Former Amazon exec John Rossman on delivering big bets

An expert on digital transformation, leadership, and innovation, John Rossman is the bestselling author of three books, including The Amazon Way, which translates Amazon’s leadership and tactics into actionable steps that businesses can apply to accelerate their digital transformations. He was an early Amazon executive himself, with key responsibilities in launching the Amazon Marketplace business in 2002.

Rossman joined me on a recent episode of the Tech Whisperers podcast for the launch of his latest book, Big Bet Leadership: Your Transformation Playbook for Winning in the Hyper-Digital Era. Part of this book’s power is that it focuses on practical how-tos, not lofty platitudes. It’s truly a playbook, based on Rossman’s experience and successes delivering on many big bets.  After the show, we spent some more time exploring some of the tactics he details in the book. What follows is that conversation, edited for length and clarity.

Dan Roberts: Your co-author Kevin McCaffrey knows you well, having been a client and now a partner at the company you founded, Rossman Partners. He’s observed that, with clients and your business, you’re not an ‘or’ kind of leader; you’re an ‘and’ kind of leader. You focus on strategy and execution, innovation and optimization. What about your career path has helped you develop this dual focus?

John Rossman: Everything about my career has been about solving problems and trying to solve them in a durable manner, not just putting a Band-Aid on. Sometimes Band-Aids are needed, and that can be step one or triage. But you have to create a root-cause understanding and solve that. If you can do that and then think about, how can I leverage the core capabilities or the elements I built to build a durable solution, there’s typically a strategic path to take advantage of.

That’s what Amazon has done to grow AWS in this combination of businesses. They solved the problem for Amazon, and then they built them in a very generalized reusable manner, and then they looked at who in the market would also find value in that. The position that senior leaders have is being able to do both of those things at once. That’s what I saw so much of at Amazon: People who can quickly be nimble across both of those lenses and see that opportunity.

Sometimes this is called a platform strategy. It’s a realization that we’ve got to have results now, and we’ve got the opportunity to create a more durable business for whatever the next horizon is for us. So I think that’s just how I now operate: Solve the problem, truly figure out the root cause and how to do it in an anti-fragile way, and then find other ways to leverage it. It’s a good pattern to follow across most solution areas.

Stephen Wilson is another person who’s seen how you operate in high-stakes moments. He talks about how you’ve deployed a number of tools or tactics during your support of Big Bets, including ‘shrink the change,’ ‘bad news first,’ and ‘thing big, bet small.’ Are there one or two that you think apply in all situations?

Shrink the change is a technique for many situations to make the gap smaller than it is and also help your team, your partners, everybody realize that we’ve been here before. This is fully within our capability. Although it seems like a big change it’s actually just us retuning things and getting back to something we were before or have done before.

The underlying essence about so many of these is about how to get to the truth. What is the real problem? What is the real root cause? What is the actual truth to the situation? If you let

truth-seeking be job number one in these circumstances, then you’re in a position to actually figure out, how do I unwind, correct, go forward, or make better recommendations than just Band-Aid recommendations.

The ‘3 futures memo’ is another technique from Big Bet Leadership. In so many executive teams, when a transformation or big idea is being presented, it’s presented with one version of the problem and one version of where we’re going. It’s done in a convincing manner, and then we ask the executives, ‘Do you have any questions or concerns about this?’ That is fundamentally an unfair situation. What happens is the executives around the table say, ‘I can’t argue with that. You’re prepared, you have vastly more information than I do. Makes sense to me.’

Eighteen months later, the real understanding comes to light, and then the CFO says we’ve got a cost problem. The marketing leader says we’ve got a brand issue. The CIO says we’ve got a platform issue. The 3 futures technique helps build that truth and understanding upfront for those leaders so they can do their job of surfacing their concerns, and surfacing them early, so we can deal with them upfront. It’s not just getting alignment but getting to a deeper understanding and truth so we can deal with it.

There is a really important section of the book on maintaining velocity. We’ve all seen big initiatives get launched with gusto and lots of energy and fanfare, and over time they lose steam. Can you share some of the advice you offer to overcome this?

One chapter in the book focused on maintaining velocity is on ‘opening moves.’ It’s about those predictable things that we should deal with early, because we know that a big bet needs a different type of environment. Topics might be the technology environment and data environment that’s necessary to be able to test this concept quickly and early. It can deal with the policies and procedures that work when you’re looking at scaling something but don’t work when speed and velocity to testing and learning is key. You need to create an environment and a set of policies, procedures, and environment designed for maintaining velocity.

Team structure and leadership structure within the big bet is also a critical factor — having dedicated teams and, importantly, a dedicated leader who is able to have sway and influence at senior levels in the organization is critical. Too many of these big bets are underpowered from a leadership standpoint. The leader may be a really good project manager, but they don’t have the perspective or the respect of the senior leadership team, and they haven’t been set up correctly, so a lot of it is kind of a negotiation and an expectation-setting with everybody.

The leader has to be able to get things done quickly across the organization. Amazon has their version of this that they call a single-threaded leader. Apple and other companies talk about it as a DRI — a directly responsible individual. This has to be a senior leader who is dedicated to the big bet and has the ability to make things happen across the organization at unnatural speeds.

That’s where tools like the ‘future press release’ can be really empowering, by articulating, ‘We don’t work for just for our function or team, we work for the mission, and the mission is this big bet.’ Those are all the little jujitsu moves that add up to maintaining velocity and creating empowered teams.

The other thing we do in the book is apply constraints to the activities to avoid analysis paralysis. You’ll notice when we’re talking about ‘thinking in outcomes,’ or other people’s outcomes, or the governance needed for a big bet, we suggest a set of constraints to make sure that analysis paralysis doesn’t become the functioning ethos of the big bet.

The subtitle of the book is ‘Your Transformation Playbook for Winning in the Hyper-Digital Era.’ Can you elaborate on three mega forces you’ve identified that are creating this hyper-digital era?

My belief is that the past 25 years of digital transformation and digital change are the minor leagues to what is coming. We are now stepping into a whole new era, and it’s not just the technology that’s creating this environment. I believe there are three mega forces connected by a fuse that is going to create this hyper-digital era.

The first is the technology. AI and other disruptive technologies — quantum computing, computer vision, fusion energy — these are the types of disruptive technologies that change markets. Every senior leader needs to understand them well enough to know when they see a use case and how that might be the type of technology that could help them. They need to be use-case specialists, and they need to be smart enough about all of these disruptive technologies.

The second mega force is the labor market. If you ask clients what’s the number one constraint, the number one risk relative to your business, it’s having enough well-trained people to do the job. That’s only getting worse in this country. If you look at our birth rates, our population aging, all of those things are creating a tightened labor market.

The third mega force is, as a country, our commitment to entitlement spending and debt service.  The only really effective way to solve that challenge is to actually grow the economy, to innovate.

How are these mega forces driving the need for big bet leadership more than ever before?

I think each one of those mega forces is an individual force to be reckoned with. Combined, it’s going to create an environment that I framed as the hyper-digital era. Connect these three mega forces together with a fuse, which I see as the aggressive investors who are looking to completely zero-base redesign and re-think established industries. That investment capital comes from not just venture capitalists and private equity firms but especially from these big tech companies that have an incredible amount of free cashflow and balance sheet capital waiting to be deployed, and who have both the technical expertise and the operating expertise.

You combine those three mega forces with these aggressive investors and capital that needs to be deployed with confident proven playbooks for how to drive transformative change — that’s why I think this next 25 years is going to be so much different than the last. And that’s what’s driving the need for big bet leadership.

Leaders have a choice: Do you want to be reacting when you’re late? That gives you a real disadvantage because you don’t have time or excess resources. Or do you want to be an active skeptic? An active skeptic does things early, they participate, but they always have a prove-it-to-me mindset. What Big Bet Leadership helps you do is be an aggressive, active skeptic so you can minimize the downside risk of these big bets while actually increasing your ambition.

Through the podcast and these interviews, I’m always looking for ideas and strategies to help our audience — the leaders, their teams, and their companies — win. In the book you quote one of Amazon’s leadership principles about thinking big. Can you talk about that, and any other advice you have for our readers about how to set themselves up to win?

The Amazon principle states, ‘Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspire results. They think differently and look around corners for ways to serve customers.’

But in addition to all of that, you have to find ways to bet small. There’s a difference between thinking big and betting big. There are moments to bet big, but it’s after you’ve de-risked all the really hard problems of a big bet. Then you’re ready to scale.

That’s the mindset and technique that is appropriate in most cases in established companies of any size: Think big, but figure out how to de-risk it, how to bet small, until it’s no longer a bet. A bet’s not a bet if you know what the outcome is. That’s just a smart investment. That’s what we want to accomplish. We want to make these things much more of a smart big investment than a true big bet.

For more insights from Rossman and a deeper dive into key themes from the book, tune in to the Tech Whisperers podcast.