In this episode of Innovators Unleashed, I had the pleasure of interviewing Steve Anderson, author of The Bezos Letters: 14 Principles to Grow Your Business. Steve shared insights into the leadership style of Jeff Bezos, from his early days at Amazon to his recent departure as CEO.

Bezos' leadership is characterized by his demanding nature and his relentless focus on customer obsession. Steve drew attention to the high expectations Bezos places on employees, necessitating hard work and long hours, but also fostering an environment of learning and growth.

One key aspect of our discussion was Bezos' unique approach to decision making. According to Steve, Bezos distinguishes between two types of decisions. Type one decisions are large, impactful, and require careful consideration, while type two decisions are smaller and can be quickly made and easily reversed by competent teams.

Moreover, we delved into Bezos' emphasis on invention and his acceptance of failure as an integral part of the process. Steve explained that Bezos has cultivated a culture within Amazon that encourages 'successful failure', seeing it as a necessary step towards innovation and growth.

In Bezos' post-CEO era, Steve believes Amazon has been navigating the transition smoothly under Andy Jassy's leadership. Bezos, despite stepping down as CEO, continues to play a role in the company as the executive chairman of the board.

Clinton Henry: So Steve, I'm so excited you're here. Because when we think about transformative leaders and people that have changed the shape of our lives and the people around them, one that always comes to mind is Jeff Bezos. And can you just set the stage? What kind of leader is Jeff Bezos?

Steve Anderson: Yeah, I'd be happy to. And Clinton, thank you for having me. Just always enjoy the conversations around Amazon and what they've done. I think there are a couple sides to Jeff Bezos in terms of his leadership style. I do think it's changed, morphed, maybe matured over the years. I mean think of Jeff Bezos early on. He was pretty much a geek, a nerd kind of person. He had some very strong opinions and I think there's some indications of what his leadership was like and from former employees who talk about that. So a couple of thoughts come to mind. One is, he was very much a demanding leader and I think still is. And again, he stepped down as CEO of Amazon, but not completely stepped out of everything but a demanding leader. In fact, in his original 1997 shareholder letter, he talks about employees and how important employees will be to Amazon's growth. But he also has very high expectations of employees. And so a real detailed process. In fact, I'm going to screw the quote up because I didn't look it up to refresh my memory. But in that first letter, he said something to the effect of at Amazon, you will work hard, you will work long hours.

And there was a third one I can't think of. And he said, at Amazon you can't choose two out of three, meaning all of that is part of what he's building at Amazon. And again, one of the phrases he uses from that very beginning letter is and we are building something great here, something we can tell our grandchildren about. And that's always struck me. This was 1997. He didn't have grandchildren, but he was already thinking long term so that infused a lot. And you'll hear a lot of stories, certainly from former employees, certainly in those early days where he was demanding. He kept pushing the envelope. He kept focusing on what he thought was important. And what's really interesting to me when I read comments of employees leaving and this is over the years now. It's an acknowledgement of yes, it's a hard place to work. I probably learned more at Amazon than any place else. So it's that interesting. Is it a dichotomy or offsetting? It's hard and demanding and he brought the best out in me. That's my interpretation of it.

Clinton Henry: So I mean is it almost like they, I'm going to push you very hard, but we're working towards a larger purpose that you're aligned to. Therefore, you're willing to be pushed. Is that fair? Because I think people leave I would say overall pretty positively.

Steve Anderson: Correct. I would say that, too. And I would say more of the negative stuff you hear about employees is coming from the fulfillment centers, the warehouses and that not necessarily the programmers, the office workers. I am making a distinction there. Warehouse work is really hard and there's no getting around it. I've had the opportunity to be in and tour two different fulfillment centers. It's an amazing operation and lots of pressure on getting it done and getting it done fast. But that also goes back to his mindset of customer obsession. I mean, everything at Amazon is focused on the customer first. Over the last several years, I've started asking the question, can customer obsession go too far? And that's kind of the fulfillment center pushing, pushing, pushing more productivity faster, faster. But that fits three customer pillars at Amazon, wide selection, low prices and fast delivery. Well, if you're going to have fast delivery, you've got to have people working really fast. I would say in his last letter, I'll go to the other end. The last letter is as CEO, he actually added two new leadership principles. Now, these were things that they put together over the years that are really the guiding principles at Amazon. But the two that they added was. Amazon will be the best place for an employee to work. And the second would be, it'll be the safest place to work. And so I think there was an acknowledgement of maybe too much focus on speed and not enough focus on employee well-being and safety. Those are typically the push backs that you hear when you certainly talk about employees and disgruntled employees and things like that there. I don't have the facts to back this up. My gut is the vast majority of those are coming from the fulfillment center operations.

Clinton Henry: Yeah. I think that makes sense. You talked about Amazon. You talked about speed. I think one of the things that when I think about Bezos as leader is his ability to make decisions relatively quickly.

Steve Anderson: Yes.

Clinton Henry: And can you talk a little bit about the importance of doing that as a leader, but also what was his process was.

Steve Anderson: Again from Bezos perspective, as a company grows, they tend to get more bureaucratic, meaning there tend to be additional layers of bureaucracy or management or however you want to phrase that. And he says the problem with that is it slows down decision making, which slows down growth. And again he goes pretty extensively in one of his letters into his decision making philosophy. And he actually wasn't very creative in naming them, but he calls them two types of decisions. Type one are decisions that are really big for the company. I call them Bet the farm types of decisions. We're going to sell. We're not going to sell. We're going to go into this country. We're not going to major impact and decisions that are harder to reverse. And what he says is those decisions you want to make slowly, carefully, with as much data as you can possibly gather and with your gut intuition. He says the problem is as the company gets bigger, they tend to focus on those kinds of decisions, not the type two decisions. So for him, type two decisions are almost just the opposite. They're not bet the farm. They have maybe smaller impact on the company. And he says those decisions should be made by the team of people who have the ability and capability back to hiring the best. If you hire the best, give them the freedom to do what you hired them to do. And he said the reality in type two decisions is if you make a bad decision, you can reverse it relatively easily.

And he describes it as walking through that door of whatever that decision is. Looking around and saying, nah, this is not what we thought it was going to be. And literally, he describes it as turning around and walking back through the door. So it's either pivoting to another decision, it's actually stopping it. And you see Amazon stop stuff all the time. It goes back to my first principle, which is encourage successful failure at Amazon. Again elsewhere, Bezos says Amazon is actually the best place in the world for an employee to fail because he understood and built into the culture of the company the fact that we have to experiment in order to invent on behalf of the customer his phrase. And when you experiment, you're going to fail. Because if you know the experiment is going to work, it's not an experiment. And so that concept of experimenting, testing, inventing, which then allows innovation, and I would say that's where I'd probably go against a lot of the thinking right now, which is, Oh, we've got to innovate. And I'm thinking, no, you've got to invent. You can innovate after you invent something new and look at Amazon and how they've invented literally entirely new industries and they keep doing it. So there's something there that allows them to be able to do that.

Clinton Henry: So you said two things that are fascinating me and a lot of them too, that I want to call out. First off, for the type two decisions. It's really about giving your people and your team the autonomy to basically make those decisions themselves.

Steve Anderson: Yes.

Clinton Henry: And then the type one decisions should be basically escalated up to someone who is paid to focus on those sort of big, big problems. So empowering that local team who are the experts because they deal with it day to day. It's better than giving the CliffNotes to some executive often.

Steve Anderson: Yeah. And if you focus on hiring high quality people, not just people to fill a job, which is a different mindset then you've hired them because they're smart. So let them be smart. And at Amazon, a small team is literally defined as a two pizza team. So a team is no bigger than what two large pizzas can feed them. Because again a small team, you don't have communication as much communication errors. You don't have to inform other teams about you're responsible for this piece of the project. Now that may mean there are 200 teams all focused on this project, but each with a different piece, but each making their own decisions for that part of the project. And again, if they make a mistake, it's not career shattering. It's actually expected. And again, that's a mindset that's very different than most businesses that I have come across.

Clinton Henry: So that was the second thing that I wanted to talk about. It was embracing a failure that I think Bezos and Amazon, he's basically influenced that culture to embrace failure and expect it. Why is that so unique within that organization versus others?

Steve Anderson: Well, again, I have to point back to Bezos. And a lot of it is how we grew up. So again, I won't go into all the detail. But one of the important aspects when he was younger is he spent his summers from when he was 6 to 16. So ten years every summer on his grandfather's ranch in West Texas, which is close by the way to where Blue Origin has their rocket launching place. So there's an interesting connection there of his love for that part of the country here in the US. The ranch was in the middle of nowhere, so his grandfather taught him to be self reliant and to be able. And he said, again, he's describing this as we couldn't run to the lumber yard or whatever. We had to make do with what we had. And so I think from a very early age, he describes himself as a garage inventor and I think all of that was part of what molded him into this idea that, no the first time I built this, it didn't work. But then I learned from what didn't work. And then I was able to iterate appropriately to get something that actually works. And I don't know if he would say it that way, but for me looking on the outside, he built those muscles and they became stronger. That failure is a part of invention. You can't escape it. And he reiterates that numerous times throughout the letters that he writes.

Clinton Henry: As Bezos has stepped away from the business more. I think one of the impressive things while he was there was his ability to scale the environment and scale helm. And have a bunch of little [Bezos'] running around with the same mindset. I think that's good. He hired and trained in that regard. But now that he has stepped away, how has the organization done without helm at the helm of keeping that? Have you noticed anything? In your research, what have you found?

Steve Anderson: Well, I've been watching so it's been a couple of years now that Andy Jassy took over as CEO. I would say he's at least peripherally involved. He's still executive chairman of the board. So obviously there's some connection there. And very close with Andy Jassy. Andy Jassy is the one responsible for building AWS, Amazon Web Services and Andy Jassy was Bezos, the correct phrase is technical consultant. But shadowed Bezos for probably at least 12 to 18 months before he stepped into that role and in AWS as that was building at that point. So Jassy is very steeped in Bezos-isms, if I can say it that way, but or mindset so I don't think that transition is very different. But he's not Bezos. But here's what I would also say and this is a friend of mine here locally has talked about, ultimately for a CEO, there's no success or no ultimate success without succession meaning that's kind of the ultimate job of a CEO is to replace themselves and make that transition successful and I see no indications right now of Bezos meddling in Andy's wheelhouse right now is how I would say it. And I think because he again embraces this idea of successful failure and he's got to make his own mistakes and learn from them.

Clinton Henry: Yeah.

Steve Anderson: So I think there's a combination of things there. But for me, that idea of identifying somebody early and again how does that apply to other businesses. Well, identify somebody early. Make sure they have the training, the experience, the breadth of operations or whatever that looks like for your business. And then let them go and make their own mistakes and try as much as possible not to be overshadowing them or second guessing them or any of those. And like I said, that could be happening, but I'm seeing no indications of that right now.

Clinton Henry: Yeah, I do not think Jeff Bezos is like Bob Iger, who undoubtedly did that. I think the idea and this is not just for CEOs, I think any leader and any manager, one of the most important jobs if you want to move up in the organization or move out is to find and train your backfill.

Steve Anderson: That's right.

Clinton Henry: And I think that that comes across in every industry and every level of an organization, not just executive leadership.

Steve Anderson: Yeah.

Clinton Henry: And so that's a skill set too. So I think it's very, very insightful.

Steve Anderson: Yeah, I totally agree with that.

Clinton Henry: Yeah. So Steve, I'm so excited that I got a little bit of Jeff Bezos insights from you. I really think everybody should read the book. I think it's a wonderful read. I learned so much from it. And I'm really pleased and honored that you spent your valuable time with us today.