Jeff Bezos’s 2016 Letter to Shareholders: It’s Always Day 1
In 2016, Amazon CEO Jeff Bezos published a 4-page letter to shareholders, packed with his insights on business. While the letter focuses on Amazon’s ideal culture (think: “How we do things around here”), its relevance goes beyond business. Bezos’s letter contains helpful ideas for not only businesses, but any organization (e.g. basketball teams, charities, universities— you name it).
The letter compares two types of organizational cultures (“Day 1” and “Day 2”), with nature’s biological cycle of growth and decline acting as the business metaphor.
Day 1 companies are healthy and full of life. Day 2 companies let stasis to take hold; they soon find themselves irrelevant, followed by a slow death. And so for Bezos, it’s always Day 1 at Amazon.
“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.
-Jeff Bezos, 2016 Amazon Letter to Shareholders, emphasis mine
Avoiding Day 2: The Default Outcome
Looking back to 1917, mining and resource-development companies like US Steel and Standard Oil were among the largest US companies—today (2020) the largest companies are found in software and technology industries (e.g. Facebook, Microsoft and Google). Tomorrow, who knows?
History’s lesson here seems to be that companies will decline, given enough time. It’s the default outcome.
To ward off the irrelevance that time seems to bestow, Bezos believes an organization must work to keep a vibrant, energetic, Day 1 culture. And so fending off Day 2.
If Amazon maintains Day 1’s culture, the future is bright. And so, that’s why it’s always Day 1 at Amazon.
How does an Organization keep Day 1’s culture?
“Such a question can’t have a simple answer.”
-Jeff Bezos, 2016 Letter to Shareholders
Yup—There’s no way to guarantee a Day 1’s culture, which Bezos believes increases the odds of organizational relevance.
If a healthy culture full of innovation, life and vitality were easy, we wouldn’t be talking about it.
Doesn’t history teach us that all empires are destined to decline?
They’re undoubtedly difficult to achieve and maintain. Organizations will need to constantly ward off challenges from within and without if they’re to survive.
However, it isn’t all bad news. Organizations can take steps to ward off stasis, and luckily, Bezos provided us with four possible prescriptions that will help Amazon, or any organization, avoid Day 2’s peril:
Customer obsession
High velocity decision-making
Author’s Note
Science-fiction writer, Isaac Asimov, describes the fall of an empire, which is merely a massive organization, in the book Foundation. In the below quote, Asimov gives his interpretation of what Day 2 looks like for an Empire. It has similarities to organizational decline as Bezos describes.
“The fall of Empire [or large social organization], gentlemen, is a massive thing, however, and not easily fought. It is dictated by a rising bureaucracy, a receding initiative, a freezing of caste, a damming of curiosity—a hundred other factors. It has been going on, as I have said, for centuries, and it is too majestic and massive a movement to stop.” - Isaac Asimov, Foundation