- Amazon CEO Jeff Bezos has released his latest annual shareholder letter.
- Bezos has published a shareholder letter every year since 1997.
- The shareholder letter is considered a must-read by many business professionals.
In the letter, Bezos stressed the importance of having high standards in running a business. By setting high standards, companies are able to live up to "ever-rising customer expectations," he said.
"How do you stay ahead of ever-rising customer expectations? There's no single way to do it – it's a combination of many things. But high standards (widely deployed and at all levels of detail) are certainly a big part of it," Bezos wrote in the letter.
Bezos also disclosed for the first time that Prime now exceeds 100 million members worldwide. In 2017 alone, Amazon added more Prime members than any prior year, and shipped over five billion items through the paid membership service worldwide, he said.
Amazon also sold the most number of devices last year, with customers buying "tens of millions" of Echo devices, Bezos wrote in the letter.
With regards to Whole Foods, Bezos said the "technical work" is currently under way to bring Prime member benefits to the grocery chain.
The annual letter, which Bezos has published every year since 1997, is widely considered a must-read by business professionals for its rich detail around the Amazon CEO's management principle and long-term thinking.
This year's letter focuses on the idea of setting high standards. Bezos writes high standards are "teachable" and that they are "contagious" within an organization. But they have to be "domain specific" because they don't automatically spread from one area to another.
In order to achieve high standards, Bezos says you need to "recognize" its exact meaning in a particular area, and then set the "scope" for realistic expectations to reach those goals.
"So, the four elements of high standards as we see it: they are teachable, they are domain specific, you must recognize them, and you must explicitly coach realistic scope," Bezos writes. "Building a culture of high standards is well worth the effort, and there are many benefits."
In one of the more amusing parts of the letter, Bezos gave an anecdote about a friend who visited a handstand coach — who told her it would take six months to master the skill — in order to illustrate his point:
A close friend recently decided to learn to do a perfect free-standing handstand. No leaning against a wall. Not for just a few seconds. Instagram good. She decided to start her journey by taking a handstand workshop at her yoga studio. She then practiced for a while but wasn't getting the results she wanted. So, she hired a handstand coach. Yes, I know what you're thinking, but evidently this is an actual thing that exists. In the very first lesson, the coach gave her some wonderful advice. "Most people," he said, "think that if they work hard, they should be able to master a handstand in about two weeks. The reality is that it takes about six months of daily practice. If you think you should be able to do it in two weeks, you're just going to end up quitting." Unrealistic beliefs on scope – often hidden and undiscussed – kill high standards. To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be – something this coach understood well.