week, per day. For Bezos, experimentation is not a way toward
the strategy; it is the strategy.
In technology, the return on investment can be very long
tailed because the Internet increases the success of an idea expo-
nentially. This leads Jeff Bezos to advise, “Given a 10 percent
chance of a 100-times payoff, you should take that bet every
time. But you’re still going to be wrong 9 times out of 10.”5
Experimentation means that decisions are no longer the
result of lengthy upstream discussions. Rather, they are made
after ideas have been tested live. This avoids unending talk,
which is often counterproductive. When one project of many
doesn’t work out, it isn’t seen as a mistake or a failure. To the
contrary, it is seen as moving the company’s collective thinking
forward. Why? Because more failures actually lead to more suc-
cesses. And “as the company grows, the size of the mistakes has
to grow as well,”6 Bezos has commented.
Amazon is always experimenting, so that customer experiences
can become a little better every day. The goal is total satisfaction.
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Experimentation is fueled by the desire to make the execution
perfect. Attention is given to even the most minor details. But
this is not micro-management. Like Steve Jobs, Jeff Bezos is
obsessional when it comes to the quality of the user experience.
This is why he personally controls every pixel on the site’s land-
ing page. During meetings, he spends most of his time reading
emails from clients. He has declared that Amazon’s customers
remain loyal until the very second a competitor comes with a bet-
ter service.
Jeff Bezos believes that this behavior sets him apart from the
vast majority of other corporate leaders. He claims not to think
about the competition because doing so would distract him from
the essential: the consumer. Rather than thinking conventionally
in terms of market share, Bezos thinks in terms of market cre-
ation. As he puts it, “Other companies have more of a conqueror
mentality. We think of ourselves as explorers.”7
the platform economy
Today, Amazon is perhaps the most influential company in the
world, a position due to its unquestionable role as the spearhead
of the platform economy. From now on, all companies will need
to develop platforms, creating systems that interact easily with
others.
What do Facebook, Twitter, Uber, Airbnb, Apple, Salesforce,
and Amazon have in common? Their business models may be
very different, but each owes its strength to an online platform
that connects people and ecosystems. Of course, these businesses
monetize their platforms differently. Facebook and Twitter live
on advertising revenues. Uber and Airbnb charge fees. Apple
Jeff Bezos
15
sells products and has also built a platform for app developers,
who, in turn, render the brand’s products even more desirable.
These platforms are all sophisticated networks. Building
them is complex because companies need to aggregate thousands
and thousands of customers and the data that is relevant to them.
Thanks to mobile apps, users can interact with any business, any-
time, anywhere. The most valuable new-economy companies are
all platforms that position them as quasi-monopolies.
When Jeff Bezos launched Amazon as a virtual bookstore,
he devised an infrastructure that combined leading-edge IT
with breakthrough logistics. This pairing became the core com-
petency of his company. Amazon has since gradually built out
from its initial assets. “Take inventory of what you are good at
and extend out from your skills,”8 advises Bezos. We have all
witnessed Amazon’s evolution from an e-commerce powerhouse
to a company hosting third-party sites. Amazon Web Services
makes its data expertise and cloud-computing capabilities avail-
able to thousands of other companies, including Netflix, to use
in building their own applications. No one invests more energy
than Amazon when it comes to improving, aggregating, and
pivoting its business, or in helping clients pivot theirs. Unques-
tionably, Amazon has had a hand in the construction of the new
economy. It has created a platform that is so sophisticated and
powerful that it impacts the way the Internet works.
In its 2016 Tech Vision report, Accenture pointed out that “a
platform does not just support the business, the platform is the
business.”9 An interesting point in Accenture’s analysis shows
the degree to which digital platforms are not limited to tech
companies. The health care sector includes many platforms that
bring together different providers and collect and manage data
via apps. This is also the case for other sectors of industry. Gen-
eral Motors has developed OnStar, a connected car platform,
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Disney has its MyMagic+ platforms, and General Electric has
created Predix, the world’s largest industrial Internet of Things.
GE’s clients can develop their own applications on the Pre-
dix platform. Their factories, as well as GE’s, will be able to
improve productivity through real-time data management and
networking of industrial equipment. For instance, the wear and
tear of machine tools will be constantly monitored, allowing
maintenance needs to be predicted and serviced before problems
occur. To take an example from another industry, it won’t be
long before every tracking point of every railroad company in
the world is equipped with an electronic sensor that links to a
real-time central database. This sets up industrial companies to
become the next drivers of innovation.
According to Accenture, this will produce a major shift. His-
torical tech centers like Silicon Valley will disperse, spreading
innovative activity across a variety of industry-concentrated
global hubs. For General Electric and its former CEO Jeff
Immelt, this will have a profound impact on the stock market.
Immelt told Le Figaro, “Today, 20 percent of the S&P 500 mar-
ket capitalization is represented by consumer Internet compa-
nies that didn’t exist 20 years ago. I would bet that in the next 20
years the same will be true for industrial Internet companies.”10
The open-platform era can be traced back to a famous inter-
nal memo that Jeff Bezos wrote in 2002. It contained six points.
The fifth stipulated that: “All service interfaces, without excep-
tion, must be designed from the ground up to be externalizable.
That is to say, the team must plan and design to be able to expose
the interface to developers in the outside world. No exceptions.”
The sixth point toughly concluded that: “Anyone who doesn’t
do this will be fired.”11 Bezos’s internal decree to Amazon ended
up being applied throughout businesses. This is how Amazon
taught other companies that, from now on, everything, or almost
<
br /> everything should be open.
Jeff Bezos
17
Jeff Bezos practices what he preaches with the companies he
acquires. His takeover of The Washington Post in 2013 is a good
example. The results have been spectacular. And yet, it’s hard to
imagine two firms, Amazon and The Washington Post, with cul-
tures that are further apart. Even so, this did not prevent Bezos’s
ways of thinking from infiltrating the daily newspaper with light-
ning speed. Since its acquisition by Bezos, The Washington Post
has gone from being a newspaper to a news organizer. It now
operates like a platform, a tech company, with journalism as its
product. Engineers and developers work every day side by side
with the editorial staff. Digital tools are at the core of the morn-
ing editorial conference. The Washington Post has become truly
digital, with continuous 24-hour publication on the web. The
content is distributed through a multiplatform system of which
the newspaper is part. There are specific editorial processes that
have been adapted to each platform. For instance, the Talent
Network is an international network of freelance contributors
that the Post can tap into when it needs additional or specialized
reporting. Every day up to 400 stories can be published. The
organization has developed metrics to qualify and monitor read-
ers. It has also created incubator units to experiment with new
ideas. The Washington Post also possesses its own set of digital
tools, called Arc Publishing, which it sells to other media com-
panies all over the world.
The turnaround has been remarkable. Key indicators—
monthly unique visitors, subscriptions, digital revenues—have
grown in double-digits over the past three years. The Washington
Post has, at last, become profitable again.
Owning a newspaper is no easy venture. Donald Trump’s
attacks on the outlet (which he usually refers to as “Amazon’s
Washington Post”12) are virulent and occur almost daily. Taking
criticism from another angle, Jeff Bezos has been rebuked by labor
unions. Finally, journalists, even those at the Post, are increasingly
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mistrustful of Silicon Valley monopolies. Nevertheless, as one
article from Vanity Fair pointed out, journalists in other media
groups “are just looking for their Bezos. Everyone looks at
The Washington Post under Bezos and is praying for the same.”13
Chapter 3
Herb KelleHer
ON HUMAN RESOURCES AND
OPERATIONAL QUALITY
I remember hearing the French President François Mitterrand
explain that qualifications were not essential when it came to
hiring ministers and civil servants. Of course a necessary level of
competence was required but, when bringing people on board,
nothing was more important to Mitterrand than their frames of
mind and their levels of commitment.
That was back in the eighties, at a time when I still believed
in detailed job descriptions that specified the precise capabili-
ties expected of candidates. Years later, I came across the famous
phrase “Hire for attitude, train for skill,”1 which was uttered
by none other than Herb Kelleher, the founder of Southwest
Airlines, a company with top performance in its sector.
Thousands of managers have tried to take Herb
Kelleher’s advice, more or less successfully, depending on the
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single-mindedness with which they have followed it. One well-
known example is Tony Hsieh, the founder and CEO of Zappos.
He followed Kelleher’s guidance to the letter. Hsieh is convinced
that happy employees put everything into giving their customers
maximum satisfaction. He talks about “happiness management”
and he has written a book about his approach called Delivering
Happiness.
employees First
“Employees first” 2 should not be seen as just a management adage
or a sort of value-added accessory. This concept is at the very
heart of Southwest Airlines’ unmatched success. Naturally, the
company’s performance relies on its business model, which does
not have a central hub, boasts the industry’s fastest equipment
rotation, and offers a single-class cabin. Yet, Southwest’s flam-
boyant founder stressed that the airline’s performance also owes
a lot to the company’s strong corporate culture and, in particu-
lar, to the priority given to its employees’ fulfillment.
Over the past several decades we’ve witnessed the disappear-
ance of carriers such as Pan Am, TWA, Eastern Airlines, Air
America, Northwest Airlines, Pacific Southwest Airlines, and
New York Air, to name but a few. At the same time, Southwest
has seen its market capitalization grow twice as fast as the S&P
500. Its sales have reached $37.2 billion in 2017 and it employs
more than 56,000 people. On top of all this, the company has
never laid off a single employee since its creation in 1971, despite
operating in a highly volatile industry.
The U.S. airline sector is often criticized for having unfriendly
staff and mediocre service. Southwest is an exception. Its per-
sonnel, whether flying or on the ground, is seen as being open,
Herb Kelleher
21
concerned, always ready to do their best. This clearly comes
from the company’s “hire on attitude” philosophy. For candi-
dates, character is given more importance than experience. Julie
Weber, Southwest Airlines’ HR director, makes a point of recruit-
ing only people who have what she calls a “warrior spirit.”3 Our
agency worked for Southwest and our people have witnessed that
this is still the case. When Southwest Airlines recruits, they are
not looking for the right experience, but for the right mindset.
Herb Kelleher believed that “the essential difference in ser-
vice lies in minds, hearts, spirits, and souls.”4 This is the guid-
ing line that defines Southwest’s behavior. He thought that his
company’s culture gave it a real competitive advantage. The
competition can buy physical things, but it cannot purchase the
spirit of a company, which serves as an everyday inspiration to its
employees. It’s an asset that competitors cannot duplicate.
It’s important to remember that Herb Kelleher imposed this
point of view at a time when shareholder value (i.e., maximizing
shareholders’ equity) was the top priority among nearly all
corporate boards. Optimizing earnings per share was supposed
to drive all the company’s strategies and initiatives. Herb
Kelleher went against the grain. He was one of the first to invert
the order of priorities and he summarized his thoughts in a brief
manifesto: “Your employees come first. And if you treat your
employees right, guess what? Your customers come back, and that
makes your shareholders happy. Start with employees, and the
rest follows from that.”5
> In return, what Herb Kelleher expected from his people was a
perfect blend of energy, enthusiasm, team spirit, self-confidence,
and tolerance of stress. He wanted the people in the company to
think and act like entrepreneurs, like owners. Ann Rhoades, presi-
dent and founder of the consulting firm People Ink, spent much of
her career at Southwest Airlines, where she served as Chief People
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Officer. When hiring, she used to ask applicants this intrusive
question: “Tell me about the last time you broke the rules.”6
The emphasis given to recruitment reminds me of the chief
executive of another U.S. company. No matter what was on
the agenda, he started every meeting by asking present staff the
unnerving question: “Who did you recruit lately?”
Another primary value at Southwest Airlines is its famous
sense of humor. Some Southwest flight announcements have
gone viral on social media because they are so funny. The com-
pany believes humor is a great way to build bonds with its cus-
tomers, so if you don’t have a sense of humor, don’t try to get
a job at Southwest Airlines. I know of no other company that
makes humor an essential requirement for recruitment.
This leads us to the most important point. By prioritizing
its employees, Southwest Airlines provides a better quality of
service, which has allowed it to be one of the first companies
to disrupt the “low cost = low experience” equation. Herb
Kelleher was one of the few who improved the status of low-cost
services. He understood that low cost does not have to lead to
compromises on quality. Since Southwest’s success, many others
have rushed into the path he traced. Low-cost companies now
deliver great customer experience in every sector of activity: cars,
hotels, banking, insurance, travel—the list goes on. A blogger7
has recently stated that frugal has become the new cool.
Southwest’s business model is truly virtuous. It would be easy
to imagine that offering the best service at a lower cost would
mean putting pressure on salary. At Southwest Airlines, the
opposite is true. The company’s employees are the best com-
pensated in the airline industry. In addition to their salaries, they
benefit from several forms of profit sharing and stock-option
schemes. As a result, by placing staff interests ahead of share-
holders’ short-term returns, Southwest Airlines has maximized
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