Last Tuesday Jeff Bezos wrote his annual letter to shareholders. From time to time I write about my admiration for Bezos and reading the letter I was reminded why. First there is his success, in 2015 Amazon became the fastest ever company to reach $100bn in annual sales and AWS is now reaching $10bn in annual sales, but more important is the way he goes about it.
A good portion of the letter is dedicated to Amazon’s culture and the principles behind it. Most companies think about values and culture, but also thinking about the principles that underpin the values is powerful.
Investopedia defines corporate culture as:
the beliefs and behaviours that determine how a company’s employees and management interact and handle outside business transactions
Many startups work hard to create a culture that will bring about business success, and one of the tools they use is to publish a list of values which encourage certain behaviours. At Forward Partners we have seven values designed to shape a culture that will make great investment decisions and deliver great help to our portfolio companies – e.g. seeking, sharing, and retaining knowledge, making good decisions, and acting with courage.
The interesting thing about Bezos’s shareholder letter is that he talks about five principles that underpin the culture at Amazon:
- customer obsession
- eagerness to invent and pioneer
- willingness to fail
- patience to think long term
- taking of pride in professional excellence
Then in addition Amazon has what they call their leadership principles, which read much more like a traditional set of company values:
- Customer Obsession
- Invent and Simplify
- Are Right, A Lot
- Hire and Develop the Best
- Insist on the Highest Standards
- Think Big
- Bias for Action
- Vocally Self Critical
- Earn Trust of Others
- Dive Deep
- Have Backbone; Disagree and Commit
- Deliver Results
Amazon tells prospective employees that Amazonians use these principles “every day, whether they’re discussing ideas for new projects, deciding on the best solution for a customer’s problem, or interviewing candidates”.
Bezos’s five principles have been the same since the start of Amazon, but I would bet the 14 values have evolved over time. Certainly that’s the way it works at most companies.
Most companies and entrepreneurs I know find it difficult to define the values of their company. It’s tough because they need to both reflect the reality of the business and encourage improvement in behaviours. One of the main reasons that values change over time is that values often reflect gaps between existing behaviours and where the company would like to be, and those gaps change over time.
I’m thinking that taking the time out to define the principles that underpin a culture is a good first step before defining and/or updating values. Principles talk to how a business should be rather than how people should behave and hence should be quicker and less contentious to draft. Values should then aim to deliver the principles, but in the unique style of the company in question. We’re planning to revisit our values at Forward Partners later this year and we will definitely investigate the approach of starting with principles.