Principles are the guiding cultural lights illuminating for employees and partners how your company thinks about its mission and about customers and customer value. Mechanisms make the principles operational – every time, by every team, on every project, without fail or variance. You need both for success. On this week’s episode, learn from author John Rossman (Think Like Amazon: 50 ½ Ideas To Become A Digital Leader) about the Principles and Mechanisms of growth businesses.
Key Takeaways & Actionable Insights
John Rossman is an advisor who helps leaders compete in the digital era, by crafting and implementing innovative digital business models and capabilities. He was an executive at amazon and launched the third party selling platform – in that way, he probably directly helped a number of our listeners become successful entrepreneurs. And he is the author of Think Like Amazon: 50 ½ Ideas To Become A Digital Leader – a tremendously useful book for everyone in business because it delivers a long list of actions you can implement immediately.
Principles and Mechanisms
John emphasizes the dual roles of what he calls principles and mechanisms in business growth. Principles are designed and communicated by company leadership: they are the few, fully codified, fundamental ways of operating that the entire company cares deeply about and executes unwaveringly. Amazon famously has 14 leadership principles starting with Customer Obsession.
But principles alone will not get the job done. They can’t implement themselves. So the second part of John’s message is that every principle must have a mechanism to operationalize it. A mechanism might consist of a complete set of generally applicable process steps and guidelines to follow them, adapt them to different circumstances, equip them with metrics and arm them accountability. The mechanism ensures that the principle can be executed again and again, by different teams on different projects across different parts of the organization and across cultures and generations.
We illustrate a few of the examples that John shared with us in this accompanying graphic.
Principles Of Austrian Economics And Their Mechanisms
John’s insight about principles and mechanisms is the same one we implement at Economics For Entrepreneurs. Our principles are principles of economics. Our mechanisms are process tools we’ve summarized in our series of knowledge graphics.
For example, a core principle of Austrian Economics is the subjectivity of value. Every individual customer experiences value in their own idiosyncratic way, and the entrepreneur’s task is to gain insight into each individual’s sense of value, in order to be able to cater to it.
We have provided three mechanisms to date for entrepreneurs to use to gather data about how individuals experience value in different ways, and to act upon that economic data:
Use the contextual in-depth interview tool to gather qualitative data for empathic diagnosis.
Follow the value learning process map in order to be able to facilitate value effectively.
Design and deploy a Subjective Value Cycle system in order to be able to repeat the value facilitation process.
Our project is to continue to add to the inventory of mechanisms to help entrepreneurs in the implementation of economic principles.
Connect with John Rossman on his LinkedIn page.
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