Outcomes Over Proxies
Insights from Amazon on effective leaders
Insights from Amazon on effective leaders, delivering outcomes, and being skeptical about proxies.
A proxy, in this context, is an indirect metric or process that stands in for the actual outcome or goal that a company aims to achieve.
For example, your goal might be to improve customer happiness. And your proxy might be a metric that measures the number of customer returns per million units sold. Customer happiness is the goal — the “returns” metric is a proxy for customer happiness, but not actually customer happiness. And the lesson is that you have to always focus on the outcome (customer happiness) more than the proxy, for the following reasons (two pieces of advice from Jeff Bezos):
1/ In his interview with Lex Friedman [3m:26s snippet], Bezos highlighted an issue that companies using proxies face (paraphrased below):
"It's very common, especially in large companies, to manage to metrics that they don't really understand, and don't really know why they exist. The world might have shifted out from under them a little and the metrics are no longer as relevant as they were when somebody ten years earlier invented the metric. You do need metrics; you can't ignore them; and you want them. But you just have to be constantly on guard."
2/ In his 2016 letter to shareholders, Bezos explains that internal processes are not only proxies for outcomes but inadvertently become the primary focus; and what leaders should do.
"Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second."
The point is to prioritize your outcomes over your proxies, be alert to what is needed or missing, and evolve your proxies.
The same principle can be applied to your personal goals. For example, if your goal is to improve at chess, your proxies might be measuring how many instructional chess videos you watch and tournaments you participate in. Improving your chess play is the outcome — the videos and tournaments are the proxies, not the actual outcome. Regularly assess if these proxies are still effective in helping you achieve your outcome. If not, adjust as necessary.
May you achieve all you set out to do in 2024. Happy New Year!
