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Malcolm Kerr: The keys to high standards

Malcolm_Kerr_EYBuilding a culture of high standards is crucial for business success. Take it from one of the world’s most successful companies

This time last year, I wrote about Amazon chief executive Jeff Bezos’s letter to the firm’s shareholders. It focused on his belief businesses need to treat every day as “day one”.

He wrote: “Hold on to day one as long as possible. Fight the idea that day two has arrived. Day two is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always day one.”

It certainly works for Amazon. The recent American Customer Satisfaction Index positioned it first place for the eighth year in a row, while the UK Customer Satisfaction Index ranked it first for the fifth year in a row.

Amazon Prime has more than 100 million paying global customers. Last year, it shipped more than five billion items to these people. In Q4, it made a profit of just under $2bn. Not huge given the size of its turnover but in line with its plans.

So, what can a small or medium size owner-managed business learn from its success?

Bezos says there is no single way to stay ahead but high standards (widely deployed and at all levels of detail) are certainly a big part of it. Are high standards intrinsic or teachable? He believes the latter, and that many can learn simply through exposure.

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High standards are contagious. Bring a new person into a high standards team and they will adapt quickly. Of course, the opposite is also true. If low standards prevail, they will spread swiftly. Most of us will have seen examples of both.

If you have high standards in one area, does that mean you will have them across the business? Bezos believes not.

He points to the early days of Amazon where he had high standards on inventing, customer care, and hiring. But he did not have such standards on operational process – how to eliminate problems and so forth. He had to learn and develop standards on all of that. His colleagues were his tutors.

Understanding this point is crucial. We can consider ourselves to be people of high standards in general but still have debilitating blind spots.

So, what do we need to do to develop high standards in a particular area? First, we need to understand what good looks like. Second, we need to have realistic expectations as to how hard it will be to achieve the result.

Bezos calls this the scope and points to a couple of real life examples.

A close friend wanted to learn to do a free-standing handstand; no leaning against the wall. She found it difficult, so she hired a handstand coach (only in the US).

He gave her some key advice: “It takes about six months of daily practice. If you think you can do it in two weeks you will end up quitting”.

Unrealistic beliefs on scope – often hidden and undiscussed – kill high standards.

The second example really resonated with me. After 20 years of consulting, I was amazed and thrilled to discover that Amazon does not use PowerPoint or any other slide-based presentations. Instead, it writes narratively structured six-page memos and all attendees at any given meeting read them at the start.

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Unsurprisingly, the quality of the memos varies widely. In the handstand example, we can all recognise high standards. It would be very difficult to document the requirements that make a great memo. But you know it when you see it.

Bezos suggests the problem can be a wrong expectation of scope. The writer of the six-page memo believes it can be written in one or two days, or even a few hours, when really it may take a week or more. They are trying to perfect the handstand in two weeks.

Great memos are written, re-written, shared with colleagues, set aside for a couple of days and re-edited with a fresh mind. His point is that you can improve results just by teaching scope. A great memo should probably take a week or more.

What about skill? Do you need to be a highly skilled writer to create a world class memo? Not in the context of a team. The (American) football coach does not need to be able to throw and a film director does not need to be able to act. But they both do need to be able to recognise high standards and teach realistic expectations on scope.

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Even in the example of the six-page memo, someone needs to have the skill. Incidentally, by tradition at Amazon, authors’ names never appear on the memos – the memo is from the whole team.

Bezos’s thinking is both relevant and important for the advice industry. This is the key extract:

“Building a culture of high standards is well worth the effort, and there are many benefits. Naturally and most obviously, you’re going to build better products and services for customers. This could be reason enough. Perhaps a little less obvious: people are drawn to high standards – they help with recruiting and retention.

“More subtle: a culture of high standards is protective of all the ‘invisible’ but crucial work that goes on in every company. I’m talking about the work that no one sees. The work that gets done when no one is watching. In a high standards culture, doing that work well is its own reward – it’s part of what it means to be a professional. And, finally, high standards are fun. Once you’ve tasted high standards, there’s no going back.”

That makes sense to me.

Malcolm Kerr is an independent consultant

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