January 17: Focus on the inputs, measure the outputs

At Amazon, leaders focus on improving input metrics.

Source: Sketchplanations, AMZN 2009 Letter to Shareholders
Published: December 2021, April 2010

Focus on the inputs, measure the outputs

“Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs... We believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time.” - Jeff Bezos

Most leaders and businesses focus on output metrics and aim to improve them. At Amazon, leaders focus on improving input metrics instead.

Input metrics (e.g., selection, price, app store rating, page loading time) are factors that can be controlled and changed. 

Output metrics (e.g., profit, customer retention, app downloads) are the outcomes that a business wants to achieve.

For example, if you’re trying to lose weight, inputs are diet (calories per day) and exercise (workouts per week) which result in an output of weight loss (weight).

---

Today’s fact is sponsored by AngelList Venture:

Invest in the latest batch of Y Combinator companies via AngelList Demo Day funds. Past Demo Day funds have generated a combined IRR of 59%. Learn more.

---

Thanks for reading! Have feedback or want to sponsor this newsletter?