Amazon founder/CEO Jeff Bezos’s congressional testimony this summer clearly focused on scoring political capital. He talked about creating a million jobs, touted Amazon’s support of thousands of small businesses that sell their products in Amazon’s stores, and pointed out campaigns by the company to help the homeless and meet the goals of the Paris Agreement.
Amazon founder Jeff Bezos has frequently cited Lean Thinking by Jim Womack and Dan Jones as one of his favorite business books, and his annual letters (which provide invaluable insights into the thinking and practice of Amazon leadership) have referred to andon cords, Kaizen programs, and eliminating the root cause of errors.The key message however came when Bezos shared the core vision that has driven Amazon since its 1994 launch: obsessive customer focus. He cited “a constant desire to delight customers drives us to constantly invent on their behalf. As a result, by focusing obsessively on customer, we are internally driven to improve our services, add benefits and features, invent new products, lower prices, and speed up shipping times – before we have to.”
If that language sounds vaguely, well, lean, then it should prompt a healthy debate: How lean is Amazon? And what can we learn from it?
We know that lean thinking has deeply influenced the thinking of Amazon founder Jeff Bezos. He has frequently cited Lean Thinking by Jim Womack and Dan Jones as one of his favorite business books, and his annual letters (which provide invaluable insights into the thinking and practice of Amazon leadership) have referred to andon cords, Kaizen programs, and eliminating the root cause of errors.
Today the company faces broad cultural and economic factors constraining its relentless growth – all of which threaten its ongoing commitment to core lean principles. At such a massive scale, every major decision by Amazon carries with it multiple consequences, making a clear judgment about its commitment to lean orthodoxy confusing.
This piece is an effort to identify where and how the company has adopted core lean ideas, and to note the challenges it faces sustaining this work. So let’s start by exploring the company’s lean cred.
Lean principles and operations
The most explicit resource detailing Amazon’s applied lean principles can be found in this interview with Marc Onetto, a GE veteran who went on to serve as Amazon’s head of global operations during its years of early growth. The spirit of lean management has long fueled Amazon, he claims, saying Bezos has from day one been relentlessly customer-centric.
His article elaborates how Amazon has applied numerous lean practices to fulfill its mission.
One key challenge from the beginning has been creating the optimal blend of people and machines that deliver value, a problem they tackled with a classic lean tool. “Given the business evolution of Amazon from a bookstore to the store for everything, we had to reinvent automation, following the lean principle of ‘autonomation’,” he says: “keep the humans for high-value, complex work and use machines to support those tasks. For Amazon, “Autonomation helps human beings perform tasks in a defect-free and safe way by only automating the basic repetitive low-value steps in a process.”
Yet the company’s reliance on lean principles doesn’t stop there. Onetto cites Amazon’s use of standard work, its emphasis on data as the basis for decision-making, and its operational habit of kaizen as further evidence of its lean influence.
Onetto also touts the company’s practice of pulling the andon cord in its customer service department. This practice eliminates tens of thousands of defects per year, he noted, while empowering front-line workers. Today the company uses a formal Amazon Virtual Andon as part of its AWS operations, and sends vendors an email with “Andon Cord” whenever defects that must be immediately resolved occur.
When it comes to the foundational practice of respect for people, Amazon’s operations have drawn widespread scrutiny for seemingly unsafe and unseemly practices. If true, such behavior conflicts with the spirit of respect for people.Finally, the company’s well-publicized process of decision-making seems to be propelled by lean principles. Former Amazon executive John Rossman says the company uses metrics to “relentlessly pursue root-cause understanding and correction.” His book Think Like Amazon shares how Amazon required everyone to develop a balanced, well-engineered scorecard of metrics as the basis for decisions. “Real-time metrics are the lifeblood flowing through the veins of Amazon.”
Finally, Amazon’s continued use of continually-improving operations to deliver the value that customer seek (and not the physical thing itself) calls to mind the core message of Womack/Jones’s Lean Solutions, which is that the ultimate goal of companies is to partner with the consumer to deliver exactly what the customer seeks; where and when they want it. Amazon's inexorable march towards fulfilling this promise suggests a lean ideal at the heart of its work.
But about respect for people?
Lean principles clearly inform many of the company’s operations and strategy. But when it comes to the foundational practice of respect for people, Amazon’s operations have drawn widespread scrutiny for seemingly unsafe and unseemly practices. If true, and widespread, such behavior conflicts with the spirit of respect for people.
Numerous articles have called out the company for exposing its delivery drivers to unrealistic deliverables that “repeatedly emphasized speed and cost over safety,” resulting in excessive crashes and in fact deaths, according to this article. While all companies doing deliveries at the scale of Amazon encounter accidents as part of doing business, this piece argues that the company placed a higher premium on fast delivery than it did on driver safety.
Another well-known charge for the company has been that the company’s push to maximize delivery of packages has led to excessive injuries among warehouse employees, who had to scan new items very 11 seconds. “Ruthless Quotas at Amazon Are Maiming Employees,” charged a lengthy article in the Atlantic. Adding to that have been more recent charges that the company has exposed its employees to coronavirus. And finally, the company has been criticized for its 2018 median wage per employee of…$28,446.
Any company that has grown to such unfathomable scale with such extensive success as Amazon inevitably encounters episodes such as these – and is certain to expect ruthless coverage from a pitiless press. Which does not however mean that some of these charges are not grounded in fact.
And yet the key question for lean thinkers remains: How effectively has this company based its success on known lean principles? And what should be learned from this, and applied to future stars?