In April 2010, Jeff Bezos sent Amazon’s shareholders his yearly letter. It opened with the kind of news shareholders like. Net sales had risen 28 percent in 2009, to $24.51 billion. Free cash flow was up 114 percent, to $2.92 billion.
Further down, he described how the company spent its management time, and it wasn’t on those numbers. “Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs,” he wrote. Amazon took the outputs seriously, but believed that focusing its energy on “the controllable inputs to our business is the most effective way to maximize financial outputs over time.”
The inputs came from a yearly routine. Goal setting began in the fall and ended early in the new year, after the holiday peak. The sessions, by his account, were “lengthy, spirited, and detail-oriented.” For 2010 they had produced 452 detailed goals, each with an owner, deliverables and a targeted completion date. These weren’t the only goals teams set for themselves, he wrote, just the ones the company felt were most important to monitor. The senior leadership team reviewed their status several times a year, and added, removed and changed goals as it went.
Then Bezos reported a count. Of the 452 goals, 360 would have a direct impact on customer experience. The word revenue appeared eight times, and free cash flow four. The terms net income, gross profit or margin, and operating profit were not used once.
None of the goals were easy, he wrote, and many would not be achieved without invention. He made no promise about hitting them: “We can’t assure you that we’ll meet all of this year’s goals. We haven’t in past years.”
The letter ended the way his letters did. “As always,” he wrote, he attached a copy of his first letter to shareholders, from 1997. “Our approach remains the same, and it’s still Day 1.”