MOVE FORWARD TO GET BACK TO DAY 1

Change the Culture of the Status Quo

Pain is temporary. Quitting lasts forever.

—Lance Armstrong

I am a cycling fan. For years, I enjoyed grinding up and down hills and mountains on a road bike in the Pacific Northwest. My wife and I became fans of Lance Armstrong when he donned the rainbow jersey after winning the cycling World Championships in Oslo, Norway, in 1993. This was well before he won his first Tour de France in 1999. Our oldest son was born in 1998, and we almost named him after Lance—thank goodness, we didn’t. I shudder to think of poor “Lance Rossman.” What a dark and complex legacy to carry around just because your parents liked to watch people race bicycles.

Lance Armstrong won the Tour de France a record seven consecutive times from 1999 to 2005. However, in 2012 he was banned from sanctioned Olympic sports for life and stripped of his Tour de France victories because of long-term doping offenses. As a result, all his wins dating back to 1998 were voided.

I now live in Southern California and spend too much time driving in a car. I enjoy listening to podcasts, and I am always in search of great content and learning. When a friend recommended Lance Armstrong’s podcast The Forward, to me, I reluctantly gave it a listen, and guess what, I loved it. The Forward is about owning your past and deciding to, well, move forward. No matter your history, you decide how to live with it and how you want to write your going-forward history. If you are at risk of having your best days behind you, you decide whether to resign yourself to slow, painful acceptance and erosion, or you figure out a way to reinvent yourself and move forward. That’s the long and short of it, anyway. Obviously, it’s a theme with which Armstrong is familiar.

Armstrong does an excellent job interviewing his podcast guests. He delves into their pasts and examines their stories and how they are moving forward. Meanwhile, he is honest and self-effacing about his own complex past. The podcast is clearly therapy for him.

When assessing personal mistakes, the first step toward a correction is honest self-appraisal. Big, successful companies are no different. No matter the past, no matter the level of achievement, you make decisions that define how you move forward. These decisions can be either conscious or unconscious, but they are made nonetheless.

Bezos has outlined his perspective that there are basically two types of companies—Day 1 or Day 2 companies. In the 2016 Amazon letter to shareholders, he wrote:

Jeff, what does Day 2 look like? That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.

Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1. To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.

I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization? Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.¹

Here’s what’s interesting to me about Jeff’s starter pack of essentials—they are all elements of culture. They define our priorities and how we work together. They are neither financial goals nor market goals. They are fully within the leaders’ control, not the market’s or competitors’.

While Jeff is focused on fending off Day 2, I’m interested in the questions, “What do you do if you are already a Day 2 company? How do you change course? Do you just accept your fate? If so, isn’t this a form of quitting? Or do you accept the risk and pain, and figure out how to move forward?”

MOVING FORWARD

If you are a Day 2 company, this book is written for you! Apply these ideas with purpose and patience. Thomas Wolfe was wrong. You can go home again. Here’s how to return to Day 1.

Commit to a Path

Although innovation and renewal can and should come from anywhere inside or outside your organization, only the leadership team and board can be purposeful and specific. You likely know some of the painful moves you need to make to get going; you’ve just been reluctant to do so.

Commit to a path, take the medicine you need to early, and then start innovating. Perhaps it means selling a business, parting with a leader, or admitting the reality of an eroding channel of business.

Recognize and Feature the Bad News

The bad news does not get better with age. What are the signs of being Day 2? Often it is slowing growth, services and products becoming commoditized, increasing loss percentages on new opportunities, or what you are hearing from your customers.

You need to not only admit the situation but take accountability. You must understand what you believe in and what you are willing to do. What you are willing to personally commit to will, in large part, define the options available to you. By featuring the bad news, you are declaring it as the past. You are saying, “The current situation is no longer acceptable. We have a new mission, and we need to do better.”

Amazon’s Leadership Principle 11 is “Earn Trust,” which means being “vocally self-critical even when doing so is awkward and embarrassing. Leaders do not believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best.”² Start business or operations reviews with perspectives like “Here’s how my team/business/operation sucked,” and then list the metrics and root causes. Discuss how you are going to fix them and what you need from others. If you start “featuring the bad news,” the stigma goes away, but it takes bold leadership.

Change the Questions You Are Asking

Ask questions that impose constraints (“How would we make our product/service/capability completely ‘self-service’”?). Ask questions that create more customer empathy (“What is our customer’s worst day?”). Ask questions that pose a different reality (“How would our product or service be completely ‘software defined’”?).

Be purposeful and deliberate in fleshing out scenarios and potential answers to these questions. Use narratives (Idea 44) or future press releases (Idea 45).

Be on Target with Communication Always

To your team, to your investors, to your board, to your customers—everyone in a leadership role needs to commit and be on point in their communications. Change does not happen with a memo or one meeting and declaration. Your priorities, your actions, and your communications need to always line up with your plan. Communications need to be both scheduled and planned, as well as spontaneous.

Equip yourself and your leaders with message points to incorporate in everything you and they do. Repeat.

•   •   •

All that said, the history of companies changing the tide and reinventing themselves is dominated by failure. Two examples of companies that have been hugely successful at changing the fortunes of their business are Apple and, more recently, Microsoft. These have not been just product transitions, but cultural transitions. Change is hard, and it’s risky. Maybe it’s easier to simply let the next generation of management deal with it. You might be able to ride this out for years. But can you live with the knowledge you preside over a Day 2 company?

Even Amazon is dealing with this. Of the companies on the Fortune 1000 list, only Walmart is over $400 billion in annual revenue. Walmart is growing at a five-year average of less than 2 percent. Meanwhile, Amazon’s forecasted 2018 revenue is $240 billion, with an annual growth rate of 38 percent. In a few years, likely less than three, Amazon will be over $400 billion in annual revenue. Amazon’s leaders are asking questions about how to manage a business like this, because not many leadership teams have done it, especially with these growth dynamics. Regardless, they remain committed to the long haul and staying a Day 1 company.

Outside of Amazon, in his emerging philanthropic endeavors, Bezos is applying many of the same beliefs and values to create a big vision and reinvent on behalf of the customer. Announced in September 2018, the Bezos Day One Fund will focus on the homelessness epidemic and preschool education. “We’ll use the same set of principles that have driven Amazon. Most important among those will be genuine, intense customer obsession,” he tweeted. “The child will be the customer.”³

Staying a Day 1 company is going to be difficult. You’re going to have good days and bad days. You’re going to lose some people along the way. You are going to have to be obsessed. Fortunately, we will talk about that in the next chapter.