Romer: Day 1 and the need to be nimble
The 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027. Many others have either gone bankrupt or are in serious decline. Why?
It’s easy to point the finger at COVID-19 or other macro-economic factors. But overwhelmingly it is because they failed to adapt to a shifting climate and instead stuck to outdated business models. Consider Sears or Blockbuster as examples of companies who were complacent with doing business as usual to the detriment of their long-term continued success.
Of course, Eagle County isn’t filled with S&P 500 companies; our community is driven by small businesses with over 90% of our businesses having 20 or fewer employees. The fact we’re driven by small business allows us — forces us — to avoid complacency and to embrace change.
That said, we have the opportunity to learn from large organizations and how they adapt (or in the case of Blockbuster and Sears, refuse to adapt). This is never truer than in today’s environment where uncertainty and public health responses drive business decisions.
Consider a company that folks love to hate: Amazon. From the very beginning, Jeff Bezos was determined not to repeat the mistakes of failed companies who dropped off the S&P, so he implemented a mindset that kept Amazon on a continuous cycle of experimentation, innovation, iteration, and even failure (remember the Fire Phone? Me either). Bezos calls this mindset “Day 1” and it has become the company’s mantra for longevity.
The Day 1 philosophy is credited with much of Amazon’s success. The Day 1 concept focuses on results, not process; applied to our local businesses, don’t get too caught up on how things are completed but rather that the desired result is achieved. Day 1 also focuses on making decisions quickly; local businesses need to remember that not everyone on a team needs to agree, but they do need to work together to achieve common goals.
The most insightful part of the Day 1 philosophy is an obsession with customer service. In his Day 1 letter to stockholders Bezos wrote “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. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.”
“Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.”
Amazon’s approach can be adopted by local businesses in their own way. Common strategies businesses are adapting as we head into an uncertain winter season include:
- Heightened sense of awareness, planning and management around operating reserves
- Committing to regular short-term forecast updates
- Fearlessness related to embracing change Renewed emphasis on leadership and communications
We are fortunate in the regard that successful communities are built on its people, and we are filled with optimists focused on creating their own future. This season will require embracing uncertainty and risk, and Amazon’s Day 1 philosophy can provide a guidebook.
Chris Romer is president and CEO of the Vail Valley Partnership, the regional chamber of commerce. Learn more at www.vailvalleypartnership.com.
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