Customer-Centric Leadership: What Can We Learn From Jeff Bezos?

Jeff Bezos and Amazon have been in the news courtesy of Bezos latest letter to shareholders. If you have any interest in what constitutes a customer-centric orientation then I throughly recommend that you print out this letter and read it. If you are up for creating a customer-centric organisation then I recommend that you read this letter every day.

Annette Franz on Jeff Bezos and Customer Experience

Annette Franz over at CX Journey has a written an enthusiastic post referring to Jeff Bezos as a CX dream come true!. I recommend reading it, and I share one particular part of her post with you:

As a leader, Mr. Bezos shows that he’s both the customer and the employee champion. Reading through the 2012 letter again, the following traits and qualities come to mind – all of which are certainly descriptive of a customer-centric culture:

  • Trust
  • Transparency
  • Best interest of customers
  • Integrity
  • Honesty
  • Not being opportunistic
  • Customers ahead of shareholders
  • Innovation
  • Passionate
  • Humble
  • Proactive
  • Delight

Do any of those describe your organization’s values and culture?

Bruce Temkin on Amazon and the customer-centric blueprint

Bruce Temkin says that Bezos letter describes Amazon’s customer-centric blueprint.  Bruce picks up on Bezos strategy of making investments and sacrifices today (to benefit customers) knowing that some of these will pay of in the long term.  There is one particular paragraph from Bruce’s post that I share with you here as I say it goes to the heart of the customer-centric orientation (bolding is my work):

Bezos understands the value of Amazon’s most critical asset, customer loyalty, which I’ve defined as the willingness to consider, trust, and forgive. That focus is what put Amazon.com on the top of the retail sector in the 2013 Temkin Experience RatingsGreat leaders focus on building that customer loyalty asset with the knowledge that it will generate the best returns for all stakeholders in the long run.

My take on Jeff Bezos, Amazon and the customer-centric orientation

I say that the core of authentic customer-centricity is a relentless ongoing commitment to creating compelling value for customers. What does Jeff Bezos say?  Here is an extract from his 1997 letter (highlighting is my work):

From the beginning, our focus has been on offering our customers compelling value….. we set out to offer customers something they simply could not get any other way, and began serving them with books. We brought them much more selection than was possible in a physical store, and presented it in a useful, easy-to-search, and easy-to-browse format in a store open 365 days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience, and in 1997 substantially enhanced our store. We now offer customers gift certificates, 1-ClickSM shopping, and vastly more reviews, content, browsing options, and recommendation features. We dramatically lowered prices, further increasing customer value. 

But we are not in 1997 and Amazon is now the gorilla of the online space not an upstart, a revolutionary.  So lets take a look at the present situation.  I say the real test of authentic customer-centricity is what you do when you have arrived, when you dominate the marketplace.  I have worked with many large successful organisations. Again and again I have seen these organisations ‘squeeze’ the customer and take ‘advantage’ of the customer’s trust or the customers weakness to maximise profits.  Has Amazon fallen into this trap?  Here are two paragraphs from the April 2013 letter:

When you pre-order something from Amazon, we guarantee you the lowest price offered by us between your order time and the end of the day of the release date…….. Most customers are too busy themselves to monitor the price of an item after they pre-order it, and our policy could be to require the customer to contact us and ask for the refund. Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust.

In 2012, AWS [Amazon Web Services] announced 159 new features and services……. AWS Trusted Advisor monitors customer configurations, compares them to known best practices, and then notifies customers where opportunities exist to improve performance, enhance security, or save money. Yes, we are actively telling customers they’re paying us more than they need to. In the last 90 days, customers have saved millions of dollars through Trusted Advisor, and the service is only getting started. All of this progress comes in the context of AWS being the widely recognized leader in its area – a situation where you might worry that external motivation could fail. On the other hand, internal motivation – the drive to get the customer to say “Wow” – keeps the pace of innovation fast.

Why has Amazon bucked the trend here?  Why is Amazon not exploiting its dominant position?  Why is Amazon not extracting value from its customer relationships to maximise short-term profits and drive up the share price?

My answer is that Bezos is not playing the profit maximisation game.  I say that he is playing “maximise service not profits” game and as such he has built a culture and management doctrine that drives the appropriate thinking and behaviour.  Here’s what Jeff Bezos say in his l2013 letter:

One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader.

I say there is value in simplicity. I say that there is value in exceeding customer expectations. I say that one of the best ways of exceeding customer expectations is to give customers more than they expect. I say that customers expect companies to play dirty and take advantage. I say a sure route to delighting customers is not to do this and instead treat people right.  What does Jeff Bezos say?

To me, trying to dole out improvements in a just-in-time fashion would be too clever by half. It would be risky in a world as fast-moving as the one we all live in. More fundamentally, I think long-term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.

In amidst all this content it is easy to miss what really matters: the context.  So let’s just take a look at the context.  Between the 1997 letter and the 2013 letter, a span of 15+ years, there has been consistency:

  • Leadership: Jeff Bezos continues to be in charge
  • Focus: creating compelling value for customers
  • Strategy: take calculated risks, innovate, invest today to create value for customers and look for payoff in terms of customer loyalty and market leadership in the longer run
  • Management doctrine: the fundamental pillars of the management doctrine are set-out in the 1997 letter.

Posted on April 23, 2013, in Case Studies, Culture, Customer Experience, Customer Loyalty, Customer Philosophy, Customer Service, Customer Strategy, Digital / Ecommerce, Leadership / Change / Transformation, Management and tagged , , , , , , , , , , . Bookmark the permalink. 7 Comments.

  1. Maz,

    You say that Bezos is not playing the profit maximisation game. I say that he is playing “maximise service not profits” game

    I disagree, I think he is playing the maximise profits game, I just think he is playing it over the long term, not the short term, and is playing it smarter than his competitors.

    James

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    • Hi Maz,
      I would have to agree with Mr Lawther on this one. I think the difference is that he has firmly put his customers at the top of his list of priorities and not the markets and shareholders with their short termism and strive for quarterly improvements.

      Adrian

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    • Hello James and Adrian

      I find myself in agreement with you.

      Maz

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  2. Maz,

    Thanks for including an excerpt from my post here. I love how you wrap it up by highlighting consistency over 15+ years. That consistency, that unwavering commitment to customers, at all costs, has proven to be a successful formula for Jeff Bezos and Amazon.

    And yes, he is maximizing service (maximizing his focus on the customer), which, in turn, maximizes profits. Seems like a good definition of customer-centricity to me.

    Annette :-)

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    • Hello Annette
      So great to hear your voice again. As for thanks, it is welcome and not necessary: you wrote a great post and it is worth sharing.

      Consistency. Yes, it makes a huge difference. Imagine what might have happened if there was a no CEO and a new strategic agenda every couple of years.

      All the best
      maz

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  3. Hi Maz The purpose of creating a customer centred organisation is and always has been to build a business that is sustainably successful in financial terms, so no problem at all with the profit that results from good service.

    But to what extent is the customer-canonisation of Jeff Bezos going to be delayed or even derailed by the way Amazon gains competitive advantage, bypassing local conditions of business and avoiding putting money back into a community from whose people it takes so much money?

    Because it can, being global and with access to tax advisory services? because it has shareholders? This is the norm for multinationals, but does it not confound our view of several of the dozen traits and qualities you attribute to Amazon? It has affected my attitude and behaviour, even though a charity with which I am involved gets a kickback from my transactions.

    all the best Richard

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    • Hello Richard

      I totally get where you are coming from.

      If I hear you correctly then you are making the distinction between ‘conscious capitalism’ (the most recent renaming of stakeholder capitalism) where the needs of all the stakeholders are taken into account and customer-centred organisations. John McKay the CEO of Whole Food Markets has written about ‘conscious capitalism’ and it resonates with me.

      As for your attitude towards Amazon, it occurs to me that you and I share the same attitude. I used to love shopping with Amazon. Now when I do shop with Amazon my conscience kicks in and leaves a bad taste. Yet, I do buy from Amazon: because it is easy, because it works, because I get a good price….

      I hope all is well with you. And I will give you a call to catch up.

      Maz

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