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Jeff Bezos.
Jeff Bezos

Jeff Bezos likes to talk about his company’s focus on invention and Amazon’s willingness to embrace failure on the path to success. The 52-year-old CEO noted this again in Amazon’s annual shareholders letter last month, characterizing the company as an “invention machine.”

But how exactly does Amazon, which employs more than 250,000 people, inspire its workers to invent and continue to come up with innovative ideas — many of which may end up completely failing?

Bezos offered more insight on that topic during Amazon’s annual shareholders meeting Tuesday in Seattle. Asked by a shareholder to explain what kind of process the company follows to help encourage this type of thinking, Bezos touched on two points: Hiring the right people, and allowing for failure.

The Amazon founder said that he likes asking potential new employees for examples of something they’ve invented. It’s not necessarily about the number of patents someone has won, he explained. Instead, he’s looking an innovative way of thinking about problems and solutions, like inventing a new kind of process, or a new metric that was really useful.

“There are lots of different kinds of invention and I find that they are all super valuable,” he said.

Bezos admitted that invention is “very, very hard” because it requires expertise in a given domain area, along with the ability to refrain from being “corrupted by that domain knowledge.”

“You still need a beginner’s mind,” Bezos said. “So, you need all of that domain knowledge and expertise, but you still need to be able to step back and look at something as if it’s your first day on the job. That is so hard and some people are good at it, so you can select for that.”

The CEO noted that not everyone at a company needs to have this mindset. He said incremental inventions to help maintain operational excellence are just as important. But Amazon, which has suffered through several failures on its way to success — shares reached an all-time high last week — is certainly on the lookout for people skilled at coming up with new ideas.

“You need to select people who tend to be dissatisfied by a lot of the current ways,” Bezos said. “As they go about their daily experiences, they notice that little things are broken in the world and they want to fix them. Inventors have a divine discontent.”

Once you have the right people in place, Bezos said that it’s imperative to allow for “high-judgment failure.” He said it’s extremely hard for companies to do this, and in particular larger organizations.

“You want to embrace high-judgment failure — this was worth trying, it didn’t work, so let’s try something different,” he explained. “All of our most important successes at Amazon have been through that kind of failure: Fail, try again, and repeat that loop.”

Bezos, who started Amazon in 1995 and founded spaceflight company Blue Origin in 2000, said managers can help teach this to employees and demonstrate it with the way they promote certain people.

“If failure is like a death knell for promotion, you won’t have a lot of people being experimental,” he added. “It’s not an experiment if you know in advance it’s going to work. If you want to be inventive, you have to experiment a lot, which means you will fail a lot.”

But failing a lot is OK, Bezos said, because one or two “winners” can pay for hundreds and thousands of failures. He offered a baseball analogy to prove his point.

“In baseball, if you swing hard, you will get home runs, but you also strike out a lot,” Bezos said. “The difference between the baseball analogy and business is that in business, sometimes when you step up to the plate and you swing, you get thousands of runs. That can’t happen in baseball — the most you can get is four runs, no matter how well you connect with the ball. So, that long tail distribution is something that really should drive you in business to experiment.”

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