Bezos’ Three Decision-Making Philosophies (Dr. Deng Shuming)

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This articleauthorDeng ShumingVisiting professor of Computer Science Department, Faculty of Engineering, Geography Department, Faculty of Social Sciences and School of Architecture, University of Hong Kong, and writes columns for Hong Kong Economic Journal“Kami Shingo”.

McKinsey China Chairman Elizabeth Neale recently gave a speech on how to revitalize Hong Kong. The content was thought-provoking and served as a spur to the SAR and every company.

In his speech, he questioned whether Hong Kong’s past advantages and mainland tax incentives were the driving force for progress, or whether they made people dependent, which eroded our competitiveness? In recent years, the government has invested huge public funds to encourage research and development and support start-ups. How can the results be expanded and strengthened to become the driving force of the future economy? How will technology help local SMEs become “micro-multinational companies”? In five years, is it possible that 20% of the local gross domestic product (GDP) will be contributed by companies and industries that have not yet been born today?

Amazon, which celebrated its 30th birthday in July, may provide some inspiration for companies seeking to stay afloat in the face of fierce global competition. Its online shopping business has changed the world, and JPMorgan Chase estimates that Amazon’s sales in the United States will reach $554 billion this year, accounting for 42% of U.S. e-commerce.

If you want to gain a foothold in the fierce global competition, Amazon, which celebrated its 30th birthday in July this year, may provide some inspiration. (AFP file photo)

How did this company grow from an online bookstore to a $2 trillion behemoth, with its business expanding from e-commerce (last year’s turnover increased by 5.4% compared to 2022) to multiple areas, including advertising (up 24.3% last year), providing services to third-party suppliers (up 18%, which is to assist sellers in logistics, customs clearance, taxation, marketing, etc.), and important cloud computing (up 13%). According to data company Synergy Research, Amazon Web Services (AWS) has a 31% share of the global $300 billion market.

Or, we can get inspiration from the letter that founder Jeff Bezos wrote to shareholders on the company’s third anniversary in 1997. As a technology company, innovation is inevitable (the survey shows that 79% of the company’s senior executives regard innovation as one of the three top priorities). In addition, Bezos also has a unique decision-making philosophy, which is to focus on customer needs and long-term profitability, using data analysis as a means:

Founder Jeff Bezos has a unique decision-making philosophy, which is to focus on customer needs and long-term profitability, using data analysis as a means. (AFP file photo)

‧ “We will continue to pay unremitting attention to customers” – building word-of-mouth through encouraging feedback, recommending books, etc. is a powerful tool for increasing customer repurchase and loyalty in the era of online bookstores.

‧ “Our investment principle is to maintain a long-term market leadership position, rather than chasing short-term profits or catering to Wall Street’s short-term reactions” – the company’s business model of expanding its customer base has now become the motto of many e-commerce companies.

“We will continue to use objective analysis to measure investment effectiveness, eliminate low-return projects, and increase investment in the best projects.” – Amazon has embedded artificial intelligence engineers in every department, team, region and warehouse to capture business opportunities more quickly and accurately.

However, I think the most important thing is to keep the fire in your heart. As early as 27 years ago, in his open letter, Bezos said that every day is the first day of entrepreneurship (Day 1). Always work diligently, dare not slack off, and will not be complacent because of small achievements, or give up long-term goals for the sake of immediate interests. I hope everyone will encourage each other!