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What can the Life Sciences sector and other industries learn from Amazon

June 29, 2020
Borderless Leadership - article

Borderless Live in Conversation with Peter Vermeulen and Paul Connolly

Two senior executives at the top of their professions with a wealth of industrial and lifesciences experience talk about learnings at Amazon and how these can be applied to other sectors.

Q: The mission of Amazon is to be earth’s most customer-centric company. Can you give some examples of how you observed this in the Amazon culture?

A: First of all ‘customer-obsessed’ is one of the 14 Leadership Principles at Amazon’ – in order to be recruited and be promoted at Amazon you need to demonstrate this leadership principle. Multiple techniques exist within the workplace to ‘start with the customer needs and work backward’ – at Amazon we don’t worry/look at what competitors do – we focus on the customer. There is also an empty chair in each meeting room that symbolizes the customer in the room.

Q: Tell me more about the famous ‘Day One’ concept at Amazon?

A: ‘Day One’ means that Amazon will always act like a startup. To act like a startup, Bezos requires Amazon employees to do these four things:

  1. Be obsessed with the customer.
  2. Focus on results over process.
  3. Make high-quality decisions quickly
  4. Embrace external trends quickly.

Every year at Amazon, we had to make an inventory of ‘Day Two’ examples (mostly examples of bureaucracy) and come with an action plan to address this. For instance, in my area of responsibility, we needed six approvals for an increase in headcount – clearly an example of Day Two process.

We piloted and championed products and processes that leverage high-technology solutions including AI, cloud computing, and data mining support. I want to give you two powerful examples:

  1. Amazon needs to find, hire and onboard 60,000 wage associates annually. To keep the enormous machine moving, scalable recruitment and election solution was absolutely necessary, but one that did not sacrifice the quality of hire or applicant experiences. Amazon implemented a process termed “lights-out.” recruiting. Initially, the salesforce had been used to find wage-earning associates, but using AI all applicants were brought through the recruitment and placement process – all with no human recruiter involved. The process occurred ‘in the dark,’ or “lights-out”. Applicants were found, solicited, given personality, capability, and language tests online. Those who met the threshold were extended offers and invited to a training class. As a result, 60,000 new hires were placed without HR teams needing to be involved directly. Through the implementation of this “lights-out” approach, Amazon was able to recruit and onboard a massive amount of talent to locations all around the globe. On analysis, the gaining teams in the field never experienced significant downtime, and quality of hire and employee experience remained at the same if not better levels than previous, human-based hiring processes.
  2. Amazon sought ways to understand, anticipate, and act on employees’ reasons for departing a job. The Amazon solution came to be named Nostradamus. The system mined employee data— far more data than a human team could ever handle — and analyzed metrics, attributes, and changes about them. Nostradamus converted all the data about employees into actionable insights for managers. Those insights provided information and context for decision-makers and managers to positively influence employee outcomes in terms of retention. In total, 28 attributes were identified that could produce leading indicators about the likelihood of an employee leaving the company. Nostradamus’ findings were used to hold “Stay Interviews” – interviews held with contented team members to find out what about the work place was satisfying for them. Stay Interviews have a distinct advantage over the more common “Exit Interviews” as they provide opportunities to “get ahead of the bang,” and make changes that could improve conditions for all employees and reduce attrition. The roll-out of Nostradamus saw a sharp reduction in regrettable losses – to more than 30% in some business units. There was also a marked uptick in employee engagement – attributed to employees feeling a stronger connection with their manager and the business overall.

Q: When you look back at the Lifesciences sector what would you advise the sector to do differently?

A: I see an enormous opportunity for Lifesciences to step up in Employee Experience in order to compete for the talent out there. The Employee Experience consists of three key elements: the culture, the workplace, and the technology experience. Although the culture is great in most Lifesciences companies, the workplace and the technology environment experience is poor and disappointing for the new generations. Compare that with a tech company where you can bring your dog to the workplace, come and work in shorts and eat from food trucks, come work in amazing workplaces, and have top technology applications at your fingertips. The contrast can not be bigger.

I strongly believe that if Lifesciences does not fundamentally rethink their talent strategy and the Employee Experience, they will have lots of difficulties in attracting top talent – more specifically technical talent and the new generational talent.

Q: What are some elements of the culture you really liked at Amazon?

A: In addition to being truly customer-centric in everything Amazon does, I was wowed by the culture of analytics and document writing. PowerPoint is never used at Amazon (in contrast to J&J where PowerPoint was the way to get things done). At Amazon leaders are required to write docs to review their quarterly business results: a six-page documents describing highlights, lowlights with KPIs in green, yellow or red. It helps to focus the discussion and creates discipline in follow up.

A new proposal always comes in a doc format – a PRFAQ – ie a Press Release with Frequently Asked Questions. This forces you to think things through and have you all your key questions answered before you present a proposal to the leadership team.

Q: What in hindsight was very powerful in the culture of Healthcare?

A: From an Employee Value Proposition, it is really very powerful to know that your job has an impact on somebody’s life. That is an incredible value proposition. Hearing a patient thanking you for saving his or her life is incredibly powerful and makes you incredibly proud to work for your company. We also had great powerful Amazon stories where we truly made a difference for a customer, but I would say these stories are less powerful than the ones I heard in Lifesciences.

Q: Looking back at your time in Life Sciences, Paul, what new insights would you offer.

A: A Sense Of Purpose.

Most Life sciences are blessed with an almost inherent ‘calling’, as it is hard not to get engaged with the purpose of improving people’s health and wellbeing. In my experience, that was not used as actively as it could have been. When Peter talked about attracting new team members or encouraging existing ones to stay and to perform at their highest possible level, this sense of purpose can be a very powerful tool. The “Empty Chair for the Customer” is a great approach to remember that every decision you make can have real, and individual, impact.

Life science companies can carry some negative press over the cost of healthcare, prescription drugs and under-invested disease states which don’t have an economic return. When you think about this Calling of improving life, going beyond the simple delivery of the device or drug and really considering how to more fully engage in the overall healthcare value stream, could supercharge this inherent calling.

Entrepreneurial mindset

For a company of Amazon’s size to still behave and think like a start-up, is an amazing accomplishment. Many established life science companies did not have to develop this entrepreneurial muscle as revenue was somewhat protected through barriers to competitive entrants such as patent protection, established customer bases tied to a specific treatment regime, and so on. Obviously, the risks within healthcare are greater than within Amazon and I not encouraging short-circuiting clinical efficacy trials, but building on the prior comments on engaging more fully in the entire healthcare value chain may be an area where this muscle could be more fully developed. The added benefit to the business would be a more robust relationship with the healthcare providers as well as the patient.

Complacency

Are life science companies less forward-thinking then the high-tech companies or the industrial companies which run on a much tighter margin? I think it would be unfair to say that as it really comes down to where you feel that you can create value, for shareholders and customers. It’s how your DNA is programmed. Most life science companies are truly product-centric and losing this, for many would really challenge their survival.

However, this does not mean that the other value disciplines of Customer Intimacy and Operational Excellence can’t be maximized. We spoke on Customer Intimacy earlier and the possibility of more active engagement within the healthcare value stream beyond the product delivery. Supporting this with a true “results -focused”, and targeted, application of Operational Excellence would be beneficial.

I say ‘Results-Focused’ to echo Peter’s comments on Results over Process. I’m an operations guy so the process really matters to me. But if the process is getting in the way of the results, you are not doing justice to your customer nor your shareholder. Having he energy and willingness to tear down your process and reinvent is scary but one approach to get back to that Day 1 mentality. Something. As simple as retiring powerpoint and focusing on the Story, it can be a great start.

Q What have you learned since you left?

A: Peter and I have both worked in the relatively high margin business of life sciences. We’ve also worked in companies with a much lower margin structure. My involvement in cost and cash management has definitely moved up a notch since leaving life sciences. I do now think more deeply on cash flow. Maybe something for the audience to consider.

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