What Amazon’s Jeff Bezos told me about How to Create a Business that Grows Faster & Bigger Than Any Competitor: Three Essentials to Success

Landing in Brazil this week, I peered out the window at the world’s largest river—the Amazon.  It’s home to the planet’s most diverse ecosystem and the greatest single source of oxygen and fresh water known to mankind. As I thought about my upcoming keynote at the International Forum of Management Strategy and Innovation, I remembered my late night interview with Jeff Bezos as snow fell outside in Davos, Switzerland, at the World Economic Forum.  Bezos wanted to create the world’s biggest and best supermarket, and the massive Amazon River was the only word that could even start to embody the size and scope of his ambitions to re-invent the retail world as we know it.

You’re a Cause AND a Company

“You can’t ‘persuade’ people to believe in you. You have to prove it with actual results. Sounds obvious, perhaps, but too often brands because they think they can just market your way to a real reputation. It’s steak AND sizzle, isn’t it!”  Bezos let out his trademark laugh/guffaw, and slapped his hand on the table.

That’s why Amazon was unprofitable for the first 5 years, and even though the investors were screaming for an exit, Bezos stayed the course and remained devoted to his vision. “It took us awhile to figure out how to get every detail right, and once you think you’re good at it, check again!  You’re dead if you think others around you aren’t getting better at it too!  We’re still figuring that out now with fresh groceries.”

This practice is a mix of “Fanatic Discipline” and “Productive Paranoia”.  I’d never suggest becoming so paranoid as to abandon your ambitions, but what our research showed about the most Admired, fastest growing companies is that they never took success for granted–their paranoia led them to be productive with daily improvements in a fanatically disciplined way.

As Bezos told me, “Amazon had to invent our brand for the first time. (And we’ve never stopped reinventing it!) In the beginning, we had to demonstrate we could actually beat (or match) conventional stores in three ways that you can’t fake.”

“Think about it, this was a time when people still doubted the safety of online purchases,” Bezos giggled. “Can you imagine a day when customers said, you do NOT have to provide these 3 essentials for long term success?

1) higher quality AND selection
2) faster delivery
3) greater value as the customer defines it — which is not always the cheapest product — but the one that meets or exceeds your expectations.”

“People don’t say: I wish you’d deliver slower and charge more!” Bezos smiled.

I celebrated Jeff Bezos’ never-ending ambitions — from Amazon’s start as an online bookstore to becoming the world’s largest retailer — during my keynote at an Expo2020 Innovation event in Dubai this week. I was honored to be there with my clients from Schwab, Coca Cola, Cisco, Hershey’s, Virgin, Rolls Royce and others.

One of the most critical distinctions between growth companies like these and other companies is the difference that their leaders make in creating and sustaining a growth culture. Jeff Bezos did it with humor, consistency and an undying devotion to learning from customers that continues to drive Amazon’s growth today. In contrast, Steve Jobs lead with the inspiring brilliance of an inventor and the intimidating emotional demeanor of a mad scientist! No two organizations or leaders will have exactly the same recipe for success, but those who encourage productive paranoia and build a culture of listening to and learning from customers are able to sustain growth and achieve lasting success.

For more insights, tune in to the podcast of Mark’s Oct. 22nd interview on the Dubai Eye “Business Breakfast” radio news show. http://www.dubaieye1038.com/business-breakfast-podcasts/

How Sir Richard Branson Wins Loyalty – the 3 R’s of Trust…

There are three things that galvanize trust. In our research, we identified 37 different variables of trust, but three things stand out more than the others. We call them the 3 R’s of Trust – Responsibility, Reliability and Responsiveness. When something goes wrong – as things inevitably do in any business – we have to be RESPONSIBLE for it. We have to step up, take responsibility and then take action to make things right. RELIABILITY – An admired brand should have an ‘implied guarantee.’ Customers expect high quality products, products that a company will stand behind, so RELIABILITY is key to trust and customer loyalty. A new PhD at Stanford did a study on the difference between “guilt” and “shame”. People who expressed “guilt” when they made a mistake were the first ones to get up and do something about it. They are the first ones to make something happen, make it better, be responsible. This impulse to take action is the third key factor in trust – RESPONSIVENESS. Shame, on the other hand, is saying, “Circumstances were out of my control,” or, “It was out of my hands…it’s her fault…or their fault”. Shame is the “blame game”.

From the outset, when Richard Branson suggested that he was going to start an airline, people didn’t believe that he would succeed. Branson said that his Board of Directors was “apoplectic” when he set out to start Virgin Atlantic, but in his heart he knew that someone must be able to make traveling on airlines a more pleasant experience.  On the first flight of Virgin Atlantic Airlines, Sir Richard Branson had the plane packed with dignitaries, press and VIP’s. The plane had just arrived from Boeing, hadn’t gone through full inspection and less than a minute into the flight one of the engines exploded with a bang and the plane had to make an emergency landing.

A couple of days later, Richard’s banker appeared at his home and told him that he was pulling all of the funding and going to put the airline out of business. “I just shook,” Branson said, “I couldn’t believe he was willing to put 5,000 people out of their jobs and out on the street so quickly.” When the crisis first hit, Richard said that he put all of his energy into finding out who to blame – but quickly realized that no matter how much he blamed the banker or the explosion or anyone else, he still had to deal with the issue. As a leader, your top priority has to be to solve the problem – to accept the guilt and try to save the day. So he focused instead on setting things right and finding the best solution.

Leaders who respond with a sense of guilt were more prone to be admired and maintain long term success. They are the ones who walk the walk when they say “the buck stops HERE!” No one expects you to be perfect as a leader or a team member; in fact many people are just waiting for the boss to screw up so that they can take them down a notch. The difference between Good and Great leaders is not perfection – it’s a commitment to finding solutions without focusing on blame. Blame won’t solve a crisis. But, if you dedicate yourself to being responsible, reliable and responsive – that’s how you solve difficult crises, build trust and gain loyalty. Richard showed a loyalty to his cause – creating a better flying experience, a loyalty to the team of thousands who joined his cause and has Virgin Airlines today is one of the world’s top ranked airlines.

Four Key Traits of the Most Admired Organizations

Four key traits are common to all of the Most Admired Organizations from our study of over 27,000 organizations in 110 countries –a commitment to “fanatic discipline”, “productive paranoia”, creativity, and ambition were essential to long term organizational success.

First, and most importantly, Most Admired organizations exhibit “fanatic discipline”. Jim Collins describes fanatic discipline as a consistency of action and a willingness to do whatever it takes to achieve a great outcome. In Most Admired organizations, this discipline is applied to achieving a deep level of customer intimacy – where you understand not only how your products are used, but truly how they integrate into the lives of the people who use them. Steve Jobs didn’t invent the PC, the mp3 player or smart phones – rather, he reinvented these ideas and made them accessible in new ways. He created products that became a “compelling lifestyle experience” by continually asking, “How are we going to become a part of our customers’ lives?”

The second trait is “Productive Paranoia”. This is not a paranoia based on fear or hiding from reality – instead it is the willingness to look at your competitors and what they are doing right. It is essential to know that while you don’t want to be your competitor, you must understand what draws some of the market to choose your competitors. In most industries, billions of dollars are being spent among a number of competitors and it is imperative to understand what your competitors have going for them as well as their potential weaknesses.

Creativity – it is a given, almost a cliché, that every employee in a Most Admired company is expected to innovate and be creative – but in this case, I’m talking about ‘empirical creativity’. What is empirical creativity and how do you achieve it? Gaining an intimate understanding about your customers leads to developing more creative solutions for them. You can’t be afraid to ask – to admit that you don’t already know everything. You have to allow your customers into the innovation process with you. You have to understand their definition of success as well as your own. The humility to ask and listen leads to greater understanding of your customers, more creative solutions, and longer relationships. The organizations that know more about their customers win their customers’ loyalty.

Finally, another key factor is ambition – a continued sense of “staying hungry” even after achieving great success. Ambition in this sense is key to what Jim Collins calls “Level 5 Leadership”.  Level 5 leaders are those who reject the “Tyranny of the OR” and embrace the “Genius of the AND”. The Most Admired leaders are AND thinkers. What can we do to grow AND increase quality? What can we do to be ambitious about our brand AND be humble enough to listen? The Most Admired leaders know that long term success requires both ambition and humility.

Organizations that continue to think this way – who are disciplined, assertive and continually set “Big Hairy Audacious Goals” are the ones who go on to become #1 in their industries. They don’t rest on their laurels after achieving their goals, they set new ones. Those that don’t continue to set new BHAG’s to accelerate growth lose their mojo and their leadership positions. In the thousands of organizations that we studied, the companies that didn’t set new goals and tried to coast were out of the pole position within 3-5 years, and often out of business in 10 years. “Accelerating growth” turns out to be a critical core competency of the 10X and Most Admired organizations.

Fanatic discipline enables you to continue to deliver great products of high quality and productive paranoia keeps you aware of the strengths and weaknesses of your competitors. Ambition ensures that you continue to innovate and not rest on your laurels. Humility allows you to listen and develop a deep level of customer intimacy where customers feel more like partners knowing that you are committed to their success as well as your own. A commitment to all four of these key factors of Most Admired organizations leads to 10X performance and long term success.

Three Things You Can Do Today To Be More Valued & Admired…

Most people can’t recall ever feeling “overvalued” in their lives, can you?  Even the world’s most successful people—like Charles Schwab—remember plenty of times that they haven’t felt valued. Here are three things you can do today (and a few things he had to do) to build a great company!

1. Do your Values-based Homework: When we explored the idea of being admired in our research, we realized that while people are usually quite clear about their own values and what they admire, they rarely know much about what the people surrounding them value most.  It’s ironic:  How can you be admired and valued by those around you if you don’t know what they value? When we asked people nationally in our research whether they felt fully valued – overall, people gave that about a 4 or 5 on a scale of 10. The next natural question is, “How well do you know what the important people in your life actually need and value?” This reveals the disconnect. The respondents gave this only about a 2 or 3! We all expect to be admired and rewarded for our contributions, but we haven’t stopped to consider those who are most critical to us in our lives and whether we know how to be relevant and valuable to them. So in order to become more valued and admired, it’s imperative to ask, “How can I be more valuable to my MVPs?

2. Create your List of MVPs. Being admired is really something that each of us can take on as a mission in our work and personal lives, and it starts with understanding the “MVPs” – Most Valuable People – in your life. Who is it that really matters to you in your life and work? Think about that short list… Who is making you valuable at the office? Who supports you in your mission each day? Who are these people in your personal life? That list may include people that you report to, those who work for you, a team that supports you, your family or friends – it’s the people who enable you to do what you do and be successful. In other words, who would you like to be valued by? And what do these people need from you and value most?

3. Be Relevant. It’s important to understand your MVPs – their motivations and their definitions of success – in order to be relevant and valued in their lives. We often act in alignment with our own personal values and expectations without finding the common ground between our values and the needs and values of the most important people in our lives and work. These questions are pertinent whether you are talking about your relationship with a boss, your company’s customers or your kids. It’s a transformational concept – when you understand what you admire vs. what the MVPs in your life value – and that you understand both the overlap and the differences.

Mark Thompson and Chuck SchwabI had an amazing day last week – I rode with my mentor Charles “Chuck” Schwab, who I worked with for over 12 years in the early days of Schwab when the company was growing rapidly and we took the company public. I was accompanying him on his private jet to visit locations where he has been highly involved in museums and arts education – a cause that is important to both of us. I’ve also spent time with him on causes like dyslexia – another common cause which we are both passionate about. Chuck is dyslexic – in fact, he was almost kicked out of college twice. He had incredibly difficult challenges early in his career starting businesses and keeping them afloat until he realized that the key to his success would be reaching out to others who had strengths that complemented his weaknesses.

Many entrepreneurs think that they are brilliant at everything and can do everything. He admits that even though he thought that he was a pretty bright guy, it was humiliating to nearly get tossed out of business school. As a dyslexic, you realize very quickly that you need to surround yourself with a great team in order to get everything done. It’s a reality check that everyone learns in business at some point – unfortunately, it’s not until we have head handed to us or we are humiliated in a difficult situation that we realize that we really can’t scale something on our own.

Chuck decided to figure out the MVPs that he would need – he assessed his own skills and those that he would need to add to his team in order to be able to scale his business quickly. When he opened the doors at Schwab, he knew that he needed people who had a passion for the things that he was not good at and to give them ownership of those aspects of his overall vision. And under his leadership, each of us felt that we were an integral part of the success of the company, and Schwab has grown to become one of the largest and most ADMIRED companies in investment services.

Each of us has to figure out who our MVPs are, what they value, and what would really “flip the switch” and make them want to own and grow a business. This is when the magic happens – when you find other people who share your values and vision and are willing to join your cause. It’s what enables an entrepreneur to scale a business, or enables you to create a family and positive life together with others. By identifying your MVPs, understanding their values and criteria for success, and giving your MVPs “ownership” (whether it’s tangible or metaphorical ownership) – not only will they feel valued and rewarded – you will become more ADMIRED as well.

Listen to Mark’s entire interview at “Money for Lunch” on BlogTalkRadio.

Mentor and Long-time Boss, Charles Schwab tops $2 trillion in client assets

My half-hour meeting turned into 90 thrilling minutes yesterday atop Schwab HQ, overlooking spectacular San Francisco as the fog settled on the Bay Bridge and Silicon Valley. I met privately with my mentor and former boss Charles ‘Chuck’ Schwab in his office to hear mind-blowing news. How did Schwab attract $2 Trillion in customer assets despite the crash, competition and rapid change?

Schwab has become among the most admired brands in history—despite an industry where the public’s trust has been deeply shaken. His company didn’t get seduced by the greed and leverage that led to the financial disaster, so he’s widely respected by customers and investors. “Success takes as much humility as it does audacity,” Chuck said. “You have to be willing to listen and grow with your customer—that’s the humble part. At the same time, you have to be bold—with the audacity to know you can do it better than bigger competitors.”

You become Great by Choice, not by circumstance or chance. What are the traits of the best performers who earn admiration in a chaotic marketplace?

1) You Have Fanatic Discipline. Steadfast and Consistent&mndah;driving forward at what you can do that is world class and “the discipline to be clear about what NOT to do!” You must be focused with your goals like a hedgehog, as Jim Collins says, rather than a fox that is frightened by change or easily seduced by distractions.

2) You Drive Change, Don’t Follow It. You know your customers better than your competitors, so you are always finding ways to make them more successful and therefore earn their trust and loyalty.

3) You have Productive Paranoia. You’re never satisfied with your level of service—never complacent about your success vs. competitors.

In his new keynote, Mark shares insights from his face to face work with Chuck Schwab, Steve Jobs, Richard Branson, and other Level 5 leaders, along with his national research conducted at Stanford and his favorite former Stanford professor, Jim Collins, on how Fortune’s Most Admired Companies go from Good to Great.

Mark was Chief Investor Relations Officer during two of history’s greatest crashes, and later served as Chuck Schwab’s Chief Customer Experience Officer and then as Executive Producer of Schwab.com with over 10 million customers. Mark has been an investment partner with the Schwab family in innovative growth companies that have become Great by Choice.