Believing in failure at Amazon

To better predict the future, it’s always a good idea to have a good appreciation for the past.

That’s true in almost every aspect of life from sports to fashion to politics. And, importantly for us, this truism also applies to business.

To that end, let’s have a little history lesson.

In the early 19th century the newly formed nation of the United States of America was starting to have an impact on the world. In particular they were starting to show the way in the world of business and manufacturing.

One guiding light in that regard was the Boston Manufacturing Company, which from its founding in 1813 and into the 1820s was the largest factory in the United States and is generally considered to be one of the most successful businesses of the 19th century.

The biggest factor in its success is that it was a disruptor. Although the term had yet to be used to describe a business that challenged norms. That’s exactly what they were doing. In particular, they re-invented how to staff a manufacturing plant at the time and found an efficiency in doing so that gave them an advantage. 

The Waltham System, as it became to be known, was based on a well-controlled system of labour. Mill owners recruited farm girls, put them up in boarding houses and worked them for six days and eighty hours per week. Harsh by today’s standards, but back then this was revolutionary and a step up from the harsh working conditions found in the United Kingdom’s factories.

Like I said they were disruptive and, I suspect, if you were around in 1820 you probably couldn’t have imagined a time when the Boston Manufacturing Company, or its system, weren’t around.

The company went out of business in 1930. A good run, but nothing is forever.

Which brings me to Amazon.

Right now, Amazon is on top of the world. It is the most disruptive retailer in operation and everything it touches seems to turn to gold. You could be forgiven for believing that the monster that Jeff Bezos created will never not be on top.

That’s a mindset that Bezos has hammered home for a long time, actually — that the second a company starts to think that it’s too big to fail is the second that it starts it’s fall towards irrelevance.

Bezos isn’t confident that Amazon won’t one day join Boston Manufacturing Company as a footnote in history. He expects it, actually. And, it’s a desire to resist that as long as possible that is still driving him, even as he prepared to step away from his CEO role.

He addressed this head on in his 2021 Letter to Shareholders. Although Amazon had a very good year — and it’s expected the 2021 Q1 earnings report will show more of the same now — Bezos sees a potential vulnerability lurking that he wants to fix

And like Boston Manufacturing Company, it’s labour practices that are drawing his attention.

Specifically, Bezos is concerned with how increased attention on the working conditions at their Distribution Centres are affecting the company’s reputation. It may seem like a silly thing to worry about when you are flying as high as Amazon and with little to no evidence that the labour concerns being voiced by some are causing any drop in revenues.

But, that’s just not how Bezos thinks. To him, disaster is awaiting around every corner. So, he has committed himself to fixing Amazon’s labour image problem in his new role as Execution Chairman.

Can he do it? Who knows, but the fact that he is thinking in this way is one more reason to think it’s going to be a long time before Amazon follows the lead of Boston Manufacturing Company.