Amazon executive Doug Herrington can sum up the formula for his company's rapid innovation in ten rules. Herrington, a 1988 Princeton alumnus, shared those rules, along with reflections on his own career journey, during a talk on campus Nov. 30.
Students, faculty, staff and community members packed McCormick 101 to hear Herrington, senior vice president for North America retail at Amazon, deliver a G.S. Beckwith Gilbert ’63 Lecture, an event co-sponsored by the Keller Center for Innovation in Engineering Education and the Bendheim Center for Finance.
Cornelia Huellstrunk, the Keller Center’s executive director, introduced Herrington by saying that Herrington's talk is exceedingly timely. "It seems that not a day goes by without there being coverage of Amazon in the news or Amazon touching our lives personally," Huellstrunk said, noting discussions around her own dinner table about the company's Amazon Prime service and its recent purchase of Whole Foods. Huellstrunk welcomed "an inside view into a company that we all hear so much about and interact with so frequently.”
Herrington said the grounding philosophy of Amazon's ten rules of innovating focuses on taking risks – being willing to fail, learning from failures, saying yes to ideas that seem destined to fail, and applauding teams that put in the effort even if they do not bring their innovations to market are what Amazon is all about.
The following paraphrases Herrington's points:
Rule #1. Start with the customer and work backwards
This first rule is the seed of Amazon’s innovations. Instead of running numbers or building complex spreadsheets, Amazon looks to understand the customer’s needs first. An innovation team will create a one-page press release that imagines how the idea would be announced when ready for launch. If the press release is deemed compelling and exciting, the team is encouraged to move forward and to develop the innovation further with the mindset that the numbers will work themselves out.
Rule #2. Be eager to invent and pioneer
Amazon CEO Jeff Bezos ’86 loves pioneers. He feels strongly that the current climate of technology plus creativity opens limitless opportunities. Supporting irrational long-shot ideas is the most rational way to ‘strike gold’ in today’s market.
Rule #3. Focus on the long term
Innovation takes time, a lot of time. Amazon believes that if an organization focuses on innovations that can be produced in the short term an organization will make only incremental changes. Most companies want to support innovations that will produce results in one to three years. Amazon embraces a five- to seven-year project timeline and thus is able to capture a market that is not overly crowded.
Rule #4. Bias towards the institutional ‘Yes’
In many corporate cultures, it just takes only one senior executive to shoot down an idea, setting up a risk-averse culture. Amazon embraces a different approach that requires only one yes from a senior executive to begin investigating an innovation idea.
Rule #5. Create programs, not projects
The term "project" have a short-term connotation that can limit resources and discourage a company’s willingness to take risks. Once an idea has passed through the one-page press release stage, Amazon invests "two-pizza team," i.e. a team that can be fed on two pizzas. Gathering a team and creating a program shows an organizational level of commitment that makes the team feel valued and energized.
Rule #6. Assign single-thread leaders
Single-thread leaders work on only one program at a time and hence are able to devote all of their energy to developing the idea and working towards its success. Having an individual with commitment to only one innovation can help keep the team engaged and motivated.
Rule #7. Be stubborn on the vision, flexible on the details
Innovating can be controversial, so it’s extremely important to have interest and passion. Amazon encourages its innovators to commit, think, and rethink their innovations. Amazon's system of showing offers from multiple sellers, including competitors, on the same page is an example of an idea that took multiple iterations to succeed. Amazon's grocery business is currently evolving in a similar way.
Rule #8. Be willing to be misunderstood
Amazon embraces an innovation culture in which innovators are egged on to keep their eyes on the vision even if others don’t immediately understand or support the idea.
Rule #9. Be willing to fail but don’t repeat your mistakes
Taking a swing at a bold new idea and then discovering the market is not there or the technology does not work is not a failure of the team. However, it is essential to learn from mistakes. Amazon is extra careful to avoid penalizing employees for having worked on failed projects, which would promote a risk-averse culture. Many members of a team that developed Amazon's failed mobile phone venture received promotions and went on to develop Amazon Echo. In an example of learning from mistakes, after Amazon failed to develop a business model in China, Bezos said, “We are not going to repeat our failures in China; we are going to have all new failures in India.”
Rule #10. Commit to operational excellence
Innovation takes a long time so having pride in what you do on a daily basis is essential. Details matter. Amazon does not only value the employee who comes up with a great innovative idea, but instead sees value in the ‘builders’ and ‘craftsmanship’ that it takes to bring ideas to life. Amazon prides itself on having developed a “builders” culture.
Herrington also shared insights from the innovative path of his own career. On graduating from Princeton, Herrington began to plan his career: He assumed he would get a Ph.D., work for the government, direct his talents to public policy, and then head to academia, maybe even returning to Princeton as a member of the faculty.
Instead, what he expected would be a quick stint as a consultant wound up lasting ten years. Along the way, instead of a PhD, he earned an MBA from Harvard, and realized that his fascination with retail consumer packaged goods and supply chain management might change what he envisioned as his career path. Herrington said a key change come when he had the opportunity to leave his consulting firm, where he was a partner, to take a job as director and product manager at an unestablished company. He said he took the risk based on things that captivated him, with the understanding that if he failed, the skills and experience he would walk away with would be of essential value to him and his future career. In the end, that venture and subsequent one, for which Herrington was chief executive, failed.
"I learned I had a terrible crystal ball," Herrington said of his career planning. He told audience members that they too are unlikely to foresee now the technologies and businesses that will be making a difference later in their careers. "Having a good career was not about building a better plan it was about building better opportunities and making better decisions when the opportunities came along," he said.
He encouraged current students to choose opportunities that build more skills. "When I look back, every new opportunity that came to me was because I had acquired yet more and different skills that expanded the surface area of the types of jobs I was offered."
A good career comes from building skills, taking risks, paying attention to opportunities and making good choices in fields that truly interest you.
Evaluate not how happy you're going to be if this thing is a wild success; evaluate where you're going to be if it's a big failure," he said. "Are you still going to be walking away with something valuable? Is it going to teach you something or give you a new skill or experience that's going to give you new opportunities down the road?"
"Although it sounds conservative, it's given me the confidence to make bigger changes and take bigger risks in my career because I have this believe that the upside is great but the downside is pretty great as well."
Herrington has served as Senior Vice President of North America Retail at amazon.com since 2015. North America Retail includes Consumables, Fashion, Amazon Fresh, Amazon Business, Consumer Electronics, Physical Media, and Retail Systems, as well as various other businesses. Herrington joined Amazon.com in 2005, leading the Consumables business and launching Amazon Fresh, Prime Pantry, Amazon Mom, Baby Registry, Subscribe and Save, and more. He has extensive experience in consumer retailing, ecommerce, and marketing. Prior to joining Amazon.com, he was founder and CEO of KeepMedia, an online content retailer. He was also a member of the executive team at Webvan, where he helped design, build, and grow the innovative online grocery retailer. Before getting hooked on startups, Mr. Herrington spent 10 years at the management consulting firm Booz Allen & Hamilton, where he was a partner in the firm’s Consumer practice. Mr. Herrington holds a BA in Economics, Summa Cum Laude, from Princeton University and a MBA from Harvard Business School.