How product managers can work backwards to amazing products
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To be a better product manager, it is worthwhile to examine organizations known for their product management capabilities. Amazon is such a company.
In this episode we are joined by not one but two product professionals who built much of their career at Amazon—13 and 15 years. They are Colin Bryar and Bill Carr. They document the process Amazon uses to create successful products in a book titled Working Backwards: Insights, Stories, and Secrets from Inside Amazon. And, they are here to share their insights with us.
Summary of some concepts discussed for product managers
[2:42] What makes Amazon so innovative?
Innovation is a necessary part of everyone’s job. Our 14 leadership principles are woven into the DNA of everyone who works there and every process in the company, and six of them are directly related to innovation:
- Customer obsession—people wake up every day trying to figure out how to delight their customers.
- Invent and simplify—leaders expect invention and innovation from their teams, and they’re always finding ways to get better.
- Leaders are right, a lot—they seek diverse perspectives and try to prove themselves wrong to make sure they have the right thought.
- Insist on the highest standards—we’re continually finding ways to get better.
- Frugality—constraints breed innovation.
Necessity also drives Amazon to innovate. Amazon operates at a scale that often can’t be supported by any commercial solutions, so they have to create solutions themselves. Amazon accepts failure as part of invention. If you’re not failing enough, you’re not inventing enough. When we started working at Amazon in 1998 and 1999, Amazon was an ecommerce business when ecommerce was completely new. We were inventing a whole new form of commerce from the beginning. The people who found it fun and exciting to invent something new thrived. As the company progressed, that mindset pervaded the company and drove them to move outside ecommerce. Also, some of Amazon’s raw materials like computing power, storage, and bandwidth, get cheaper over time. We use those advancements to invent new things, like scanning and storing every book in the world.
[7:47] How did you see customer obsession encouraged at Amazon?
Remarkably, Jeff Bezos and Amazon figured out how to create reinforcing processes to make customer obsession part of people’s jobs. Weekly business review meetings included a section called Voice of the Customer. At these meetings, a leader of the customer service group brought forward a customer problem that Amazon didn’t have a good solution for. The senior leadership assigned people to tackle the problem and create a solution so it never happens again. Another process, the COE (Correction of Error) process, tasked teams with diving deeply into the details of a defect, figuring out why the customer had the problem, and creating a detailed plan to fix the problem. Unlike most companies, Amazon created methods for leaders to programmatically seek out problems and solutions.
[11:40] Who is responsible for innovation at Amazon?
Everyone. Innovation is the lifeblood of the company. We don’t have a chief innovation officer, because that would be like having a chief breathing officer—everyone has to innovate, so you don’t assign that task to one person. We have found the best innovations come from people who are closest to working with the problems at hand, rather than having a management team several levels removed from the problem dictating how to innovate. Many of our innovations are small, and customers never see them, but they make Amazon work more efficiently and allow us to provide lower prices for our customers. In a lot of companies, people think of innovation as a product function. At Amazon, it’s a job for everyone, not just the product organization.
Amazon celebrates innovation. Employees receive awards for finding ways to cut costs, going above and beyond to serve a customer, and filing patents. The awards have no monetary value, but they’re some of the most prized possessions of people at Amazon. Everyone is expected to innovate, and everyone celebrates and recognizes innovation.
[17:37] What is Amazon’s Working Backwards methodology?
Working Backwards is Amazon’s method for developing new products and services. We start with the customer needs and work backwards from there. Most companies take a skills-forward approach, meaning they develop new products based on what they’re good at. Instead, we start with our customers’ needs. In 2004, we started thinking about how we could build an ebook service. If we had taken a skills-forward approach, we would have focused on expanding our ecommerce site, which was already working well. Instead, we focused on invention on behalf of the customer. We identified what the customer would need to read ebooks—a device to store ebooks, a paper-like reading experience, the ability to download more books, etc.
To come up with these concepts, teams use the PRFAQ process, which stands for Press Release and Frequently Asked Questions. As we were developing the Kindle, we figured out that we needed to start with the press release, which is normally at the end of the process. If you can write a press release that describes the product as something that people are going to jump out of their chair to buy, then you’ve got something. If it doesn’t sound exciting, then it’s probably not worth building it. We also answer FAQs at the beginning of the process. We describe the problems we’ll have to solve and potential solutions, answer questions the customer would ask, and answer internal questions like “How long will it take to build?”
Set aside the skills you have today, focus purely on what the customer needs and work backwards from the end of the process.
Working Backwards works for anything—small features, large businesses, or which country or industry to move into next.
[23:48] Where do ideas come from in the Working Backwards process?
The best ideas come from people who have a deep, fundamental understanding of the customer experience and the problem they’re trying to solve. Market research and focus groups can verify some hypotheses, but the best ideas come from looking for a unique solution to a customer problem. It’s an iterative process. Few, if any, products get the green light on their first PRFAQ process. The press release might be missing a few things that still need to be solved, the customer value proposition might not be right, or the product might not have a big enough impact to be worthwhile.
[25:23] Tell us more about the PRFAQ process.
The press release is an enticing description of the product. If you read the press release and aren’t saying, “Wow, the customer really wants this,” then there’s no point in continuing. After you’ve described something that’s amazing, the FAQs tell how it can actually happen. Your team should develop and review multiple PRFAQs for multiple ideas to figure out which ones are worth doing. You may write a press release that sounds exciting but realize once you delve into the FAQs that there is a problem that will prevent you from achieving your goal. Again, everyone is responsible for innovation—both the team that writes the PRFAQ and the people who read, comment, and make it better.
The FAQ is both a business case and a feasibility case. When we developed the Kindle, the press release said the device needs to always be connected to the internet. In 2005, when the PRFAQ was written, wifi was not prevalent, so we didn’t know how we could solve that problem. The team problem-solves and brainstorms to understand the constraints and challenges and solve them in a way that is economically viable.
[29:31] How do experiments fit into innovation at Amazon?
Amazon used a lot of experiments to figure out how to operate. The PRFAQ process took a while to develop. Through experiments, we also learned how to make our meetings more productive. Customers never see these innovations, but Amazon spends a lot of time and effort on innovation related to its operation. Amazon also does A/B tests to optimize the website. Another example is Amazon Fresh. Amazon knew if they wanted to be big in retail, they needed to sell food, because food is a big portion of overall commerce. We didn’t know how to do it, but we knew from customer feedback that we had to do it. We experimented with a small geography; don’t go big until you’ve cracked the nut. As another example, in the early 2000s, Amazon did a big longitudinal test for radio and TV advertising. They tested markets in Minneapolis and Portland for a year but found that it was too expensive to roll out that advertising nationwide. Twenty years later, Amazon has become the largest advertiser. When it was time, Amazon went back and used what they had learned from that early advertising experiment.
Jeff Bezos has a saying, “Stubborn on the vision and flexible on the details.” We know what the endpoint is, but we don’t know exactly what product will get us there. For example, it didn’t take long to figure out that shipping costs were one of the biggest barriers to customers’ purchasing from Amazon. We ran multiple experiments of different free shipping promotions, finally creating Amazon Prime. We were very clear on the vision—making shipping free—but we didn’t know what the right formula was.
Action Guide: Put the information Colin and Bill shared into action now. Click here to download the Action Guide.
“We innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent.” – Jeff Bezos
Thank you for being an Everyday Innovator and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.