“Jeff, what does Day 2 look like?” Amazon.com logo

 

That was a question Jeff Bezos, founder and CEO of Amazon.com, was faced with at an Amazon “all-hands meeting” in 2016.

 

For most of us, the “Day 2” reference probably needs to be put into context.

 

What is “Day 1”?

In Jeff Bezos’ 1997 letter to stockholders in the company’s annual report, he said:

 

“[T]his is Day 1 for the Internet and, if we execute well, for Amazon.com. Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets.”

 

So, “Day 1” for Amazon was the time of its IPO in 1997.

 

And, Jeff Bezos has “been reminding people that it’s Day 1 for a couple of decades.” In his 2016 letter to shareholders he says, “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.”

 

So, what is “Day 2”?

“Day 2 is stasis,” Bezos says. Stasis that is, according to Bezos, “Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.”

 

STASIS
A state in which there is
neither motion nor development,
often resulting from opposing forces
balancing each other

 

“To be sure,” Bezos points out, “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.”

 

How to fend off “Day 2”

“I’m interested in the question, ‘How do you fend off Day 2’?” Bezos continues in his 2016 letter to shareholders. “What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?”

 

Acknowledging the challenge, Bezos tells his reader flatly: “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.

 

Fending off “Day 2” in your company and supply chain

A genuine obsession with customer service

“There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more,” Bezos tells us. Be he goes on to say, “in my view, obsessive customer focus is by far the most protective of Day 1 vitality.”

 

If your company or supply chain is “efficiency” or “cost” focused at that is in any way interfering with FLOW—the flow of product and services to your customers—then you cannot also claim to be customer-focused. (And, by the way, I have never met a company or supply chain that spent its time, energy and money on silo-measured costs and efficiencies where there were not also detrimental effects on FLOW.)

 

A skeptical view of proxies

What are these “proxies” to which Bezos refers.

 

Bezos explains: “As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous, subtle and very Day 2.”

 

“A company example,” Bezos reminds us, “is process as proxy. Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing…. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not rare to hear a junior leader defend a bad outcome with something like, ‘Well, we followed the process.’”

 

It doesn’t really matter how many other people, companies, or supply chains endorse some process. It especially doesn’t matter if the process isn’t really working for any of them.

 

Take the traditional MRP (material requirements planning) process. This process isn’t working for most companies. We know this because your company—and more than 80 percent of your competitors—is likely to be supplementing the data you are getting from your MRP system with spreadsheets, home-grown applications, or even whiteboards.

 

Nevertheless, most companies and supply chains cling to traditional MRP, substituting the proxy of “the process” for the result they really want.

 

Why? Because they can always claim: “We followed the process.”

 

Eager adoption of external trends

The fact that most companies and supply chains are still clinging to traditional MRP—a process designed in the 1950s, articulated in the 1970s, and encoded into software in the 1980s and 1990s—is evidence enough that most are not eager adopters of external trends.

 

Jeff Bezos warns: “The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind. These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace.” [Emphasis added.]

 

DDMRP (Demand Driven MRP) is one of those “powerful trends” that is getting “talked and written about a lot.” Just do a Web search for “DDMRP” and see what you come up with. Or, try this one. No shortage of excellent material on this new and powerful trend.

 

But most companies and supply chains are still trying to get their proxy (read: traditional MRP process) to work for them—and rapidly becoming “Day 2” companies.

 

High-velocity decision making

Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations…. Speed matters in business….” Bezos observes.

 

By the time most have adopted DDMRP, most of the business advantage will have dissipated. It’s the early adopters who will benefit most.

 

So, what’s keeping you and your company or your supply chain from adopting DDMRP now?

 

The evidence is in. Adopting DDMRP is already proven to be a high-quality decision. See case studies here.

 

How s-l-o-w will your company be in making this quality decision? It’s really up to you.

 

Now it’s your turn

Do you agree or disagree with Jeff Bezos on Day 1 versus Day 2? Why?

 

We would be delighted to hear from you. Please leave your comments below, or feel free to contact us directly, if that suits you better.

 

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Citation: https://www.sec.gov/Archives/edgar/data/1018724/000119312517120198/d373368dex991.htm

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