Amazon’s Planning Cycles: A Guide for Leaders
As CTO and Interim CTO, I am always looking for ways to optimize your company’s planning and execution processes. One of the most successful models out there is Amazon’s Operating Model. It’s described in the fantastic book “Working Backwards: Insights, Stories, and Secrets from Inside Amazon.”. I’d highly recommend reading the book! Here’s my summary on how to model your planning cycles, measure success, and prioritize key projects.
Table Of Contents
Long-Term Vision
Define Your Mission and Vision
Start by clearly articulating your company’s long-term goals and the principles that will guide you. This vision should be ambitious and customer-focused, ensuring that your objectives are centered around delivering value to your customers.
Implement a Two-Pizza Team Structure
Small, Autonomous Teams
Organize your teams so that they are small enough to be fed with two pizzas. This promotes agility and accountability, with each team owning their projects from inception to execution, ensuring full responsibility for outcomes.
Adopt the Working Backwards Process
Start with the Customer
Begin by writing a press release and FAQ for the product or feature you want to develop. This forces you to think from the customer’s perspective, ensuring that your vision is clear and compelling.
Iterate on the Press Release
Refine the press release and FAQs until you have a vision that addresses customer needs effectively.
Establish Regular Planning Cycles
Annual Operating Plan (AOP)
Develop a comprehensive plan for the upcoming year, including key initiatives, resource allocation, and financial targets.
Quarterly Business Reviews (QBRs)
Conduct detailed reviews every quarter to assess progress, make adjustments, and allocate resources as needed.
Weekly Business Reviews (WBRs)
Hold weekly meetings to track key metrics, identify issues, and ensure alignment across teams.
Set Clear Metrics and Goals
Define Key Performance Indicators (KPIs)
Establish metrics that will help you measure progress toward your objectives.
Use the “Controllable Inputs” Approach
Focus on metrics that your teams can directly influence, rather than only on outcomes.
Prioritize S-Team Projects
Senior Leadership Team (S-Team)
Assemble a senior leadership team responsible for driving major initiatives and ensuring alignment across the organization.
Focus on High-Impact Projects
The S-Team should prioritize projects that have the potential to significantly impact your long-term goals.
Regular Check-Ins
Hold regular meetings to review the status of S-Team projects and make strategic decisions.
Foster a Culture of Innovation and Experimentation
Encourage Experimentation
Promote a culture where teams are encouraged to experiment and learn from failures.
Data-Driven Decision-Making
Use data to guide your decisions and validate hypotheses.
Maintain a Customer-Obsessed Culture
Customer Feedback Loops
Regularly gather and analyze customer feedback to inform your planning and decision-making.
Relentless Focus on Customer Experience
Ensure that every team and project is aligned with improving the customer experience.
Example Planning Cycle Timeline
January:
- Finalize Annual Operating Plan (AOP)
- Set KPIs and goals for the year
February - March:
- Kick off major S-Team projects
- Conduct Q1 Business Review (QBR)
April - June:
- Monitor progress through Weekly Business Reviews (WBRs)
- Conduct Q2 Business Review (QBR)
July - September:
- Mid-year review and adjustments to AOP
- Conduct Q3 Business Review (QBR)
October - December:
- Prepare for the next year’s AOP
- Conduct Q4 Business Review (QBR)
Weekly:
- Hold Weekly Business Reviews (WBRs) to track metrics and address issues
Summary
This structured yet approach, can ensure that your planning cycles are effective and aligned with your long-term vision. Amazon’s model can help to foster a culture of innovation, customer obsession, and operational excellence, positioning your company for sustained success.
If you don’t have a structured planning process, then I’d strongly suggest to dive into the “Working Backwards” book and copy the Amazon Operating Model at first. You can - and should - adapt the process to your challenge along the way. The Amazon Operating Model is a really good starting point and a solid foundation your business.
