You should watch this 50min video of Jeff Bezos talking about the importance of setting up a culture of experimentation inside Amazon. I believe it maps directly into Product innovation and how you should be operating your company.

Here are the Key Takeaways:

Experiment! (13:26)

Bezos tells you how important experimentation is for innovation and how you need to make sure there are very few barriers for people to do it.

A good thing you have to do if you’re going to innovate (…) is to maximize the rate of experimentation
And if you’re going to do that you have to make sure that your cost of doing experiments is low

If your cost of doing experiments is high then the company is only going to do a few experiments per year
And if you’re doing a few experiments per year, you’re going to have to do some kind of global prioritization to see which kind of experiments you can do
And that’s going to have a couple of downsides

  • One is you’re not gonna do much experimentation

  • But the second is that the best, most inventive people in your organization are going to become frustrated because (…) if Amazon could only do 3 experiments a year then if you wanted to do an experiment you’d have to get my permission to do it, and I’m not scalable, so that is going to put a huge impediment in the way of invention

He also goes on to say how one of the things they’ve done over the years is to make sure the infrastructure and the framework that operate Amazon makes it easy for people to do experiments in a self service way, without coordination with the institutional apparatus, and the importance of collecting usage data, AKA analytics.

Inventing on the Ground (20:18)

A lot of the most important inventions happen at the finest granularity, so incremental improvements in unit productivity are critical

Here Bezos gives the example of an improvement in Amazon’s warehouses, and how that invention was only made possible because they were paying attention to the details that you can only capture when walking down the aisle.

The key to doing that kind of invention is to make sure that you have small, separate, empowered teams that aren’t subject to a bunch of dependencies in the rest of the organiztion.

They know what they’re trying to achieve and they go about making those incremental improvements, day in, day out, month in, month out (…)

Don’t Disregard Intuition (26:00)

When deciding if they were going to keep the “You’ve already bought this product before” feature, they made an intuitive bet, overriding what the data from the tests suggested, because they believed this feature made Amazon more valuable to the users.

You Won’t Be Able to Escape This (34:50)

Invention is always going to lead you down paths that people are gonna think are weird.

Bonus

“Experiments are key to innovation because they rarely turn out as you expect and you learn so much (…) We’ve tried to reduce the cost of doing experiments so that we can do more of them. If you can increase the number of experiments you try from a hundred to a thousand, you dramatically increase the number of innovations you produce.”