Be­zo­nomics de­tails Ama­zon’s for­mula for suc­cess.

Inc. (USA) - - CONTENTS - BY BRIAN DUMAINE

Hav­ing con­quered on­line re­tail, Ama­zon ex­panded ex­pe­di­tiously into cloud com­put­ing, me­dia, and ad­ver­tis­ing. How? Be­zo­nomics—the ti­tle of my book and the term I gave to CEO Jeff Be­zos’s for­mula for suc­cess. It in­volves an ob­ses­sion with cus­tomers, a ma­nia for in­no­va­tion, and a long-term point of view. But more than that, Be­zos was first to deeply in­te­grate data, ma­chine learn­ing, the in­ter­net of things, and A.I. into his com­pany’s de­ci­sion-mak­ing process, en­sur­ing that Ama­zon would be driven by facts and rad­i­cal trans­parency—and in­cred­i­bly use­ful while work­ing from home under lock­down.

I was amazed at how deeply A.I. is em­bed­ded in the com­pany’s ac­tiv­i­ties.

Ama­zon was an early adopter of ar­ti­fi­cial in­tel­li­gence, and has in­jected it into al­most every as­pect of its busi­ness. For ex­am­ple, the com­pany used to con­duct weekly re­tail re­views with up to 60 man­agers. They’d ne­go­ti­ate what to buy, how much, and which ware­houses needed what amounts. Now, al­go­rithms do all that.

My big­gest sur­prise? Find­ing out that Jeff Be­zos was cloning him­self through­out the or­ga­ni­za­tion.

When I spent time in­side Ama­zon, I learned that Be­zos and his top lieu­tenants re­li­giously use a shad­ow­ing pro­gram that has promis­ing young man­agers fol­low their boss every day for two years. By the end, the “shadow” knows how Be­zos and his best ex­ec­u­tives think and has in­ter­nal­ized the Ama­zon for­mula to spread those ideas through­out the com­pany. The clone has also earned Be­zos’s trust and can now take on huge re­spon­si­bil­i­ties.

I was im­pressed by how quickly Ama­zon is mov­ing into new in­dus­tries.

Not many peo­ple re­al­ize that Ama­zon is be­com­ing a fi­nance com­pany. Last year, it lent $1 bil­lion to the en­trepreneur­s who sell their goods on the com­pany’s site. But those loans can be a wild ride for a small busi­ness. In 2016, one en­tre­pre­neur whose com­pany sells travel pouches bor­rowed $300,000 from Ama­zon, only to wake up one morn­ing dur­ing the busy hol­i­day sell­ing sea­son and find that the al­go­rithm had de­cided he was no longer cred­it­wor­thy and can­celed his line of credit. He never found out why his loan was pulled. (Luck­ily, he was able to ob­tain a loan from another Ama­zon seller and even­tu­ally dig him­self out of his predica­ment.)

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