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Posted By:  Ecommerce Exchange on 06/20/2018 in Consulting

Prime Opportunity: What Amazon Can Learn from Andrew Carnegie

Prime Opportunity: What Amazon Can Learn from Andrew Carnegie

By Brant Cooper 

For those of us from back in the day who watched Amazon lose money on every book they sold, their rise to dominance has been astonishing. Not since US Steel gave us the source code of the urbanized 20th century has a single concern been able to amass such a sphere of influence. When President Trump rails against Amazon's deal with the United States Postal Service on Twitter, he may be acting from self-serving principles, but his point is nonetheless salient: what is to be done about Amazon, and what does the company owe the broader society that helped it grow?

In 1889, Andrew Carnegie's Gospel of Wealth proclaimed that the wealthy should distribute their excess means in a responsible and thoughtful manner. To people at the time, especially business rivals, it must have seemed like a dramatic about-face, even an attempt at saving face. Carnegie, whose net worth was estimated at $372 billion in 2014 dollars, built his fortune on ruthlessness and often total disregard for the well-being of other people. His late-in-life change has the suddenness of a sinner fearing Hell, or perhaps the anxiety of an entrepreneur concerned with the eternity of his brand after his company's mismanagement was associated with the deaths of more than 2,200 people.

Amazon's business practices haven't gotten anyone killed. But the company's underpayment of warehouse workers, threats to pull out of Seattle to avoid a modest tax to benefit homelessness, and a well-known cut-throat corporate culture where employees are punished for illness has galvanized opposition from the Open Markets Institute, labor unions and regular people wondering what their recently increased Prime Membership is paying for.

Amazon's published Leadership Principles provide insight into the company's behavior. In summary: be obsessed with customers, be bold, be innovative, move fast, be learners and listeners, and deliver results. It's hard to argue with any of the principles. It's also hard to argue with the results.

Many writers have chosen to interpret Amazon's Leadership Principles as their corporate values, but that's a false equivalency. Every principle describes how leaders should behave in order to be successful at Amazon. None proclaim a value it wishes to bestow to customers, employees, shareholders, or any aspect of society. "Customer Obsession" is not a positive principle in itself. After all, stalkers are obsessed, too. These principles are only in service to itself: Amazon.

Amazon comes closer to establishing values at aboutamazon.com, where they describe that they seek to create jobs, support small businesses, innovate, support communities, and protect the environment. But without declaring these as corporate values, there‚s no reason to believe they are anything but marketing, and they certainly don‚t drive behavior. The proof is in the actual behavior. "Support" for small business means, for example, forcing them to participate in Amazon's online marketplace or perish.

Corporate values describe the beneficial outcomes a company is committed to achieving. Application of the leadership principles should then be measured within that context. Corporate values also typically describe expected behavior among employees in pursuit of the desired outcome. The disconnect is that as good as the leadership principles may be, devoid of defining beneficial outcomes (other than the bottom line) and how to measure progress, the principles have become a tool for abuse.

In Amazon's case, leaders aren't provided with a direction, so the default position is "winning at all costs." It's market domination. It's growth for growth's sake. Bezos is reportedly driven by data, but what data means everything. Clearly, Amazon's leadership is measured by hitting growth numbers and so they, in turn, define metrics for their employees based on achieving quantitative numbers. Micro, even nano-management, has resulted. Amazon's leadership turns out to be not entrepreneurial at all, but dictatorial. Pure outcome-based metrics rather than including behavior data, such as employee satisfaction, results in a frenzied, cut-throat, race-to-the-bottom type of culture that will not prove sustainable.

What Can Be Done?

Bezos recognizes this can be a problem. While hopeful the behavior described in The New York Times article was not true, he said: "I don't think any company adopting the approach portrayed could survive, much less thrive, in today's highly competitive tech hiring market." Addressing staff, he added: "I don‚t recognize this Amazon and I very much hope you don't, either."

Establishing corporate values is more than just listing platitudes about how the company should act on costs and efficiencies. In order for Amazon to continue to be successful, Bezos needs to put a stake in the ground about doing good in the world, not just lowering prices. Creating value is providing better products and services and paying people well enough to afford them.

First, empathy work can help Amazon understand its customers (small businesses, consumers, and employees alike), and shed light on what their needs, desires and aspirations are beyond things like cheaper goods. Next, talking directly to his stakeholders and acting upon the criticism rather than shrugging it off as unrecognizable behavior is the only way to transform Amazon into a company as eternal and steadfast as the rushing body of water from which it takes its name.

Call it corporate noblesse oblige or just plain smart business, but without good faith as a renewable resource Amazon will reach its limit. The most important growth, as Carnegie realized, occurs in heart of fellow human beings. All Bezos has to do is seek to understand them better. I'd bet he'd find a workforce eager to do that work.

About the Author
Brant Cooper is the author of the New York Times bestseller The Lean Entrepreneur. He also serves as an advisor to entrepreneurs, accelerators and corporate innovation teams. He is CEO of Moves The Needle, which empowers organizations to discover and create new value.

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