Test, build, accelerate and scale: Meet the 4 cycles of Jeff Bezos
Free Book Preview: Unstoppable
I know I don't have to explain who Jeff Bezos is . The founder and current CEO of Amazon is the richest man in the world, and his online store has redesigned our present in ways we didn't even imagine. The concept of his business was not, in itself, original (there were already other online stores), but his vision, his mastery of risk and his creative strategy separated Amazon from its competitors until it became one of the companies that , in many ways, defines our time.
Things don't happen by accident. Businesses do not grow "naturally" or "wildly", as if they were a small tree that is enough to water to become an oak. Businesses require leadership, vision and strategy. Jeff Bezos describes this vision and his strategies in his letters to his shareholders each year. The first of them, that of 1997, already clearly shows the path that Bezos was undertaking.
Back then it wasn't obvious that Amazon would be a hit. It was a young company with a great idea, but still losing money on all four sides, exploring new ways to solve old problems. In his book The Bezos Letters , Steve Anderson makes an analytical summary of the Bezos System, which is summarized in four cycles and fourteen principles of growth.
The four cycles are: Test, Build, Accelerate, and Scale . Take out a pencil and paper, because this gets interesting.
CYCLE ONE: TEST
Nice that you have a great idea! Scented mosquito candles? Very good. Organic and ecological drink? Ok. An app for locating dogs? Okay. It all sounds great. But before you sell your house and leave your job, do what the greats do: test if there is a replicable process and a market that wants to buy it.
Don't wait to have the perfect product to go out, or waste too much time at the design table. On the contrary: generate prototypes and minimum viable products (MVP) and explore the jungles of your market.
1. Promote successful defeats
Our culture fears defeat and humiliates those who make mistakes. This generates an innovative paralysis: nobody tries new things for fear of failing. Companies that grow, try hard and fail a lot . For every great Google service, there are dozens that fell by the wayside. Try and celebrate these "wrong" ideas. Exploring is the only way to find new paths.
2. Bet on big ideas
You have launched exploratory expeditions. Out of ten attempts, eight failed. Good: now you have two that do work. It's time to bet on them. Redirect time and resources to the things you've tried, raising your chances of success along the way.
3. Practice dynamic innovation
Your vision has to stand firm, but in the processes, there are no things written in rock. Whether your company is digital or made of concrete and brick, install systems that allow you to receive information in real time about your processes. Then keep designing and improving your processes until you get closer to their optimal status. Never, never stop learning.
SECOND CYCLE: BUILD
When you have a proven idea, it's time to lay the groundwork. Now you do have real information that tells you that your idea is viable: that it can be a business. It is time to build.
Different companies have different product creation systems. For example, a digital or creative-based business is not the same as a cake factory or a horse farm. Develop systems that allow you to respond to current demand, anticipate the future and, also (this is essential), space to continue your dynamic innovation process.
4. Become obsessed with your customers
Big ideas, zero sales - that's the story of thousands of companies that fail along the way. At the end of the day, it doesn't matter how great your product is. If nobody buys it, then you are dead. Amazon developed a search, rating and feedback algorithm whose sole goal was - still is - to understand and delight each of its millions of customers. Understanding your customer is a task that requires effort and time, but it pays off handsomely and prevents you from wasting too much time on roads that lead nowhere.
5. Think long term
If you are not born to be the best then what are you born for? You may not be the biggest company on the planet, but you can - and should - aspire to be the best in your own niche, no matter how big or small. That is not built in two days. Amazon lost money for many years before starting to win, but from day one they set a goal that was well worth the effort. It is preferable to try the impossible and fail, than to try the achievable and achieve it.
- To know more: Possible signs of life found on Venus. Elon Musk and Jeff Bezos reportedly upset that they didn't find them first.
6. Make your customer your center of inertia: the Flywheel model
Many sales systems are based on the funnel model or sales funnel , which is a process of filtering customers. The purchase is at the end of the funnel and with it, the sales process is “finished”. The center system inertia and Flywheel It changes the focus of the process and puts the customer (not for sale) at the center of the entire experience, attracting, falling in love and learning to generate a strong long-term relationship. The funnel is great for one-time sales, but the Flywheel is great for repeat sales. The customer returns again and again to a changing ecosystem around him. In more ways than one, the client is the architect of their experience.
THIRD CYCLE: ACCELERATE
You have a proven model and a customer base that allows you sustained growth. Congratulations - you have a real and successful company! This is where most of the companies that exist stop: with a business model that works, and in which they choose to stay where they are and not grow any more.
To grow is to believe. It is time to move to the next level.
7. Generate high-speed decisions
The bureaucracy can hang medium-sized companies. A leadership review is required at this time to sustain growth with swift strategic decisions. Not all founders are good CEOs! Sometimes a change of baton is convenient; some others it is the same leader who continues ahead. Courage and risk control are required to be able to add value where it is needed and eliminate what is left over.
8. Make the complicated, simple
Simplify, reduce, save and clean processes and products that take time, resources or effort. Structures that have not lived up to their potential are likely to be born in the testing and construction stage: not all have to stay there. Stay with the best and make life easier for your clients, attending to your core business , your mission and your vision, which must be clear, current and shared with your entire organization.
9. Speed up time with technology
Technology can be your best ally. Don't be afraid to try new things. For example, Amazon One Click Purchase , which was patented at the time, was a revolutionary element that reduced friction to a minimum and made life easier for the customer. Automate, lighten and accelerate growth with the technology at your fingertips. Even small and medium businesses can find ways to do it.
10. Promotes a sense of ownership
Through this process in which the company begins explosive growth, maintain a team culture and a common vision. Amazon allows, like many other companies of the modern era, the option of holding shares for its employees, with which they are direct beneficiaries of growth. However, money is not everything. Neither stocks nor bonds exceed the sense of belonging and purpose that gives a clear vision and positive leadership.
FOURTH CYCLE: SCALE
Not all businesses can be Amazon. But they do develop a scale-up strategy that allows them to serve the needs of more people without destroying the core of who they are and have built. This will only be possible if the bases indicated in the previous cycles have been previously established. This is the difference between serving hundreds and serving thousands or millions, and it is the key to a business with an impact beyond its initial niche.
11. Maintain your culture
The risk of tearing is imminent. Not a few companies have been lost due to uncontrolled growth that makes them lose their center, their style and their mission. Take care of the communication channels so that the feeling of being a team or, better yet, a family, does not succumb to pressure and distance.
12. Focus on high standards
Distance and speed can very easily impact the way things are done. A poor delegation system can result in poor quality, poor service, and dissatisfied customers. With the prestige of the brand and the future of the company at stake, this is not the time to lower our guard.
13. Measure what matters, question what you measure and trust your intuition
The amount of numbers and information that is generated in a wide-range operation can be noisy and confusing. Manage your information flows to measure what matters and have the data you need to make decisions at hand. But decisions are not automated: they require the intuition, experience and risk sensitivity of the leadership in the company. Businesses that go automatic soon reverse.
14. Think it's always day one
Stay hungry, stay curious , are the words Steve Jobs famously ended his Stanford speech with. Throughout his annual letters, Jeff Bezos has maintained and repeated this phrase as a kind of mantra: we continue on day one.The companies that can see the future are those that constantly reinvent themselves and that have in their purpose an impossible ideal that never fails to inspire and thrill the curious mind. It is always day one for a company that grows, that makes a mistake, that falls, that starts again, and that is always hungry to eat the world.