.
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That's like the full playbook of every little mechanism.
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The two books kind of go together, and that's really been my mission ever since then is you know, I always say like this isn't about Amazon, it's about you, how you're gonna compete, how you're gonna win in the digital era.
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And I borrow from a lot of places, including Amazon of which I have some, you know, authority to, because I got to participate there so much.
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And that's kind of what I do and my story a little bit.
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I think that's great.
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And I appreciate you sharing that about your background and also, you know, thank you for sending me the book.
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I enjoyed it as well, and I would agree, it's a read that you can digest pretty quickly, but there's a lot of real nuggets of wisdom in here.
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You know, I think for a lot of businesses, they look at a company like Amazon, so successful, right?
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It's part of just about everybody's daily life it seems.
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And yet sometimes they're wondering, well, how can I apply some of the things that made a business like that successful?
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And I'm just a small business, but I thought that the 14 principles that you outlined in the book gave some real relevant kind of ideas for businesses to think about.
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Amazon.
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Wasn't always this big, When I started at Amazon in 2002 holiday of that year, we had our first billion dollar quarter.
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Right?
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So while that's still a big company like that, you know, to this year, they'll do 480 billion.
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You know what I mean?
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But they operated with the same principles, the same approaches then, and we weren't successful, right?
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We were being referred to as amazon.com, amazon.toast, amazon.org, because obviously we can't make money.
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You know we were small, we had to be extremely frugal, and use that as a constraint to innovate, not as a constraint to complain or limit our vision.
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And I just wrote about kind of constraints, and in this environment, in my newsletter today and everything, and it's like, It's a tremendous opportunity and everything, and you can get so much more done because, you know, people have just a, a better sense of urgency and they're much less prone to you know, analysis paralysis and more of just like, okay, we think this is due, do it, you know and everything, right?
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And so just don't think of Amazon as the Goliath we know today, whether it was a team of a 100, 1,000, 10,000, a 100,000, they, still fought about the situation and they held each other accountable with the same approaches.
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And that's why, whether these principles are the ones you use or not thinking through.
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How do we make decisions?
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How do we hold each other accountable?
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How do we prioritize the customer?
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These sorts of things help you think better, even on an individual basis.
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Any business that you're talking about big or small, you know, Apple almost went bankrupt.
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Amazon started out as a bookstore, right?
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They all had a genesis somewhere and they all grew to what they are today by trial and error and implementing good principles.
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And that's what I loved about a lot of what you talk about in the book, these are practical things that any business can really implement.
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And the first one I wanted to dive into a little bit is this idea of customer obsession, because certainly from a marketing standpoint, you know, people look at marketing and say, oh, all these guys are trying to do is sell me something.
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But I think really good marketers are framing it into customer value, right?
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What can we really do to solve customer problems?
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So when you think back to Amazon, and this principle, what's your thought on customer obsession?
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Well, I actually listened to your prior podcast.
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I forgot the gentleman's name, but you were talking about customer obsession and everything.
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And I thought that was a really good conversation.
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In general, I think there's two types of customer obsession.
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So first I'll, I'll read the principle and it says, leaders start with the customer work backwards, they work vigorously to earn and keep customer trust.
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Although leaders pay attention to competitors, they obsess over customers.
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And you know, the most interesting word in that principle is the word obsession, right?
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Like we could have chosen a more comfortable word, like we're focused on our customers, or we care about our customers and everything, but we chose the word obsession for really specific purposes.
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Because it meant we were willing to do really hard thing for the customer.
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So I think there's really two types of customer obsession, and I'll refer to one as tactical and the other as strategic.
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The tactical customer obsession is about getting today's customer today's, you know, we'll call it, delivery, the promise you're making to your customer as perfect as possible, right?
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Exceed this customer's expectations.
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And so that drives all of your kinda operational excellence, the value proposition you make to your customer and measuring every aspect of that customer experience for today.
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The other type of customer obsession, strategic.
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Well, that is really what helps you look up and down the customer value stream, find new ways of understanding your customer, having more empathy for them beyond just your product and your service and always asking the question like, well, how can I serve this customer bigger and broader than I just served them today?
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And that lens of customer obsession is really been, what's taken Amazon from being this book's music, video retailer to the conglomerate business that they are today because they were exploring the customer, the longitudinal, the long point of view of the customer and being really interested in, you know, where's their friction, where's their poor value exchange relative to what they're getting.
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And they've been willing to do the hard things, which is build new products and services in order to insert themselves into that value proposition.
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So that's one aspect of understanding customer obsession.
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I love that you use the word friction, because I use that a lot on this podcast.
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It sort of makes the hair on the back of my neck stand up a little bit, because I think so many businesses have so much friction in their buying experience and it's such a turnoff to customers.
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I'll give you a quick example.
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I just went and had my annual physical the other day, went into a doctor's office.
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The number of forms that I had to complete that required me to fill out the exact same information.
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None of which was different than they already had on file.
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And then I go in and see my physician.
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They asked me all the same questions anyway.
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So it was just all this friction, it just makes for a terrible customer experience.
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And I think that that rolls very nicely into sort of one of your second principles here, which is invent and simplify.
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I know as a marketer, when we go into businesses, often one of the first things that we have to do is deconstruct the mess that has been created, right?
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It's simplification, simplifying the messaging, simplifying the way you're presenting your products and services to customers.
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There's a lot of simplification that goes on, and I think that's been keys to Amazon as well, right?
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They're the inventor of one click buying.
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You go exactly where I go to on this principle, right?
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The name of the principle is invent and simplify.
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And I think the invention piece is always, you know, fascinating to people and sounds really hard, you know, and everything.
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But what we recognize is that the and simplification aspect is both as important and as hard as inventing and that simplification mindset again, kind of comes in two general arenas, although they're connected, obviously simplifying the customer experience.
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And every single touchpoint you can have with them, not asking them to reintroduce themselves, essentially, which is the experience, uh, that you were having.
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And other types of, friction is important.
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But then, internally as an operational leader, you were always looking to scale and to scale means being able to do more on a declining cost per unit, right?
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Actually gaining efficiency.
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Most companies, they initially start getting scale, but then they actually like, they can do more, but it's not improving on an economic basis, right?
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And that's because they haven't done the work of simplifying the work that needs to be done.
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And that is super hard, super important and super uncomfortable work to do because you have to challenge and force sometimes the uncomfortable conversations around, well, how does work get done?
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How's the organization structure look?
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You know, why do we do it this way?
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How do we get out of our own way in order to simplify the work that gets done?
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But you know, when you know, there's this concept called Conway's Law and Conway's Law essentially says that you ship your org chart, right?
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And that's what happens so often that customers see is.
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Hey, you buy something online, you go to the retail store and they go, well, we can't accept.
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It goes spot online.
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Like that's essentially because the organization structure is split between stores and eCommerce, right?
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Like they've shipped their org chart.
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The customer doesn't care about your org chart, right?
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They care about their experience.
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The reason it's called friction for me, because it's the little tiny things that yes, a customer can compensate for, but really you would never want it that way.
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And as an operator, you you've kind of grown numb to it, right?
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You're blind to all of these little things.
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My favorite, personal experience of, of friction is, and I hate to call anybody out, but I'm going is going to a Home Depot store, right?
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I've got a specific little light bulb that you know, maybe I need or something specific.
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It's in the store someplace, right?
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And not only is it difficult to find the aisle, but then you're sitting in front of this massive wall of light bulbs and you're going up and down the wall trying to find this specific light bulb.
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I cannot understand, and somebody will say to me, well, John, they have an app for you to download that you can do this.
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That's way too much friction and everything.
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Why don't they have a little handheld device?
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I walk into the store, I grab the device.
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I can either take a photo, scan the UPC, or speak to it.
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And it says, Hey, John, go to aisle seven.
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I go to aisle seven and then all of a sudden, like a little light goes off.
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Well, here's the item on the wall.
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You try something like that of really understanding, the discovery in particular tends to be a really hard problem.
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know, I would say about Amazon, like the only problem with being the everything store is it's the everything store, right?
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A customer isn't looking for everything they're looking for anything.
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And so discovery at Amazon is a hard problem.
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Discovery at a lot of stores is a big problem.
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You need to rethink the discovery moments for a customer and that really is oftentimes simplification work that needs to be done.
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Hey, it's Eric here and we'll be right back to the podcast.
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Now back to the podcast.
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Discovery as a podcast host, this is a huge issue for us in this business because the tools aren't really very good right now for discovery.
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They're very keyword focused.
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And if you're not using the right keyword, you don't even find what you're looking for.
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And for somebody who's looking for marketing services, well, what would they be searching for?
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So discovery is a really big deal.
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And I wanna skip ahead to another point.
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And this is really around a bias for action because as a marketer, what we often find is you know, we're a cost center, we're an expense for a business and businesses sometimes are reluctant to take action.
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They're reluctant to take that risk of spending the money because they're not certain about what the outcome is going to be, but you sort of have to be willing to take risks, you have to be willing to experiment.
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You know, we always talk.
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Uh, marketing as a mixture of art and science, right?
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There is an art aspect to it.
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There is an experimentation, nobody gets their messaging right out of the gate.
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Nobody gets that ad perfect the first time, right?
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They have to experiment.
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So when you talk about a bias for action, how did you see that work inside Amazon and how do you advise leaders to take those necessary risk?
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Yeah.
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So the leadership principle reads like this, it says speed matters in business.
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Many decisions and actions are reversible and do not need extensive study.
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We value calculated risk taking, and the way it manifested itself in the business is in understanding that all decisions aren't made equal, and that some decisions you need to slow down, you need to talk about a lot, you need to bring to the center.
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We call those one-way door decisions.
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Most decisions are two-way door decisions.
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They should be made.
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With a little bit of discussion, a lot of intuition and at speed, because if we break down these decisions into more of a test and adapt test and learn mindset, the speed element becomes even more, that much more valuable versus just continual studying.
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And what you notice in most companies is that when you start slowing things down and you start making them into big study appointments, well then what you do is you just make the decision bigger and bigger, bigger.
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And so it actually becomes a risk.
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It becomes a riskier decision at that point, right?
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It becomes more of a one way door versus a two-way door decision.
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And you know, the thing about these principles is they're balanced.
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You, can't just, overindex on one.
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Sometimes they actually pull against each other, right?
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They're not in complete alignment that typically leads you to a better set of thinking and a better outcome than if you were just using, you know, one principle and at the end of the day, leaders do need to have really good insights and proceed with speed and be willing to have both, you know, responsibility and accountability relative to those decisions versus trying to kind of shift them off with others, and that just slows the business down and it doesn't grow good leadership.
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I love the way you talk about the way these principles kind of pull at each other to find balance because the next principle I want to talk about is frugality, right?
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And as a marketer, that's not a term I like to hear a lot because we're a cost center, right?
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We're an expense.
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You have to make an investment in marketing.
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Yes
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Spend, spend, right.
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But there's also a balance, right?
00:20:01.966 --> 00:20:07.186
There are things that we can do that are very cost effective, trying to create content, to generate organic leads.
00:20:07.307 --> 00:20:10.307
And there are things that can be very expensive, a Super Bowl ad isn't cheap.
00:20:10.576 --> 00:20:13.426
So there are balances that need to be made.
00:20:13.696 --> 00:20:20.511
How do you sort of balance the bias for action with frugality and making sure that you're not just spend, spend, spend.
00:20:21.481 --> 00:20:21.731
Yeah.
00:20:22.221 --> 00:20:46.192
So the spirit of the principle isn't about being cheap, it's about using resources smartly and using resource constraints as a forcing function to help you innovate, like how do you actually improve on the unit cost of whatever it is you're doing right on the item, maybe it's on customer acquisition.
00:20:46.372 --> 00:20:49.991
How do we actually get better at that and come up with better solutions?
00:20:50.791 --> 00:20:55.251
Because to scale, we know we need our unit costs in order to get better.
00:20:55.521 --> 00:21:04.277
I just wrote about this in the Digital Leader newsletter today about, you know, just the mindset of do more with less.
00:21:04.517 --> 00:21:09.856
And that mindset of do more with less is actually the mindset that helps you innovate.
00:21:09.862 --> 00:21:14.846
You use constraints in order to come up with a better approach, a more efficient approach.
00:21:15.451 --> 00:21:18.241
In order to accomplish what you need to get it done.
00:21:18.422 --> 00:21:27.602
One of the things I wrote about in the newsletter is typically op people go, they translate, do more with less to do less with less, right?
00:21:27.841 --> 00:21:31.711
Oh, well, if you're gonna cut my spend, then I'm gonna scale back.
00:21:31.951 --> 00:21:32.491
No, no, no, no.
00:21:32.701 --> 00:21:36.122
The game plan for today's market volatility.
00:21:36.341 --> 00:21:37.932
Is do more with less.
00:21:38.081 --> 00:21:54.622
What we need from teams and from leaders is to actually be problem solvers and innovators and figure out a way how do we get better at what we're doing and using the constraint as an opportunity to force us to rethink whatever it is that we're working on.
00:21:55.051 --> 00:21:56.811
Yeah, I like that.
00:21:56.811 --> 00:21:59.466
Constraints really force the best ideas, right?
00:21:59.466 --> 00:22:00.727
They force a better approach.
00:22:00.727 --> 00:22:02.767
It's not a signal to pull back.
00:22:02.767 --> 00:22:04.537
It's a signal to be more creative.
00:22:04.866 --> 00:22:07.156
Look at new ways of approaching a problem.
00:22:08.287 --> 00:22:18.936
And you know, when you're designing constraints, when you're designing this scenario that you know, you're gonna solve, or you're gonna hand to a team, you really need to be thoughtful about the constraints you put in place.
00:22:19.787 --> 00:22:26.916
You know, you always have to like, well, if you're gonna put these constraints in, what are you willing to do in order to meet those constraints?
00:22:27.216 --> 00:22:32.916
And if you put too many constraints in, you will put a situation into a no win situation.
00:22:33.067 --> 00:22:39.606
And so designing will call it an experiment or a scenario and the smart constraints have to be really careful.
00:22:39.606 --> 00:22:44.497
And the other mistake somebody will make is they'll put just one constraint on, right?
00:22:44.737 --> 00:22:48.696
And then a good team, just like they optimize to that constraint, right?
00:22:49.176 --> 00:22:53.737
Like lower the inventory level or whatever it is, like lower the cost.
00:22:54.281 --> 00:22:59.142
Well, then what will happen is, yeah, we, you know, we hit the inventory level, but guess what?
00:22:59.172 --> 00:23:02.331
In stock percentages, plummeted, right?
00:23:02.951 --> 00:23:19.112
Okay, you know, you didn't think through the constraints very well, so you always have to think through kind of the really smart constraints that you're gonna put on and that's why, you know, none of these tools or approaches can be used without thinking about'em right?
00:23:19.112 --> 00:23:23.662
They need wisdom in order to use it's a sophisticated playbook.
00:23:24.122 --> 00:23:34.102
At the end of the day, you can't have an evil attempt and you can't have a dumb attempt and be successful at any of these things, like you have to use'em smart and with wisdom.
00:23:34.602 --> 00:23:35.142
I agree.
00:23:35.451 --> 00:23:42.088
One of the things that we're facing in the world today, not just this country, but I think pretty much globally is an erosion of trust.
00:23:42.088 --> 00:23:45.513
And you talk about your principle of earning trust.
00:23:45.538 --> 00:23:58.259
And I know that a lot of the principles really based on earning trust within the organization, as a leader with your employees, but in marketing, we also have this brand persona that's out there, really earning the trust with the customer.
00:23:58.528 --> 00:24:02.759
And it's so hard to earn that trust and so easy to lose it, right?
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