Streamlining for Success: Lessons from Amazon's Playbook

0:00I think a lot of people, if you're running a smaller business, they might think, oh, this doesn't apply to me because I'm not Amazon, right? They got really complex logistics, right? So, yeah, I'm guessing they need to do that. But, you know, I don't need to do that. And I'm here to tell you, there is not been a business that we've worked with that did not benefit from doing this, what we call value engine mapping, business process mapping. It's not a new concept, but very few small businesses do it. And so I would recommend everybody, here's the tools that you need. You need a whiteboard, you need a Sharpie, you need some sticky notes.

0:31okay get you some post-it notes and go on a whiteboard and just ask okay when it comes to to customer or client fulfillment like how does that happen after a sale is made then what do we do hey everybody welcome to another episode of business lunch with your hosts myself roland fraser and my business partner and friend ryan dice ryan how are you doing today so good we still talking to Amazon? Amazon turnaround and what you can learn from it? Yeah. So, um, so we had, we had taken from, uh, we kind of did a case study and analysis of Amazon's turnaround under Andy Jassy and thought that there were enough lessons that it made sense because there's specific things for us to talk about that, um, are very applicable to you as a small business owner, a startup, a medium-sized business, obviously all the way up to a company like Amazon.

1:31We expect Andy is tuned in to all of our episodes about this just hanging on every word to be sure that he's making the right moves. But there is something that can be learned. And so I love, love case studies. We were talking about the big turnaround in valuation and profitability by him coming in and having kind of these different areas that were pretty large and significant that he focused on and how we can use those to improve our own businesses. The first three we covered last time, the power of a fresh perspective, the ability to embrace being frugal and then engaging with shareholders. This time we're going to talk about three more.

2:11We might finish it up this time and only do two or we might go three. We'll see how it goes. but it's definitely, there are lessons to be learned here. The next thing, the number four was streamlining of operations. So what he did was he eliminated unnecessary processes. He streamlined teams and he focused on core competencies. And I think that's cool. He improved operational efficiency, which helped obviously with the profits. He went back to things that Bezos had done successfully, like no meeting should have more than can be covered by, I think it was two pizzas, right? Yeah, two pizza teams.

2:48No team should have more people on it than that. Kind of addressing where they overstaffed. Obviously, on the bigger team of, say, customer support, they probably need more than eight or 10 people at Amazon to cover that. But maybe, you know, thinking about sub teams, and we talked about that on a couple other podcasts. The action step here would be, have you mapped out your business processes? Because it's hard to be efficient. say what gets measured gets managed. If you don't have something that you're measuring in, at least to the point of knowing what the process actually is, it's definitely a good idea for you to chart out what are your business processes.

3:29Then you can apply one of our favorite things, the theory of constraints to identify the bottlenecks and fix those. Where are things kind of chunking up? And then can you use more modern automation like RPA, which is robotic process automation or AI, or even just basic marketing automations and accounting automations that are present in software to replace or make more efficient the things that people are doing. And that's something that doesn't get looked at very often. So I think thinking about what technology should we be investing in that actually enhances our collaboration, our automation, and our communication.

4:11And if we're looking at some goals here as how you would apply this to actually realize the benefits specifically, it would be, we're going to reduce operational costs by X percent. And while we're also increasing productivity by Y percent, and maybe even tie that into customer, like, cause we always like getting back to the customer at the same time, improving customer satisfaction ratings by Z percent. So that's kind of the category of of streamlining operations. Love to get your thoughts on it, Ryan. I think a lot of people, if you're running a smaller business, they might think, oh, this doesn't apply to me because I'm not Amazon, right?

4:48They got really complex logistics and operations. So yeah, I'm guessing they need to do that, but I don't need to do that. And I'm here to tell you, there has not been a business that we've worked with that did not benefit from doing this, what we call value engine mapping, business process mapping. It's not a new concept, but very few small businesses do it. And so I would recommend everybody, here's the tools that you need. You need a whiteboard, you need a Sharpie, you need some sticky notes, okay? Get you some Post-it notes and go on a whiteboard and just ask, okay, when it comes to customer or client fulfillment, like how does that happen?

5:23After a sale is made, then what do we do, right? And if you will get a sticky note and you will write out one sticky note for each step or stage of the process until that process is done. And maybe it's done when you've fulfilled on the order or you've completely fulfilled on the service or just when you're at a point where you're ready to ask for a testimonial or customer story, because I know some are ongoing. But when you feel like it's done and you fill in everything from the start to the end, you see all these little sticky notes that represent the different steps and stages of that process.

5:55it now becomes a lot easier and a lot simpler to look at and go, just like you said, okay, which of these sticky notes could we audit or could we optimize? Which of these sticky notes could we automate? Which of these sticky notes maybe don't even need to be there that we could skip completely? Where are we missing some sticky notes? Which of these sticky notes, like you said, is the bottleneck? I just firmly believe that you can't optimize until you first visualize. And one of the simplest things that any business can do is just to get some sticky notes and a whiteboard and visualize a particular process, not as a linear checklist, but as an actual flow chart occurring.

6:31Connect the arrows, show the flow through a process. You know, if it can fork off in different directions, you can turn it on a diagonal, use the diamond shape to show that it's going off. That anytime we're working with a client or a portfolio company to build out the operating system, that is step one. And you should do it for your customer acquisition process. you should do it for your fulfillment process. And you should also do it for how you innovate, how you roll out, create new product services, features, things like that. If you do that for all three, it becomes a lot easier, like you said, to say, which of these sticky notes do we need to automate, optimize, just get rid of.

7:08Yeah. Yeah. I think that, is there a place, because I know that we have exercises on that. Is there any place that people can access some sort of information on that, how to do that? Yeah, I mean, I just recorded a YouTube video on it because we had so many questions about kind of the process. And so that should be up, I would think, around the time this comes out. So let's see if we can grab the link. But if not, you can check out my YouTube channel, Ryan Dice Official. Should be there at some point. Awesome. Then the next one is going to be attention to detail. Now, we talked about this last time that he's known, Jassy is known for his meticulousness and that he was personally reviewing press releases and blog posts, blog posts, and even statements that were going out.

8:03And the benefit is, well, it's all of this attention to the detail that's improving the company's communication. and that's helping with profits and certainly messaging and ultimately translating into shareholder value. We have some issues with that, which we talked about before. But if we're thinking about how could you get like climb back into the business a little bit, have you got any anything that really what he's doing there is quality control? So do you have quality control? Does it have to be you as the founder, CEO? It's probably not your job. It's probably too much. But when you're doing a turnaround, it might be the most important thing.

8:46I mean, he was trying to recover a trillion dollars of shed value. So he probably perceived that as a pretty high value thing. And even if we want to criticize as we did, and I think rightfully and over focus on shareholder value, it will impact that company's ability to get credit. It will impact covenants that the company might have. And so there's a lot of things behind the scenes that we might not be aware of that cause the valuation to be more important to the operations and ongoing future of the company than just the stock price. So giving some room there for that to be the case. So what are some other things that you can do?

9:29Tell your employees what's going on. Let them know what's going on as well so that they can be part of this. Have this culture of the constant, the Kanai, Kaizen, never-ending constant improvement. While you're allowing the employees to take ownership of the work, be careful when you're doing what he's doing too, not to do the jobs of somebody else to where they just become effete. They just become powerless. It's like, well, I'm not going to do anything because this guy's going to come in and do it. And that happens a lot in smaller and medium-sized businesses. And then also, what are the goals?

10:05Like, what are the specific KPIs? Maybe it's reducing product defects by, you know, 50 % or increasing customer satisfaction ratings by 15 % or achieving a 98 % on-time delivery, you know, or whatever. Those are all things that could be potential goals. What are some of your thoughts on that? Well, I think what we talked about before really is the process for doing it. So you first have to visualize it and then you go step by step, stage by stage and ask, how can we optimize and improve this? How can we save? How can we make make it more efficient? But you you've got to go you have to first get a clear picture of the entirety of the process.

10:44And so I think they're kind of one in the same a little bit there, you know, because in addition to saying, how can we make this more efficient? You can also say, how do we make the step better? You know, so but you again, you have to first visualize before you optimize whether optimizing is improving the experience for the customer or making it more efficient for the company. I'll also say I do believe that that CEOs, founders, they should be existing at 30 ,000 feet and at three inches. Right. You're at the very, very highest level strategic. And then you're diving down to the things that matter the most.

11:20And those are the two worlds that you need to live in and balance being ultra intentional about where you're going to be at three inches to the ground. It's so important. It sends such a massive signal. So if you're going to dive in, make it clear why you're doing it. Make it clear that it's important, but also make it clear that you're not going to linger there forever. Make sure that your team knows that. And then last point that I'll make as the CEO, you know, as as the person in charge, it's not your job to have all of the answers. And this goes to what you were saying before about let's make sure we're not doing the work for our people.

11:52It is not your job to have all the answers. It's your job to ask the questions. Hey, why isn't this performing up to this benchmark that we had? Or, hey, you know, it seems like in the past we were able to get this result. Why can't we get that anymore? You know, and these don't have to be like leading passive aggressive questions. You know, why would you say you suck when before? Like, I'm not talking about that. I'm asking sincere questions about why aren't we doing it this way or why is it this working as well? Your job is not to have all the answers. Your job is to ask the questions. Yeah, I love it.

12:26All right. The next thing, number six, was balancing innovation and efficiency, which we talked about, and this is related to it. So Jassy's action, while prioritizing efficiency, he also invested in AI and other key growth areas. So this balanced approach allowed Amazon to maintain its innovative edge while improving profitability. How can we do that too? One of the ways would be to allocate a specific budget for innovation initiatives. If you haven't done that, number one, have a budget. If you don't have a budget, you definitely need one. Okay, so let's start there. Then once you have a budget, you should have segmented sections for different things.

13:08So having a innovation budget, or very often it's called an R &D, research and development budget, is one of the easiest ways to do that. Also, what can you do to encourage experimentation? Even if you don't want to have or you defund your moonshot program, that's the wild, crazy, let's have lasers that float us up in the air and then make people buy. It's like, okay, that's less likely to turn for sure into something. How can we have our employees focused on innovation? We talked about maybe doing that through masterminds. Google did. I don't know if they still do, but they used to say, you need to have 20 % of your time devoted to crazy, you know, just not to crazy, but to your own ideas for how you can make the company better.

13:56So I think a formalized versus informal program, even if it's as simple as take 20 % of your time that is on the clock and devote that to meaningful development. But that alone, without some system for how do I then see that you're doing that and that that's benefiting the company, how do I measure that so I can manage it? That's something that you're going to need to think about having too. So it's not just, you know, have all the employees fall asleep in the Easter egg chairs and meditate, you know, about how they could be better at the business and never have to share anything or produce any result.

14:30It's got to be, we expect that we're going to have an innovation rate of X and have some ability to measure that as a KPI. So that's, you know, I think that's really important. The other thing is how can you let the employees know that it is safe to share ideas, that you're not always shooting them down. Don't be a defensive manager. So they come and they say, Hey man, the way we're manufacturing ketchup, I think you could get a whole lot more out of it if you increase the size of the opening on the bottle, just, you know, double the size. People use twice as much ketchup and you're like, that's the worst idea I ever heard.

15:04You don't even know anything about manufacturing. Where's your degree in efficiency of products and product design? I don't think so. You know, that's not, and the people do that. I say that hyperbolically, but like that does happen. And it turned out that that ketchup guy ended up, I think, doubling profits at Heinz, right? So definitely think about creating that safe space to encourage and embrace the employee ideas. And then how are you going to measure these? What are the KPIs you'll put in place to do that? So that's something to think about. If I was looking at what those KPIs might be, maybe it's that you're tying increases in revenues, profits, or some other KPI that's important to you, customer satisfaction, NPS, even employee satisfaction, to the innovative offerings that are coming from the employees.

15:52How do you tie those together? So we want X percent of your time devoted to innovation. And then that innovation needs to be matched against improvements in a thing we care about that equals a certain amount. And then you can work, you know, again, measure and manage. Thoughts? It's calendars and wallet. If somebody says, I'm really frustrated because nobody on my team is coming up with any new ideas, nobody's able to fix, you know, problems that are that's all left up to me. My question is always, number one, what are the specific metrics that you're trying to improve? Can you point to them on a scorecard?

16:28And have you pointed them on a scorecard to your team? Have you said, hey, team, this is what we want to try to improve. Have you framed the innovation question for them? Because if you haven't and you're just saying, like, well, go blindly innovate. Go visionate everybody. Well, that's kind of not fair. That's probably not their job. And it's probably not what they're best suited for. So you need to step number one is you got to frame it. But then going back to what I said before, you're committed to an idea if it shows up in your calendar, in your wallet. And for businesses, what this means is your meeting rhythm and your budgets.

17:01So if you're saying there's not enough innovation going on, you know, people aren't coming up with, you know, with any with any new ideas. We're not we need to push that out. And I need everybody, you know, coming up with with all these amazing ideas to make me a lot more money. Number one, have you framed it? Number two, have you is there a specific budget for it? And do those managers know that they can spend that amount on innovation projects? This has happened to us before where I've been begging, like, why have we not tested this new ad platform and this new ad strategy? And I just assume that it's because people were lazy and they didn't care, which is not a fair assumption.

17:33What it came down to is they didn't want to burn up the budget that they had on something that they didn't know would work because now they're going to miss their goals and they're going to get in trouble and maybe even fired. Right. Well, that makes sense. So we had not given them the budget to test with. So now it's like, no, no, no. Use the test budget. Use the test budget. This is in addition to not in lieu of. So show me the budget. But then also, do you have meetings that are dedicated to brainstorming and innovation ideas? It usually doesn't happen in isolation. And so for all of our prior to any quarterly sprint planning meeting that we're doing, there's going to be some type of idea brainstorming session that happens at the team level that is done in a particular way.

18:14And it is designed to aggregate ideas. Those ideas are put on an idea scorecard. They're measured. They're ice scored. Hypotheses are created. And it is a formalized process. So if you find that people aren't innovating, have you framed it? Have you allocated the budget? have you allocated the calendar time and meetings to do it? If not, I'd try that before you just assume that everybody is lazy and stupid. I love it. Or think that, but keep it to yourself and try to get yourself to evolve. Because I used to think that way all the time as well. It's like, not only are they lazy and stupid, but they're all dead to me now.

18:50I'm just going to do it myself. Terrible, terrible idea. So happy that we have all moved away from that. The next one would be number seven, adapting to a changing landscape. So he was adapting to the post-pandemic economic slowdown. Primarily, his adaptation was the focusing on cost control and efficiency. So this has obviously helped them to be hugely profitable again, which also helped increase their valuation and share prices. For the average bear that's not Amazon, stay informed about the industry trends. Know what's happening. There is definitely always something moving. Things definitely do not stay the same.

19:30And how can you stay ahead of it? How can you skate to where the, you know, the puck is going, not to where the puck is right now, per Wayne Gretzky. Think about investing a little bit of your budget in market research and, and also encourage your employees to learn and to anticipate. And they should be consuming industry publications. On job interviews, it's one of the most annoying questions I ask people, I think. I say, so what are you reading or watching to, or content that you're consuming to keep up with what's going on in the industry? And almost none of the candidates can tell me anything.

20:11I want the person, I'm going to hire the person who says, oh, these are my three favorite blogs and I like this YouTube channel. And then I go to these meetings and I read this newsletter. And this guy has a great podcast. And that's what I want, a passionate consumer who is interested in staying up on what's going on and what's likely to happen. That's who you need to be. And that's who you want to encourage your staff and employees to be as well. So that culture is important. Can I make a point on that? Because it's a narrow thing. Don't put that question, ask me how I know on a job application.

20:51Um, we asked that question on, on a job application, like what do you, cause we wanted to figure out, like, if they're not reading it, then we just want to even research and think about it and give you a long list of stuff. Well, what we noticed was that, um, I, I looked at one, I was like, Oh, that, that's kind of cool. Like, yeah, those are some good podcasts and blogs. That looks great. And then went to the next application and it was the exact same. And then the next one, it was the exact same. And the next one is the exact same. they put the freaking interview questions into chat gpt and chat and they just copied and pasted what chat gpt did and what i what it made me realize is that there there are now all of these ai based um you know application job hunt kind of things that will pre-fill them all and even if it's a question that's not on there give you an ai question so it made me realize that you can no longer ask these on an application because people are using ai to answer them incidentally everybody who used that, we were like, you're done.

21:47Like if you're not even going to take the time to fill in its own form of screen, but yeah. And to me, this is a, this is an in-person question when I'm, when I'm literally talking to you for an interview. And if they can't tell me that I'm like, you're going to not, I mean, you might be competent, but you're, you don't have the hunger that I want. Yeah. You won't grow unless I, unless I make you do something, you won't grow. You're not choosing. You clearly don't value growth and learning. So what are the KPIs here? It could be a goal that you set that you want them to consume some sort of content.

22:29It could be reports to tell me what you see as the trends and the things that are happening. If you were KPI-ing it, maybe it translates into some increase in market share that we want our program, we want our growth rate before the program of keeping up with trends and everything was implemented. We want, you know, that's our measurement, our baseline. We want certain things to increase, you know, by a certain amount after that. That'd be, you know, that'd be some way to do that. So any, any other thoughts on that? Yeah. I just, I think it's important to, to ask if you can have a pre-mortem and a post-mortem when you're making these strategic decisions and ask before you make the decision, um, what's, what do we believe is going to be true about, you know, our world, this market that isn't true today.

23:23Just asking that question is going to prompt investigation and conversation. Similarly, if something doesn't go right, asking, was this a failure of execution or a failure of assumption? If it's a failure of execution, then maybe you got a systems issue of people, you know, issue that that's solvable. If it's a failure of assumption, then what that means is that you either didn't ask the premortem question or you asked it, failed to answer it or failed to answer it correctly. So saying, what did we believe would be true about the industry, the world, like our market that clearly isn't true. Questioning your assumptions on the front end and then questioning them again on the back end is one of the best ways to learn.

24:06It's way more painful to learn on the back end after a failure, but it's probably the most valuable lesson you'll ever learn if you take the time to actually ask that question. What assumptions did we make that turned out not to be true? What can we learn about that moving forward? I like it. And I think the last one that we should probably talk about is just the personal touch that he did come in and he held internal meetings. He communicated directly with the employees. He shared his overall vision for the company with everyone that he talked to. He was passionate about it, communicative, on message the whole time.

24:40And that did, I don't have a specific increase in employee morale, but I have that it contributed to employee morale and engagement during this challenging transition period. So keep in mind, he was coming in in a time that the company was transitioning, but he was a transitioning factor himself and a pretty big one to go from this aspirational figure that is so big in Bezos who created this amazing thing from scratch to be the person taking over. I know that, I don't know if I'm going to pronounce his name. Is it Satya Nadella? Is that how you pronounce it? Satya Nadella. What is it? Satya Nadella.

25:24Satya. Satya Nadella, who came in and replaced Gates, right? I mean, or actually he replaced Balmer, but that was, you know, his own thing. But like when you have these giant figures or cook replacing jobs, you've got to connect. You can't stay in your ivory tower as I am the designated crown prince that, you know, or crown person of royalty that came from the founder that's got this giant larger than life personality. And so whether you're going through a difficult time transition, a transition from that might even be successful from small company to big company, which can derail a lot of companies or from leader, old leader to new leader or founder to manager, all of those are really to require a very, very careful and intense amount of personal connection with the people that you're coming in to manage, not just at the report direct to you level, but throughout the organization.

26:23So I think he did a really good job of that and helped the employees to feel it was going to be okay. Because I think there was a lot of concern about what was going to happen when Bezos left. So you guys out there regularly connecting and interacting with your employees at all levels, town hall or standup meetings, actively seeking feedback, having a specific method where or mechanism where any employee can provide feedback that will trickle up to top management and implementing customer feedback mechanisms and personalizing your communication with your key clients as well, not just employees, but key clients.