Case Study - Amazon

Amazon uses a Dashboard to generate a Weekly Business Report that company leaders spend many hours analyzing. The genesis of this report dates to the very beginning of the company, when founder Jeff Bezos connected a digital bell to the company’s servers and had the computer ring the bell every time a book was sold. The bell was great for morale, but the real reason behind it was that Bezos wanted to track sales.

Today, this feedback loop is the heart of Amazon’s operations. The Weekly Business Report numbers in the hundreds of pages. It shows every imaginable metric regarding the company, with the most important and challenging information bannered at the top. 

In light of this book’s chapter on Experimentation, it’s particularly interesting that Amazon executives use the report to monitor the progress of various experiments underway throughout the organization. Based on this information, they narrow down those experiments to one or two huge bets every year.

One of these big bets was Amazon Prime. It had seemed illogical (and like a money loser) at the time it was originally proposed. With free shipping included in the subscription, why wouldn’t people just buy a toothbrush one day, toothpaste the next day, and floss the day after that? The fulfillment costs would be huge. But experiments showed that Amazon Prime members grouped much bigger purchases than non-members.

On another occasion, Amazon management considered whether to sell disposable diapers, which have almost no margin. To their surprise, they discovered that customers bought more diapers if they didn’t have to go elsewhere to buy them. Our point? Assumptions can often be wrong; testing the product or service is the only way to really know what will work.

Once decisions are made about an experiment, Amazon tracks them constantly through Dashboards. Because of that, staff are guided by the Dashboard as part of their daily work.