Business Lesson — Shatter Complacency in the Good Times
In the middle of reading The Everything Store: Jeff Bezos and the Age of Amazon, I’m come upon my favorite anecdote in the story so-far. While the company was on a tear, people suggested that they hang up some of the articles coming out, all of which were glowing, positive commentary on the company and its growing accomplishments. The CEO, Bezos, took the suggestion and implemented a twisted version of it. Instead of hanging up any of the abundant positive press he posted one of the most critical articles that had ever been written about the company. This was from darker days in the company’s history, and it did not have nice things to say about Amazon.
U ntil a few weeks ago, investors couldn't get enough of Amazon.com . Perhaps it was because Amazon's story is so easy…
Posting this article up on the wall might have afforded it a certain form of fame. The article has not aged well, and reading it is very enjoyable, just to hear the immense depth of how wrong people were about the future of the company.
This gesture might have been half-humorous, but it is an application of a seriously important business lesson. When things are going the best, it’s best to recall the worst. Good times make life feel simple. In bad times, we are forced to be uncomfortable by circumstances. Good business and good strategists enforce a discipline that fights complacency in good times. Stellar growth and performance actually becomes a cause of uncomfort. This uncomfort reflects a feeling that something lies over the horizon that threatens everything.
This unique form of uncomfort can be seen in many actions of great leaders. When the author of The Everything Store met with Bezos about his plans for the book, Bezos asked how he would avoid the narrative fallacy. A proper reading of the narrative fallacy is that the story of Amazon (as we read it now) gives a false impression about success. The correct perspective would be to start out following entrepreneurs of the early internet age in an unbiased sample, and then consider outcomes of that group so-many years after the fact. The likelihood or unlikelihood that Bezos would have been selected in this group, and how large the group would be, is exactly the point. The path to success is littered with dead bodies — companies that did not make it.
Perhaps the deeper insight here is that the Amazon.bomb article might not have been a bad article. Using hindsight, it was colossally wrong, but going by the information at the time? Maybe it wasn’t so bad. The difference between becoming a tech giant and going bankruptcy might have been entirely within reasonable prediction margins.
Mentioning the narrative fallacy actually represents a major focus on defeating the congratulatory attitude that naturally comes with success. It is a loud-and-clear statement saying “this wasn’t a given.” It is the same reason that Woody Allen avoided attending award ceremonies. On closer inspection, a large amount of Bezos’ philosophy and behavior has been driven by this insight. It’s the idea that, no matter how many billions you have, you mentally start your next venture in a scrappy startup garage. Ego is anathema to inventing the Next Big Thing. Forgetting that lesson means that you’re finished doing that. For the great figures of history, an individual success is just a means to an end — a means to enable the next gamble.