Amazon & Google: Winning Org Design Deconstructed

Happy Monday! Cheers to a new month, fresh start and new chance to get things right. Let’s do this.

In the last week’s episode of The J Curve, Talita Lacerda, CEO at Petlove, Brazil’s largest pet e-commerce platform told a lot about her approach towards implementing some of Amazon’s leadership principles and Google’s OKR system. So today I thought I’d dig into the fundamentals of both.

Amazon Leadership Principles

To say that Amazon is a fantastic company is an understatement. Here are 13 mind-blowing facts about it 👇🏻

1. Amazon is worth over $1.105 trillion in 2022.

2. Having a brand value of $350 billion, Amazon is second only to Apple, leaving Google and Microsoft behind.

3. In 2022, Amazon had 300 million active users.

4. Among these active users, 197 million people visit Amazon.com every month.

5. Amazon ships to more than 100 countries, excluding Cuba, Iran, North Korea, Sudan, and Syria.

6. Over 200 million people globally have an Amazon Prime subscription.

7. Amazon Prime video, the second-largest streaming service in the world, has over 205 million subscribers.

8. Around 25.21 billion US dollars is generated yearly from membership services.

9. Amazon owns more than 90% market share in five product categories: Batteries (97%), Kitchen & Dining (94%), Home Improvement Tools (93%), Golf (92%), and Skin Care (91%).

10. Amazon boasts nearly 50% share of the US e-commerce market, which is more than triple the combined shares of its main competitors: eBay (6.6%), Apple (3.9%), and Walmart (3.7%).

11. In 2021, almost 2 million SMBs operated as Amazon’s third-party sellers. Half of Amazon’s American partners use the FBA service, as it offers at least 30% lower shipping costs.

12. Every quarter of 2021, about 56% of Amazon’s revenue came from third-party sellers.

13. In 2021, Amazon’s advertising revenue was about $31 billion.

Here is the illustration of The Sixteen Principles that have been the key to Amazon’s world wide success:

Here’s a great article that summarizes the essence of the 16 principles and their application. Here I will focus on 4 principles that were instrumental in the organizational design of Petlove:

#1 Customer Obsession

“Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”

Amazon is the world’s most customer-centric business, and this principle is testament to that. Most companies are competition-focused. Amazon, on the other hand, looks at their entire business through the eyes of the customer.

#2 Ownership

“Leaders are owners. They think long term and do not sacrifice long-term value for short term results. They act on behalf of the entire company, beyond their own team. They never say ‘that’s not my job.’ Drive the business like your own car, not some cheap weekend rental.”

Ownership is synonymous with accountability.

#8 Bias for Action

“Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.”

People get caught up in “analysis paralysis,” they spend too much time planning and do not take action quickly enough. Amazon believes you do not always need to be 100% sure to make a decision. When you are 80% certain and have a strong business judgment, it is better to decide now with limited information rather than wait another nine months.

#10 Learn and Be Curious

“Leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act to explore them.”

Curiosity leads to creativity. Creativity leads to innovation.
In addition to the above, Amazon’s concept of single-threaded leaders and obsession with controllable input metrics were key to Petlove’s organizational design:

Single-Threaded Leader is a leader who is 100% dedicated and accountable to a specific product and is responsible for turning strategy into real results, and they are empowered to do so. 

Controllable Input Metrics are measurements of the things that need to go right in order to generate great outcomes.

PS: There’s an amazing written by two Amazon former executives Colin Bryar and Bill Carr, called “Working Backwards: Insights, Stories and Secrets from Inside Amazon.” Check it out to learn more about Amazon Leadership Principles and everything the company learned on the way to defining them.

Google OKR System

OKR (Objectives and Key Results) is a goal-setting framework to create alignment and engagement around measurable goals. It was pioneered by Andy Grove, Intel’s co-founder and CEO. John Doerr, the Silicon Valley’s legendary VC who was part of Intel’s sales team back in 1974 introduced Google to OKRs. Larry Page and Sergey Brin adopted the system in 1999 and popularized it later on. Today it’s used by digital and brick-and-mortar juggernauts like Spotify, LinkedIn, Airbnb, Netflix, Disney, Walmart and Target.

OKRs are frequently set, traced and evaluated - most often quarterly and sometimes even monthly. The company sets a set of objectives and key results, teams set their own OKRs to support company OKRs, and individuals then set OKRs to support team-level OKRs, resulting in aligned waterfall of priorities. All OKRs are visible to everyone from CEO to the frontline workers. One of the key features of OKRs is measurability. As a former Google executive Marissa Mayer said: 'It’s not a key result, if it doesn’t have a number.'

John Doerr offers a formula that best defines the OKR structure:

I will (Objective) as measured by (this Set of Key Results) 

Objectives are big inspiring goals. These objectives should be fundamentally hard to attain. If goals are 100% achievable, they are not ambitious enough. Good OKRs (~60-70% achievable) will force you to step out of your comfort zone and encourage personal growth.

Key Results are a set of quantitative and measurable metrics. Typically 3-5 for the year and every quarter with a clearly defined feedback loop.

PS: John Doerr did a great job describing the methodology in his book “Measure What Matters” using Google as an example. Check it out.

Thanks for reading,

Olga