Author Archives: Suhit Anantula

The Power of Invention – Amazon.com

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From Jeff Bezos’s Letter to Shareholders:

To our shareowners:

 

The Power of Invention

 

“To us, the value of Amazon Web Services is undeniable – in twenty seconds, we can double our server capacity. In a high-growth environment like ours and with a small team of developers, it’s very important for us to trust that we have the best support to give to the music community around the world. Five years ago, we would have crashed and been down without knowing when we would be back. Now, because of Amazon’s continued innovation, we can provide the best technology and continue to grow.” That’s Christopher Tholen, the Chief Technology Officer of BandPage. His comments about how AWS helps with the critical need to scale compute capacity quickly and reliably are not hypothetical: BandPage now helps 500,000 bands and artists connect with tens of millions of fans.

 

“So, I started selling on Amazon in April of 2011, and by the time we became the top Amazon lunchbox seller in June, we had between 50 and 75 orders a day. When we hit August and September – our busiest time, with the start of the school year – we had 300, sometimes 500 orders a day. It was just phenomenal… I’m using Amazon to fulfill my orders, which makes my life easier. Plus, when my customers found out they could get free shipping with Prime subscriptions, the lunchboxes began selling like crazy.” Kelly Lester is the “mom entrepreneur” of EasyLunchboxes, her own innovative line of easy-to-pack, environmentally friendly lunchbox containers.

 

“I sort of stumbled onto it, and it opened a whole new world for me. Since I had over a thousand [book] titles at my house, I thought, ‘I’ll give this a try.’ I sold some and I kept expanding it and expanding it, and come to find out this was so much fun I decided I don’t ever want to get another job again. And I’ve got no boss – other than my wife, that is. What could be better than that? We actually work together on this. We both go out hunting, so it’s a team effort that’s worked out very well. We sell about 700 books a month. We ship between 800 and 900 to Amazon each month and Amazon ships out the 700 that people buy. Without Amazon handling shipping and customer service, my wife and I would have to be running to the post office or someplace every day with dozens of packages. With that part taken care of for us, life is much simpler… This is a terrific program and I love it. After all, Amazon supplies the customers and even ships the books. I mean, how can it get better than that?” Bob Frank founded RJF Books and More after getting laid off in the midst of the economic downturn. He and his wife split their time between Phoenix and Minneapolis, and he describes finding the books he sells like “a treasure hunt every day.”

 

“Because of Kindle Direct Publishing, I earn more royalties in one month than I ever did in a year of writing for a traditional house. I have gone from worrying about if I will be able to pay the bills – and there were many months when I couldn’t – to finally having real savings, even thinking about a vacation; something I haven’t done in years… Amazon has allowed me to really spread my wings. Prior, I was boxed into a genre, yet I had all of these other books I wanted to write. Now I can do just that. I manage my career. I feel as if I finally have a partner in Amazon. They understand this business and have changed the face of publishing for the good of the writer and the reader, putting choices back into our hands.” That’s A. K. Alexander, author of Daddy’s Home , one of the top 100 best-selling Kindle books in March.

 

“I had no idea that March of 2010, the first month I decided to publish on KDP, would be a defining moment in my life. Within a year of doing so, I was making enough on a monthly basis to quit my day job and focus on writing full time! The rewards that have sprung out of deciding to publish through KDP have been nothing short of life changing. Financially. Personally. Emotionally. Creatively. The ability to write full time, to be home with my family, and to write exactly what I want without the input of a legacy publisher marketing committee wanting to have a say in every detail of my writing, has made me a stronger writer, a more prolific writer, and most importantly a far happier one…. Amazon and KDP are literally enabling creativity in the publishing world and giving writers like me a shot at their dream, and for that I am forever grateful.” That’s Blake Crouch, author of several thrillers, including the Kindle best seller Run.

“Amazon has made it possible for authors like me to get their work in front of readers and has changed my life. In a little over a year, I have sold nearly 250,000 books through the Kindle and have traded in old dreams for bigger and better ones. Four of my books have hit the Top 100 Kindle Best Sellers List. Also, I have been approached by agents, foreign sales people, and two movie producers, and have received mentions in the LA Times, Wall Street Journal, and PC Magazine, and was recently interviewed by USA Today. Mostly, I am excited that all writers now have the opportunity to get their work in front of readers without jumping through insurmountable hoops. Writers have more options and readers have more choices. The publishing world is changing fast, and I plan to enjoy every minute of the ride.” Theresa Ragan is the KDP author of multiple Kindle best sellers including Abducted .

 

“Past age 60 and in the midst of the recession, my wife and I found our income options severely limited. KDP was my one shot at a lifelong dream – our only chance at financial salvation. Within months of publishing, KDP has completely changed our lives, enabling this aging nonfiction writer to launch a brand-new career as a best-selling novelist. I can’t say enough on behalf of Amazon and the many tools that they make available to independent authors. Without reservation, I urge fellow writers to investigate and seize the opportunities that KDP offers. As I’ve happily discovered, there is zero downside risk – and the potential is virtually unlimited.” Robert Bidinotto is the author of the Kindle best seller Hunter: A Thriller .

 

“I leveraged KDP’s technology to blow through all the traditional gatekeepers. Can you imagine how that feels, after struggling so hard, for so long, for every … single … reader? Now, inspirational fiction lovers I never would have reached are enjoying Nobody and my other two novels from the Kindle Store at $2.99. I’ve always wanted to write a Cinderella story. Now I have. And, thanks to Prince Charming (KDP), there will be more to come…” Creston Mapes is the author of the Kindle best seller Nobody .

 

Invention comes in many forms and at many scales. The most radical and transformative of inventions are often those that empower others to unleash their creativity – to pursue their dreams. That’s a big part of what’s going on with Amazon Web Services, Fulfillment by Amazon, and Kindle Direct Publishing. With AWS, FBA, and KDP, we are creating powerful self-service platforms that allow thousands of people to boldly experiment and accomplish things that would otherwise be impossible or impractical. These innovative, large-scale platforms are not zero-sum – they create win-win situations and create significant value for developers, entrepreneurs, customers, authors, and readers.

 

Amazon Web Services has grown to have thirty different services and thousands of large and small businesses and individual developers as customers. One of the first AWS offerings, the Simple Storage Service, or S3, now holds over 900 billion data objects, with more than a billion new objects being added every day. S3 routinely handles more than 500,000 transactions per second and has peaked at close to a million transactions per second. All AWS services are pay-as-you-go and radically transform capital expense into a variable cost. AWS is self-service: you don’t need to negotiate a contract or engage with a salesperson – you can just read the online documentation and get started. AWS services are elastic – they easily scale up and easily scale down.

 

In just the last quarter of 2011, Fulfillment by Amazon shipped tens of millions of items on behalf of sellers. When sellers use FBA, their items become eligible for Amazon Prime, for Super Saver Shipping, and for Amazon returns processing and customer service. FBA is self-service and comes with an easy-to-use inventory management console as part of Amazon Seller Central. For the more technically inclined, it also comes with a set of APIs so that you can use our global fulfillment center network like a giant computer peripheral.

 

I am emphasizing the self-service nature of these platforms because it’s important for a reason I think is somewhat non-obvious: even well-meaning gatekeepers slow innovation. When a platform is self-service, even the improbable ideas can get tried, because there’s no expert gatekeeper ready to say “that will never work!” And guess what – many of those improbable ideas do work, and society is the beneficiary of that diversity.

Kindle Direct Publishing has quickly taken on astonishing scale – more than a thousand KDP authors now each sell more than a thousand copies a month, some have already reached hundreds of thousands of sales, and two have already joined the Kindle Million Club. KDP is a big win for authors. Authors who use KDP get to keep their copyrights, keep their derivative rights, get to publish on their schedule – a typical delay in traditional publishing can be a year or more from the time the book is finished – and … saving the best for last … KDP authors can get paid royalties of 70%. The largest traditional publishers pay royalties of only 17.5% on ebooks (they pay 25% of 70% of the selling price which works out to be 17.5% of the selling price). The KDP royalty structure is completely transformative for authors. A typical selling price for a KDP book is a reader-friendly $2.99 – authors get approximately $2 of that! With the legacy royalty of 17.5%, the selling price would have to be $11.43 to yield the same $2 per unit royalty. I assure you that authors sell many, many more copies at $2.99 than they would at $11.43.

 

Kindle Direct Publishing is good for readers because they get lower prices, but perhaps just as important, readers also get access to more diversity since authors that might have been rejected by establishment publishing channels now get their chance in the marketplace. You can get a pretty good window into this. Take a look at the Kindle best-seller list, and compare it to the New York Times best-seller list – which is more diverse? The Kindle list is chock-full of books from small presses and self-published authors, while the New York Times list is dominated by successful and established authors.

 

Amazonians are leaning into the future, with radical and transformational innovations that create value for thousands of authors, entrepreneurs, and developers. Invention has become second nature at Amazon, and in my view the team’s pace of innovation is even accelerating – I can assure you it’s very energizing. I’m extremely proud of the whole team, and feel lucky to have a front row seat.

 

As always, I attach a copy of our original 1997 letter. Our approach remains the same, and it’s still Day 1!

 

LOGO

Jeffrey P. Bezos

Founder and Chief Executive Officer

Amazon.com, Inc.

The Best-Kept Management Secret On The Planet: Agile

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My biggest learning in 2011 – Agile. Totally agree.

The best-kept secret in management today: Agile

Something similar seems to be happening in management which for decades has struggled to solve a fundamental conundrum: how do you get disciplined execution along with continuous innovation? Promising efforts to improve one dimension always seem to cause losses on the other one. Disciplined execution crushes innovation, and innovation by its nature is undisciplined. The problem has seemed insoluble.

Yet, just over a decade ago, a set of major management breakthroughs occurred. These breakthroughs enabled software development teams to systematically achieve both disciplined execution and continuous innovation, something that was impossible to accomplish with traditional management methods. Over the last decade, these management practices, under various labels such as Agile, Scrum, Kanban and Lean, have been field-tested and proven in thousands of organizations around the world. My own recent work distills, builds on and extends these principles, practices and values so that any organization can now achieve to apply the elusive combination of disciplined execution and continuous innovation.

Why software?

Unfortunately, these management discoveries were not made by “the right people”: academics in business schools or high-paid managers in big corporations. The discoveries were made by the people that, in prospect, you would think are the least likely people to have solved a management problem: geeks. Software developers were known to be antipathetic to both managers and management. Badly dressed, unkempt, even sometimes unwashed, speaking about issues that managers could hardly grasp, these employees were the most problematic of a big organization’s employees. How could they possibly have solved a problem that had stumped the finest management minds on the planet for decades?

 

Engineers get it done

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SD: Is Agile management really new?

RC: We have known for over 50 years that participative management is far superior to traditional legacy management. We’ve got a whole discipline of humanistic management that has come out of the work of Maslow and McGregor. But it’s had very little impact on organizations. It changed the style but it didn’t change the substance of management.

It’s ironic that as we watch the substance of the current management shift, especially over the last decade, it’s coming from the engineers. Who would have thought that the change in management would come, not from psychologists and OD specialists but from the engineers? The Agile Manifesto was written by software engineers. The new paradigm is being created by engineers like Sergey Brin and Larry Page at Google. Bill Gore at W.L.Gore was, in 1958, way ahead of his time in developing his lattice organization where there were no supervisors: his background was also engineering. It’s ironic while the psychologists and sociologists identified what was needed, the engineers are actually getting it done.

Steve Denning and Rod Collins

Eusociality and collaboration

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Steve Denning on Edward O. Wilson’s new book “The Social Conquest of Earth”.

What about customers and clients? Group selection shapes instincts that encourage collaboration within the group, but not toward members of other groups. If customers and clients are seen as outsiders, then there is a risk that they will be treated just as badly as competitors, causing the organization to perform poorly.

This helps explain why at meetings, Amazon [AMZN] founder Jeff Bezos, one of the most successful of today’s executives, makes sure that one chair is kept empty to represent the customer, whom he calls “the most important person in the room.” That focus on the customer gives Amazon the confidence to innovate freely without fretting about short-term results, Bezos says. “We don’t focus on the optics of the next quarter; we focus on what is going to be good for customers,” he explains. “I think this aspect of our culture is rare.”

Wilson’s theory may also help explain why Apple [AAPL] has been successful in innovation by keeping teams separate from each other and even forbidding them to discuss their work with other teams. One might have expected lost opportunity cost in terms of missed possibilities of cross-fertilization among teams. Is it possible that the gains from suppressing internal competition, infighting and politicking within the organization more than compensates for the loss of cross-fertilization?

The Empty Chair

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Forbes has a good story on Jeff Bezos of Amazon.com. The one theme which came out strongly was Bezos’s focus on the customer. And he uses a fantastic strategy in my opinion for that.

Field Of Empty Chairs

Jeff Bezos’ managers at Amazon find him formidable enough. But the figure that overwhelms their lives goes by the internal nickname “the empty chair.” Bezos periodically leaves one seat open at a conference table and informs all attendees that they should consider that seat occupied by their customer, “the most important person in the room.”

If the empty chair is the ultimate boss at Amazon, then Bezos is its billionaire enforcer, the guardian of what he calls the “culture of metrics” that tries to give that inanimate object a loud, clear voice. Amazon tracks its performance against about 500 measurable goals. Nearly 80% relate to customer objectives. Some Amazonians try to reduce out-of-stock merchandise. Others race to build a bigger library of downloadable movies. Intricate algorithms turn one group of shoppers’ past habits into custom recommendations for new customers. Hourly bestseller lists identify what’s hot. Weekly reviews keep track of who is on course—and where corrective attention is needed.

I this is an extremely powerful metaphor to use and a very good one to use too. As Drucker reminded us, “the business of a company is to create a customer” and to do that you need to know how you are performing for the customer.

I think this is even more important in the social sector. If you are working for families or children or aged people or disabled or inner city youth or homeless or anything else to be able to leave a empty chair in meetings as a metaphor and continue to focus on that is quite important. In the myriad number of decisions that we make everyday and the effect of the now and urgent on our thinking its so easy to forget whom we are trying to make a difference for and our mission.

The empty chair is a good metaphor for that.

Lafarge is transforming construction in the slums of Mumbai

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From Firstpost:

Lafarge supplied a few contractors of Shivajinagar ready-mix concrete to construct several houses. One problem encountered was to manoeuvre supply trucks within Shivajinagar, whose streets are too constricted for two-lane traffic. Like good entrepreneurs committed to developing a prospective market, Lafarge thought laterally. They devised a means of supplying concrete in plastic buckets. Buckets of 15 litres each were neatly stacked in the modest back-space of a tempo and brought to site, traversing the narrow alleys without obstruction. The buckets were unloaded by hand by the contractor’s team, upturned into plinths and formwork and returned to the tempos that departed instantly. The speed of this process was as astonishing as its efficiency; high technology and world-class quality hand in hand with labour intensive building methods. By working with contractors who build affordable homes in areas of the city hardest to reach, an international cement company may just have changed the paradigm of the construction industry in Mumbai.

This unusual collaboration has benefited the contractors of Shivajinagar. With quality assured and concrete available in retail quantities, the ease of supply and of actual use can transform site work. The cost of ready-mix is currently more than that of hand-mixed concrete on site, but the time (and space) saved more than adequately makes up for it. Their clients get a home built with the best of concrete, long-lasting and pucca to the core. There is now an increasing demand among several contractors from other neighbourhoods.

Lafarge now has gained access to vast potential retail market in addition to upper-end builder and contractors. That they were willing to go beyond a comfort base and adapt to changing work circumstances and clients is to their credit. This may be strictly business, but is one with a potential for transformation. Supplying concrete to build small homes in Shivajinagar may become as profitable as supplying concrete to build that other large home in Mumbai, Antilla.

Social Entrepreneurship needs good management like anything else

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Akula launched SKS Microfinance in my home city of Hyderabad, India and grew it into one of the biggest lenders. In recent time SKS came under the microscope for aggressive debt collection techniques which lead to farmer’s suicides.

I always viewed micro finance with skepticism in the sense that not every poor person can become an entrepreneur with a micro loan and make money to get out of poverty.  Every single developed country and developing countries like China and previously Korea etc moved their citizens out of poverty through jobs and mainly manufacturing jobs. History tells us that especially for the size of populations in India, Bangladesh or African countries that is the only way out.

Akula talks here about his learnings and wants to help social entrepreneurs.

Other than the first round of 3Cs I propounded earlier for microfinance and social entrepreneurship – access to capital, dealing with capacities and costs, the new 3Cs are vital for social enterprises,” Akula said. Asked by audience members on what were the key mistakes he made at SKS, he skirted a direct answer, saying, “I just did not focus on the three Cs: did not focus on culture, code of conduct and control.”

Well, the main thing is that as he said he cannot be naive and run a large organisation. Any organisation whether it be government, not for profit, social enterprise or the private sector need good management. Ask Drucker.

Infact, as Drucker argued that for organisations in the social sector which do not have a bottom line like for profit companies they need more management and not less. Akula should start reading Drucker and others and learn from the history of the last 100 hundred years like all other people who work in the social sector.

The Right to Education Act and Gujarat

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Gujarat is a real path breaking state in India. If only the other states can learn from Gujarat.

From Firstpost:

Instead of focusing only on input requirements specified in the Act like classroom size, playground, and teacher-student ratio, the Gujarat RTE Rules put greater emphasis on learning outcomes of students in the recognition norms. Appendix 1 of the Gujarat Rules is the one which has a path-breaking formulation for recognition of a school: this will be a weighted average of four measures:

Student learning outcomes (absolute levels): Weight 30 percent.
Using standardised tests, student learning levels focussing on learning (not just rote) will be measured through an independent assessment.

Student learning outcomes (improvement compared to the school’s past performance): Weight 40 percent.
This component is introduced to ensure that schools do not show a better result in (1) simply by not admitting weak students. The effect of school performance looking good simply because of students coming from well-to-do backgrounds is also automatically addressed by this measure. Only in the first year, this measure will not be available and the weightage should be distributed among the other parameters.

Inputs (including facilities, teacher qualifications): Weight 15 percentStudent non-academic outcomes (co-curricular and sports, personality and values) and parent feedback: weight 15 percent.
Student outcomes in non-academic areas as well as feedback from a random sample of parents should be used to determine this parameter. Standardised survey tools giving weightage to cultural activities, sports, art should be developed. The parent feedback should cover a random sample of at least 20 parents across classes and be compiled.

This is one of the first times in India’s history that public policy has focused on children and parents, instead of focusing on the public sector producers of education services.