Amazon and the Importance of a Data Culture

Success at the company has always stemmed from its use of data.

Introduction

Having watched and participated in the dot-com boom, I have known a great deal about Amazon for a long time. (Ditto for eBay, Google, and the like.) Today, though, I consider myself vastly more informed about Amazon than ever. For that, I have to thank Brad Stone for writing the excellent book The Everything Store: Jeff Bezos and the Age of Amazon (affiliate link).

This is a landmark text. The others written about Amazon have been too brief, lacking in some critical ways, and/or incomplete.

Not this one. Stone’s research is comprehensive, his story telling masterful. Bezos wouldn’t give his imprimatur on the book, but that didn’t deter Stone in his quest to write the closest thing to a definitive book on the company. He tracked down key former employees. He pieced together heretofore unknown parts of the company’s success. The Everything Store tells stories that few outside of Amazon have known up to this point. And this is no puff piece. Stone justifiably questions the actions of his subject when called for. (There are many times when Amazon has crossed the line with governments, publishers, supplies, and others.)

The Everything Store ranks among my top-five company profiles. Reading the book gave me a new appreciation for the ruthlessness of Amazon and Jeff Bezos in particular. Like Stone, I admire what Bezos and Amazon have done, but not always the way that they have done it. (That’s a post for another day.)

The Data Element

Those who haven’t paid a great deal of attention to Amazon over the years may not realize the extent to which it uses data. (To be fair, data per se was not a major focus of Stone’s book. His is a business text first and foremost.) Still, reading the book confirmed how profoundly the Amazon culture embraces data for both daily and strategic decision making. Just about everything at Amazon is quantified, examined, analyzed, and split-tested. Decisions are best made by data. Employees need to bring data or go home.

Bezos understands that data is increasingly valuable and a source of competitive advantage.

In one of the most harrowing examples from the book, Bezos steamed while calling Amazon.com’s 800 number to question an employee’s claims about short hold times. Two excruciating minutes passed when an Amazon rep finally answered, “Amazon.com.” Bezos’s terse, intense reply: “Just checking.” He then hung up.

Simon Says

Does Amazon sometimes take data-driven management too far? Yes. For instance, I was unaware of the persistent conflict between the data wonks and editorial folks. And I’d hate to be a designer and have my creativity constantly devalued in the face of cold, hard data. Amazon is no picnic, as evinced by its high employee turnover rate.

Still, I’d argue that most companies could use a little more Amazon in them: manage data well, quantify whatever you can, routinely test key business processes, and see what can be improved and how.

Feedback

What say you?


I wrote this post as part of the IBM for Midsize Business program. It provides midsize businesses with the tools, expertise, and solutions they need to become engines of a smarter planet. IBM has compensated me to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.

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