In the last three years, we’ve powered countless experiments and generated tens of thousands of user insights for Fortune 500 product teams. Time and time again, we see Amazon products and services perform astonishingly well in a range of industries and markets. Product leaders routinely ask us about what makes Amazon so consistently innovative. It turns out, we don’t need to look too hard to find the answer.
In his very first letter to shareholders after the company’s IPO in 1997, CEO Jeff Bezos laid out precisely how he planned to run Amazon:
…this is Day 1 for the Internet and, if we execute well, for Amazon.com.
Our goal is to move quickly to solidify and extend our current position while we begin to pursue the online commerce opportunities in other areas.
We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.
Bezos described Day 1 as a strategy and mindset that embraces experimentation and risk-taking in order to build innovative products and achieve meaningful growth over the long-term.
It’s been 20 years since Bezos wrote that letter. In that time Amazon’s stock price has risen by over 55,000% as the company has achieved a market cap of more than $350 billion.
Companies in Day 1 display the following behaviors:
In his most recent letter to shareholders, Bezos shares why, after 20 years since his first letter, he keeps Amazon in “Day 1”:
Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.
The regression into “Day 2” is the topic of conversation in board rooms inside large corporations across the world. The average lifespan of a corporation is decreasing, and it’s been estimated that half of today’s S&P 500 will be replaced over the next 10 years.
There are certainly however advantages to operating in Day 2, particularly for large companies. Bezos humbly acknowledges such:
This strategy is not without risk: it requires serious investment and crisp execution against established franchise leaders.
In Day 1, “failures” occur, and patience is required to realize return on investment in new ideas. Meanwhile, companies operating in Day 2 benefit from some level of predictability, and can increase the efficiency of their existing businesses and maximize short-term profits. You may recognize companies operating in Day 2 as exhibiting the following behaviors:
Companies in Day 2 often appear strong on the surface. Their stock price may even be rising. However, in almost every industry today, there’s a company that’s operating in Day 1, moving quickly and ruthlessly to build products that meet the needs of their customers. As a result, these companies are quickly gaining market share on their Day 2 counterparts.
Successes like Amazon are illustrations of the advantages of remaining in Day 1. So how can other companies do the same? Fortunately, Bezos lays out the strategy in plain English:
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.
Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.
We’ll be exploring how product leaders can keep their companies relevant and in “Day 1” mode every day at our upcoming event in New York on June 20th. Register here.