Ever wondered what it takes to shape the future of a tech giant? 

Join us in this episode as we dive into a fascinating conversation with John Rossman, the early Amazon executive who played a pivotal role in launching the Amazon marketplace in 2002. With four bestsellers, including “The Amazon Way,” John is a leading keynote speaker on leadership for innovation and transformation.

Founder of Rossman Partners, a strategy & leadership solutions firm, John’s impact extends to roles as the senior technology advisor at the Gates Foundation and senior innovation advisor at T-Mobile. His latest book, “Big Bet Leadership: Your Transformation Playbook for Winning in the Hyper-Digital Era,” released on February 27, 2024, and is available for just 99 cents throughout March 2024.

Join us as we unravel the secrets of Big Bet Leadership in the Hyper-Digital Era and explore John’s journey in shaping the future of technology and business!

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Transforming Your Business in the Hyper-Digital Era

Introduction

Jeff Tomlin: Welcome to the Conquer Local Podcast! Our show features successful sales leaders, marketers, thought leaders and entrepreneurs who will inspire you with their success stories. Each episode is packed with practical strategies, as our guests share their secrets to achieving their dreams. Listen in to learn the highlights of their remarkable accomplishments and get tips to revamp, rework, and reimagine your business. Whether you’re a small business owner, marketer, or aspiring entrepreneur, the Conquer Local Podcast is your ultimate guide to dominating your local market. Tune in now to take your business to the next level! I’m Jeff Tomlin and on this episode, we’re pleased to welcome John Rossman

John is the founder of Rossman Partners, a strategy & leadership firm and he’s the author of four books on leadership and business innovation including the best seller, The Amazon Way. 

As an early Amazon executive, he played pivotal role in launching the Amazon marketplace business in 2002. Today he is a prominent keynote speaker on leadership for innovation and transformation. 

Known for his hands-on approach to business problems and customer needs, John is recognized as an operator and builder, creating innovative solutions and business models that generate lasting enterprise value.

With a background as the senior technology advisor at the Gates Foundation and senior innovation advisor at T-Mobile, John’s upcoming book, “Big Bet Leadership: Your Transformation Playbook for Winning in the Hyper-Digital Era,” is set to be released on February 27, 2024.

Saddle up Conquerors for John Rossman coming up next on this week’s episode of the Conquer Local Podcast.

Amazon’s Success Lies in Customer Obsession, Simplicity, and Active Debate. 

Jeff Tomlin: John Rossman, welcome to the Conquer Local podcast, and thank you so much for taking time out of your busy day to join us here. How are you doing, man?

John Rossman: Jeff, thanks for welcoming me. It’s going great. Thanks.

Jeff Tomlin: Just reading down the bio, of course. Just went through the intro, author, speaker, analyst, and advisor. If you’re not careful, you can make a lot of us feel like we’re just sitting on our hands here. You’re a busy man.

John Rossman: Well, I feel so fortunate to get to do work that really pulls me forward and in my own special way I feel, I know I contribute to my clients and how a lot of people tackle problems and really think about kind of the combination of leadership and strategy in their organization. So I don’t quite fully understand how I got to do this, but I love it and really I don’t take it for granted and work pretty hard at it.

Jeff Tomlin: Well, you’re really busy now. You’ve got a lot of things on the go. You’ve done a lot of things throughout your career. The stint at Amazon must be something that you’re extremely proud of. Not everybody has a chance throughout their career, their lifetime, to take apart and be an instrumental piece of an organization that has grown to the scale that Amazon grew to, one of the largest companies in the world now, and they really pioneered the path to growing and scaling an organization like that. Maybe start there, talk a little bit about what were some of the things that Amazon really got right that allowed them to get that type of scale?

John Rossman: What a great question. So just a little reminder, I was an early executive at Amazon. I was there from early 2002 through late 2005. My role was a key role in launching the marketplace business at Amazon, so that’s third-party selling at Amazon.com. That’s about 60% of all units shipped and sold today. And although the business of Amazon has changed 10,000 times since I was there, fundamentally, what they believe in, how they act, how they think things through, how they choose to invest, we were creating that foundational thinking, approaches and principles when I was there. And it was such a great story and so impactful to me. Several years after I left Amazon, a client of mine at the Gates Foundation recommended like, “John, you should write a book about that. You do a nice job of taking the little insights and inserting them into our work.” So I wrote a book called The Amazon Way, and that really was kind of the start of my path on capturing stories for the benefit of others. But some of the things that Amazon really got right, I’ll mention three things and these tie to specific leadership principles from Amazon, there’s 16 of them. I’ll just talk about three of them. So the first is about how they truly work to understand their customers extremely well. That’s called customer obsession in Amazon parlance, it’s called customer centricity in lots of others. But what a lot of people get wrong about customer centricity is they think it is just about kind of hustling for today’s transaction, working to make today’s customer experience as great as possible. And that’s true, but there’s a different flavour of customer centricity, which is strategic customer centricity. And that is being so curious and persistent about understanding the job your customer is trying to get done, that you actually spot opportunities to help them bigger and broader than just how you might work with them today. And that’s really been what has led Amazon from going from a book, music, and electronics retailer to this conglomerate business today. So that’s the first thing they got right was be curious about your customer and always think bigger than just your service or your product relative to your customer. The second thing is really this notion of inventing and simplifying. So this is the third leadership principle and the edgiest work I do with my clients is working to simplify, delete rules, policies, processes, steps, features, and everything that doesn’t really distinguish you or doesn’t add explicit value. And Amazon really got that right and that notion that both invention and simplicity go hand in hand. And that’s as important in your product design, in your service design as it is in your operations and your processes and how you work together. So that’s the second thing. Now the third thing I’d mention is the ability to have active debate. And so there’s a leadership principle called disagree but commit. And it gets much simpler when you write memos about the situation, either the problem or your proposal, and then you get together and debate. And that’s kind of the Amazon problem-solving and inventing processes through this set of memos, this working backwards process. But if you complement that with a culture that’s able to vigorously actually debate topics and then recognize decision-making rights, the ability to make a decision, move forward wholeheartedly, learn from it, make adjustments if needed, and oftentimes they’re needed when you’re trying to correct something or innovate on something, that culture is really important to being efficient at how you go about it and allowing the best ideas to win, not the compromised ideas to win. And that’s typically what tends to work in most enterprises is it’s so easy and comfortable and you feel like you’re doing the right thing by compromising, but actually when there’s a right decision to something, compromise is actually the worst type of mechanism to have in those cases and everything. So those are three things that Amazon got really right.

And the fourth is that they packaged all of this up into a set of principles. I captured that story in The Amazon Way, the principles as the foundational bedrock and operating model for how they operate. And so it allows them to, in relative terms, stay fast and nimble at scale. And I wrote an appendix in the book, The Amazon Way about building your own leadership principles. And not that Amazon’s are the right ones for you or for other people, but thinking through tenants and how we operate and really meaning them and working to put them in play every day, I think any team and any company can probably benefit from that.

The Importance of Setting Foundation and Continuous Improvement in Operations. 

Jeff Tomlin: I want to mention we read through that book some time ago here at Vendasta, we adopted a number of Amazon’s principles because they made a ton of sense for our business. But when I look at a lot of companies in our space, that we work with and we know and ours, I’d say the one thing that probably a lot of people don’t get right is getting the foundation set before they begin to scale and how important those things are to create operational excellence over time. And I’d say probably today we’re still iterating and trying to understand in our operations on a regular basis what customer obsession really means for us, operationally, what does it mean for us? But anyways, I just wanted to know-

John Rossman: I mean, that’s the journey. It’s never over. It’s never perfect. You always fail relative to perfection and these ideals, but you keep them in place to pull you forward and to not just get lazy or to compromise about striving to do better.

Jeff Tomlin: It’s a good point. Oftentimes we look to them, it brings us back to centre when we feel like or we look at something and it may not be working, those things when we’re using them properly, they bring us back. So anyways, wanted to note that was-

John Rossman: I always tell my team and my clients, it’s like a customer problem or an operational problem, to some degree, it’s a gift, it’s a signal on how to improve. And so there’s art in interpreting that signal and then figuring out how do I experiment and try to improve it and everything, but that’s what a job is and the best work you can do is one that allows you to actually tackle problems. The environments and the cultures that I really feel sorry for are those that just accept the current state and don’t put in place the mechanisms or the approaches of like, okay, how do we learn from this and how do we do something better. That’s just learned helplessness. And I think that is a, to me, that may be what purgatory is and everything is being in a place where I see all these problems and I’m not allowed to do anything about them.

Transformation Challenges in Tech Require Clarity, Velocity, and Validation. 

Jeff Tomlin: And it’s common too because, especially in the technology space, companies go through different stages and they’re like stair steps and every single different stage comes with a different set of problems that you got to work through, especially when you’re trying to figure out scale. John, I want to talk to you a little bit about transformation because it’s something that you chat about quite a bit. Interestingly enough, I think just last night, KeyBank Capital Markets came out with their annual SaaS benchmarks report that they do, and OpenView I think came out with their benchmarks last month. And so something that I read with quite a bit of interest.

And this past year has been a challenging year in tech for a lot of companies. So I think a lot of companies, not just ones that are trying to reinvent themselves from an industry perspective, a lot of companies are thinking about transformation. So some of the things that KeyBank highlighted, growth rates are down, sales and marketing costs are up, efficiency is down, and access to capital is tighter than it used to be. So now companies have to balance growth and profitability working forward. A lot of companies are going through this phase of transformation. And so talk a little bit about how you work with your clients and how you get them to embrace the process.

John Rossman: Well, I’m going to take that question, Jeff, and make it an opportunity to talk about my next book, if that’s okay because the book is specifically about transformation. This book releases end of February. It’s called Big Bet Leadership, Your Transformation Playbook for Winning in the Hyper Digital Era. And essentially, it’s framed in the context of yes, everybody is having to tackle these supply challenges, cost model challenges, demand problems, and differentiation problems at their core, but yet we know that the vast majority of these types of transformations fail, like 75% fail to deliver expected benefits, one in six fail to deliver any benefits at all. Well, that’s a pretty tricky proposition. We know we have to change, but we’re most likely on a journey to nowhere here and everything. And that’s both tricky for a business, and it’s tricky for the senior leaders who are having to lead those endeavours and stuff.

So we specifically wrote this book as a playbook to senior executives to help them do an increasingly important part of their job, which is to lead these actual types of transformations. And the boiled-off summary of this is, is that there’s three critical habits that big bet legends put in place in order to successfully create a system for successful transformation. And those three critical habits are they create clarity, they maintain velocity, and they accelerate risk and value validation. And so the book just basically explodes on those. Okay, so how do we go about doing those things for senior executives? And it’s not an end-to-end methodology, it’s a set of intercepts that can be undertaken in part of a transformation. So your setup is perfect, which is the biggest challenge in these transformations is the fact that we actually refer to them as a transformation. What’s so much more helpful is to have a really firm command of this is the specific problem I’m going to solve and making sure that it’s worth it, that our customers would pay for it or that operationally it’s really worth it. So you have to have that anchor, be very specific about the problem you’re trying to solve. Couple that with your hypothesis for what you believe the future state is. Make it so that I can feel it. What’s your mental experiment that you would articulate, well, this is how I envision it working in the future. And if you can create those two points, well that creates a vector. Specific A to B point, and then you can do an experiment that allows you to validate or adjust that hypothesis to the future status. Transformation is a great category for technology and overall, but it’s really a, I think, part of the problem. Be more oriented towards the use case and in specific talk about the problem you’re going to solve and your hypothesis for what the future is. And that really is just a key part of creating that clarity, maintaining velocity, and then accelerating risk and value validation as part of that.

Agility is Key in De-Risking and Validating Digital Initiatives.

Jeff Tomlin: I wanted to dig into risk and validation. So I am assuming you’re big on input and output metrics and-

John Rossman: Yes, sir.

Jeff Tomlin: And measuring things on a regular basis and maintaining sort of agility. Talk us through a little bit of what that looks like.

John Rossman: So accelerating risk and value validation. The second half of that, or the unstated half of that, is you defer as many other aspects of investment or building as possible until you’ve proven that, oh, this works and everything. And so the input and output metrics you’re talking about are key in terms of defining the experiment. Well, what are the input metrics? What are the output metrics I need in order to prove the most complex and riskiest parts of this future state that I’ve defined? Once you’ve proven that out, well, then you’ve really de-risked the initiative. It’s no longer a bet anymore, it’s just an investment. We have high confidence that this is going to work. We just need to execute well in order to claim this prize that we have defined. And so those metrics really form the basis for creating your experiments on the few critical high-risk imperative operational pieces that have to be in place for this future state to be true.

Jeff Tomlin: I wanted to ask you, by the way, so I mean you’re talking about de-risking things, and it brought me back to a conversation that I was having with someone some time ago about what it means to be agile and what is agile software development. And one of the things I chatted with them about is at its core, agility is about being able to de-risk things and make decisions in a quick way.

John Rossman: And deferring as many things as possible that aren’t tied specifically to that de-risking piece, right?

Jeff Tomlin: Yeah, yeah, a hundred percent. So just dovetailing on that, you talk a little bit about this concept of what it means to be digital, and I saw a video on your website, you’re talking about it, and there’s sort of two parts to that. Walk us through that a little bit because I thought that, in a similar way, that created a lot of clarity, what it means.

John Rossman: So first I would say I think your instincts on agility and agile is completely right, and that term has at times been corrupted to mean like, oh, we do this iterative software development, but it’s really become the methodology of no accountability. No scope, no budget, no commitments at all, but yet we’re agile and everything. And so not in a purposeful way, but at times don’t confuse the agile methodology with actually being agile. And so that’s a key point. So what I believe a digital transformation or becoming digital truly is, and there’s more than one definition of this. So this is open for debate and everything, but the way I define a truly digital organization is really along two attributes of speed and agility. Well, if you think about what speed is, well, that’s about a highly efficient, highly predictable, highly precise, highly efficient motion or capability, well, that’s our operational excellence gene and pull to get perfect in today’s operations. The other attribute is the attribute of agility. Well, that’s the ability to sense and make change happen. That’s not our software development processes, that’s our organization and its ability to sense when change is needed and its ability to experiment its way towards staying relevant and creating durable competitive moats around our business and using all of the great technologies and tools and approaches and frameworks that we have. But I think that’s ultimately what leadership is looking for in their organization, which is both a highly efficient operational organization and one that continues to try to reinvent its core value propositions and staying relevant to its target market and expanding that target market. That’s what I believe a true digital transformation is about.

Digital Transformation Requires a Holistic Organizational Perspective and Strategic Testing.

Jeff Tomlin: That resonates a lot over the past probably a dozen years or so. One of the thing that Vendasta has done quite a bit is worked with traditional media companies and helped with digital transformation. And the ones that we’ve worked with that found a lot of success and really get it right are ones that thought about digital transformation holistically from an organizational perspective and thought, what does it mean to be a digital organization? And the ones that didn’t have as much success just thought about it from the standpoint of, hey, we’re going to replace some of our analog revenue with digital revenue, and it wasn’t a true transformation. I’m curious if there’s any common misconceptions that you run with or that you run into on how people think about what it means to build a digital strategy.

John Rossman: Well, yes, it’s always about the CIO using it as a way to rationalize whatever big platform or re-platforming effort that they want and everything. And I think that that too often is what becomes known as the digital transformation strategy within an organization, which is really kind of tech debt payments and everything. And I think the best ones are ones that take those investments and really tie them to the specific use cases and outcomes that they believe are going to matter and then figure out how do we as quickly as possible test the high-risk elements of those and then proceed on the big investments that are necessary. Most companies get that completely different. They commit big upfront, both in public announcements and in spending. They defer until the very end actually trying to capture and validate the high-risk operating imperatives relative to that, because these things get to be so big, all the personnel have to pull back. They de-risk it by lowering their ambition versus actually testing the high-risk operating imperatives. And so they may deliver it, but it just doesn’t have the pop, the impact that it should. And so while companies are going through their digital transformation, the juice isn’t worth the squeeze.

AI Success in Marketing, Customer Support, and Software Engineering Functions. 

Jeff Tomlin: Yeah, I totally get it. One of the things I wanted to ask you before we left is, it was about AI because everyone’s talking about it right now, the opportunities around it, how people are integrating it and implementing it, and who’s having success with it and who is not having transformative success. And so I wanted to get your take on it because of your background and the work that you’ve done in this space. Where are you seeing people have a lot of success in terms of integrating AI into their processes?

John Rossman: Well, there’s two core functions where you can, I think, in most organizations you can immediately find traction. And those two use cases or functions tend to be A, in kind of the marketing function, in marketing and customer support, I might add. And B is in the software engineering function. And so those are the individual jobs that can rapidly gain acceleration, leveraging ChatGPT, and other generative AI tools. Beyond that, if you kind of think about the daisy chain of how a process works or something like that, I think it’s still very early in figuring out how do we not just get benefits from leveraging AI, but how do we create, I always talk about the itities of a process. The itity means it has the essence of something, so a real process has to have scalability, measurability, observability, audibility, and building those itities into a process that incorporates AI. I think that’s the stuff that most organizations are curious about, and they may be doing a little experiment in, which I think is great in everything, but the tools, the controls, the integration, all of those things are still really early on a lot of those capabilities. And so I think it’s holding back a lot of value that will be captured in the future. So the name of my book is Big Bet Leadership, Winning in the Hyper Digital Era. So the hyper digital era is what I see as the next 10 years, which is where you are going to see productivity and operating models transform 10 to 100x because we figure out how to integrate AI into all of these long chain processes, and we fundamentally change the operating models and what productivity means in most back office and traditional knowledge worker work, which really hasn’t happened to a large scale through our past digital era. I think it’s coming, and it’s why being able to transform needs to become a core competency for senior leadership because if you think the current transformations you’re doing now are hard or impossible, I think the next set of transformations are going to make these look like trivial problems. And so we have to get good at how we actually change.

Jeff Tomlin: That also resonates. If you had a couple of takeaways for the audience here, what would be the two, maybe three things that you want to leave them with?

John Rossman: Well, A, focus on problems in particular, your customer problems. Always have those as being your north star as to how to really ground any abstract notion of an AI plan or a transformation. Focus on problems that matter to your customers and to your operations. B is understand how to simplify before you start layering in technology. That’s where you really make progress. Delete, delete, delete. That’s what Elon says. That’s his algorithm. Delete, delete, delete. And I think it’s absolutely true. And then the third is the best type of experimentation you can do is to write out your problem and your future state and then debate them with your colleagues. And that’s the cheapest and most impactful experimentation you can do is being able to picture how it works and what are the high risk components you need to do. So if you do those three things, you’re on your path towards an actual agile, transformed organization.

Getting in Touch with John Rossman

Jeff Tomlin: I love it. The discussion about agility was very well-timed, especially in my life here. Hey John, I really want to thank you for joining us on the podcast. One thing that I don’t take for granted is the opportunity that we have to get people on the podcast and pick their brain, and a lot of people that command big money to stand up on stage and share their wisdom with people. And we get you for 20, 30 minutes to get the best ideas out of you. I really, really appreciate it. I hope that we can get you back on the podcast sometime in the future so we can have a future conversation.

John Rossman: Anytime. And what I appreciate is being able to have a conversation with somebody who has depth and who has perspective to add to the conversation so that it’s a conversation and not me having to explain the basics and everything. So this was super fun and I appreciate the opportunity anytime.

Jeff Tomlin: All the best to you, John, and if people wanted to reach out to you, continue the conversation with you, how do they reach you?

John Rossman: Yeah, so LinkedIn, John Rossman, super easy. Rossmanpartners.com is the other way.

Jeff Tomlin: John Rossman, thanks for joining us on the Conquer Local podcast. Best to you, my friend.

John Rossman: Thank you. Thanks, Jeff.

Conclusion

Jeff Tomlin: Wrapping up this conversation with John has been a pleasure. Let’s break down some key takeaways. Firstly, we explored customer-centricity in organizational leadership and strategy. John’s insights into understanding customers deeply, thinking big, and focusing on meeting customer needs were pretty enlightening.

Moving on to the second point, John stressed the importance of having a Foundational Principle for Efficiency. Drawing inspiration from Amazon’s approach, he highlighted the value of embracing principles like “Invent and Simplify,” fostering active debate, and maintaining a customer-centric focus. Efficiency, as John notes, emerges from eliminating non-value-adding elements, encouraging healthy debates, and staying nimble in the process.

And the last takeaway revolves around Transformation Habits and A.I Integration. John shared three pivotal habits for successful transformation. Creating clarity, maintaining velocity, and accelerating risk and value validation. He emphasized the need to prioritize simplification before introducing technology into the transformation process. Plus, John touched on the transformative power of A.I, especially in marketing and support functions.

Before we wrap up, make sure to check out John’s latest ebook, available for just 99 cents throughout the month of March on his website. It’s a valuable resource you won’t want to miss!

If you’ve enjoyed John Rossman’s episode discussing Digital strategies and Innovation , keep the conversation going and revisit some of our older episodes from the archives: Check out Episode 647: Leverage the Lighthouse Strategy to Attract High-Profile Clients with Dennis Yu or Episode 618: Mastering Partnerships and Go-To-Market Success with Barrett King

Until next time, I’m Jeff Tomlin. Get out there and be awesome!