There is much to be learned about setting standards by looking at how successful companies do just that.
OMG, it is so damn beautiful in Austin By God Texas, y’all.
Today, we talk about CEOs setting standards taking our inspiration from the recent Amazon shareowner letter which revealed that Amazon Prime had surpassed 100,000,000 members (Big Red Car is one of them).
Here is a link to the Amazon Shareowner 2017 Letter. Read it after you finish this post.
How do standards evolve in a successful company, Big Red Car?
Bezos (Amazon founder and CEO in case you’ve been on Jupiter for a few decades) notes that yesterday’s “good” standards are not “good enough” a year later. High standards are a continually evolving benchmark.
He also notes that standards are not set “domain-wide” meaning he sees them as being departmental or functional. This is something that is particularly true in large enterprises.
What he does not say is that standards are an essential part of a company’s culture. The whole issue of culture is one of those things which gets over-hyped and is sought after as if you could buy a gallon of it on — wait for it — Amazon!
Culture is pervasive and creeps in to take its place in one’s brain over a protracted period of time. It does not happen overnight. It takes time to build a culture.
Cultures – like standards — must continue to grow and prosper with the same evolutionary bent a standards.
How does this work for me, Big Red Car?
Dear startup CEO, I want you to focus on four things that Brother Bezos trumpets in his letter.
“So, the four elements of high standards as we see it: they are teachable, they are domain specific, you must recognize them, and you must explicitly coach realistic scope.”
That is a direct quote. How can you use that wisdom in your operation?
Let me tell you. Do your planning with more care, detail, and effort. Think more about and document standards. I know it’s hard to do when you’re in the midst of startup chaos, but this is when you have to do it.
Read the “six-page memorandum” anecdote in the shareowner letter and take it to heart.
An interesting side note from the shareowner letter.
Amazon Prime’s number of members has been a well kept secret with informed guesses suggesting it was 80,000,000 last year. In fact, Bezos announced in the shareowner letter that AP is 100,000,000 strong.
Back in January, Amazon increased prices for Amazon Prime to $99/year. You can do the math yourself. Wow! That is a huge base cash flow, isn’t it?
I note this with great envy as it is the monetization of relationships which are, essentially, based on some future benefit. The benefits of Amazon Prime membership are substantial, but this is a revenue stream that is based on a promise of future good treatment.
The fact that its members outnumber the population of Germany is irrelevant. It is a lot of people and a lot of money.
As a startup CEO on your way to becoming a huge success note that Amazon was founded on 5 July 1994. That is a short period of time ago.