Over the past 30 years, I have led numerous teams through transformations in technology, from major digital native brands like Amazon and Nubank to century-old incumbents like Citi and Coca-Cola. Every one of these companies has faced the same noise and the same challenges. The greatest takeaway has also been the same: It is never about picking the right tool but how you drive transformation through setting ambitious long-term goals and supporting them with a fail-fast culture.
With a market cap today of $1.81 trillion, Amazon was a first mover at the dawn of the consumer internet. However, it would never have succeeded without constant evolution. With its scale and complexity, the Amazon experience offers instructive insight into how to lead companies through transformation.
In the early 2000s, Amazon was moving from monolith to microservices when then-CEO Jeff Bezos sent what became known as “The API Mandate“: Thou shalt work through APIs or leave. By standardizing communication across the company, Bezos was breaking Amazon’s architecture into decentralized services with a long-term goal to make the company more agile, scalable and rapidly innovative across its growing portfolio of products and services. It was the memo that set the stage for identifying our long-term vision.
Laying The Foundation For Growth
In 2006, we were only just beginning to think about how to build the AWS cloud. We were implementing agile methodologies, cross-functional teams and single-threaded leadership as part of the massive transformation required to unblock Amazon’s potential. When I took over the global payments division, the main issues I faced were poor business growth and slow expansion.
The time to onboard local payment methods was blocking company goals, but individual units only cared about their own revenue and couldn’t see the broader impact of payment inefficiency. Operations costs were too high, and the culture was suffering. We grew through acquisition, so disparate systems left everyone unsatisfied. Builders couldn’t build due to technical debt, attrition was high, and hiring was low. That was the state of play.
So, with everyone pursuing their own goals, we had to establish a clear direction. After collecting feedback, I put a six-pager in front of Bezos that stated the top two business priorities: getting us back to growth and building a meaningful payments business. These priorities were deliberately long-term and strategic. They became our first “big hairy audacious goals” (BHAGs), which, by definition, had to redefine how we did business while still being achievable.
Separating The Signal From The Noise
Companies face constant “noise” in the form of new technologies, strategies and trends vying for attention. An overabundance of trackable data points and metrics can also obscure how well you are executing strategy. This is where BHAGs come in because they are a tool to help businesses filter the signal from the noise of the strategy. As a business leader, when you set BHAGs, remember they must be game-changers—ambitious enough to drive transformational change.
For example, in 2016, Bezos announced Amazon’s goal to become “Earth’s most customer-centric company”—not just in their industry or ecosystem, but as an entire company constantly striving to find new ways to better serve customers. Back then, however, the biggest BHAGs centered on freeing the business from payment constraints.
So, every fall, we did annual planning where we would forecast and budget for the next year as part of our five-year directional plan. Our priorities and goals were established as OKRs (objectives and key results). By breaking down BHAGs into goals that were smart, specific and trackable, we had a more accurate measure of progress toward our strategic objectives. In our payments business, for instance, the BHAG was to create the lowest cost of payments in the industry, but the annual OKRs were to lower the cost of payments by specific amounts by the end of each year.
When businesses know what long-term success looks like, it can drive clarity and frequent meetings then used to keep everyone accountable. However, while OKRs are very concrete, the hardest part of digital transformation is something more abstract—changing people’s behavior to support that long-term vision.
No Transformation Without A Living Culture
The 21-90 rule says it takes 21 days to make a habit and 90 days to make a permanent lifestyle change. So it requires constant reinforcement to establish and perpetuate culture across an organization of 3,000 people. To make sure employees are supportive of change, have a clear communication plan that embeds culture in company rituals and uses learning moments to reinforce those values.
In Amazon’s case, we started small in the spirit of quick wins and optimized group by group. Daily, everybody saw the data and adopted best practices. Monthly, this inspection mechanism brought the business together. Annually, we could better forecast and predict our biggest costs. The more people see and hear the company’s values, the more they internalize them, and they become the culture.
In a 2018 shareholder letter, Bezos wrote, “As a company grows, everything needs to scale, including the size of your failed experiments.” That means implementing quick feedback loops to determine whether to keep moving forward on a project or adapt your approach. As much as tools like continuous integration and continuous delivery (CI/CD) can keep a company agile, leaders need to foster a culture that builds the trust to fail fast, figure out why and keep moving forward.
Innovation For Lasting Transformation
At Amazon, we did what we set out to do. Not only did we unblock the company, but we became recognized for our culture and built a meaningful payments business along the way. We invented things like “shop with points,” digital currency and foreign exchange capabilities. But it didn’t end there. Through its mechanisms and rituals, Amazon maintains a holistic alignment of its people, operations and architecture—driving the company forward, even as the world endlessly evolves. And by applying these insights, you can, too.