BUSINESS INSIGHT: LEARNING ACCOUNTABILITY FROM JEFF BEZOS
At the middle of the year, many questions relating to the priorities of a firm spring up. It is easy to set priorities at the start of the year but following through is somewhat a challenge for most organisations. In the process of swimming with the tides of change either caused by internal or external factors, so many drift away from their initial goals and objectives. One way to resolve this is by being accountable to shareholders or partners.
Drawing insight from Jeff Bezos’ ritual of writing letters annually, since 1997 to date, to the shareholders of his company, Amazon.com, business owners can learn a great deal of accountability. The brand that is referred to as the world’s largest online marketplace and cloud computing company has been able to consistently remain on track running with clear priorities.
It was observed that the letters the company writes to communicate its focus to shareholders help it stay accountable throughout the year. Whether it is a new strategy towards expanding the brand or a decision on employees, the letters act as signals informing shareholders about the direction of the company. An excerpt from the 2004 letter shows that Bezos also uses it as a medium to share some financial concerns. There he wrote “Our ultimate financial measure, and the one we most want to drive over the long-term, is free cash flow per share.”
An analysis carried out on the letters indicated that there are key words the letters are structured with. From this, one can tell where the company’s priority for that year is centred on. The 2006 letter revolved around five words, “businesses,” “new,” “Amazon,” “grow,” and “culture”— pointing the attention of shareholders towards expansion and growth. In that letter, Bezos writes,
“At Amazon’s current scale, planting seeds that will grow into meaningful new businesses takes some discipline, a bit of patience, and a nurturing culture. Our established businesses are well-rooted young trees. They are growing, enjoy high returns on capital, and operate in very large market segments. These characteristics set a high bar for any new business we would start. Before we invest our shareholders’ money in a new business, we must convince ourselves that the new opportunity can generate the returns on capital our investors expected when they invested in Amazon. And we must convince ourselves that the new business can grow to a scale where it can be significant in the context of our overall company.”
Moving on to 2010, the priorities of the company changed to “data,” “Amazon,” “services,” “systems,” and “technology”. Bezos pinpointed
“All the effort we put into technology might not matter that much if we kept technology off to the side in some sort of R&D department, but we don’t take that approach. Technology infuses all of our teams, all of our processes, our decision-making, and our approach to innovation in each of our businesses. It is deeply integrated into everything we do.”
Even though Bezos never includes the failures of the firm, he makes his shareholders know of such possibility but assures them of a way out. This is clearly seen in his 2013 letter:
“Failure comes part and parcel with invention. It is not optional. We understand that and believe in failing early and iterating until we get it right.”
Bezos also utilises the opportunity to remind the shareholders about the company’s plan from the beginning. This can be seen in the most recent 2018 shareholders letter released 11th April 2019. It reads:
“From very early on in Amazon’s life, we knew we wanted to create a culture of builders – people who are curious, explorers. They like to invent. Even when they are experts, they are “fresh” with a beginner’s mind. They see the way we do things as just the way we do things now. A builder’s mentality helps us approach big, hard-to-solve opportunities with a humble conviction that success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again. They know the path to success is anything but straight.”
With this approach, accountability becomes less of a problem for the firm, and serves as a means to attain sustainability.
What is your own approach for accountability?
Written by Jennifer Chioma Amadi
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