An Amazon Sized Challenge for Retail Leaders

Jeff Bezos created a retail juggernaut. He did not do it overnight. He had the foresight to see where the Internet and digital retailing were headed. He was willing to leap full force in front of the curve before other retailers knew what hit them.

There are countless ways that Jeff Bezos’ innovative thinking and corporate culture have delivered success to Amazon.com. Most retail founders are innovators at heart. However, as they begin to scale they pass the torch to managers. These managers prefer to maintain and scale the status quo and not to take risky leaps.

Founders, leaders and managers and the roles they play

Roy H. Williams explains:

“Leaders thrive amidst chaos and feel handcuffed by order. Managers are repulsed by chaos and feel empowered by order. Most organizations are begun by entrepreneurs, grown by leaders, and later optimized by managers.

Companies built on passionate Poise and Responsiveness are difficult to sustain long-term. Can you think of one that has kept the spring in its step and the sparkle in its eye for more than a decade or two? Poise and Responsiveness often give way to Planning and Execution so that systems and methods and techniques and procedures can be created, allowing consistent results to be obtained by average people.”

There is a reason Amazon is often referred as the world’s oldest startup. Jeff Bezos said “All businesses need to be young forever. If your customer base ages with you, you’re Woolworth’s.” This important world view is a strategic advantage. “We’ve had three big ideas at Amazon that we’ve stuck with for 18 years and they’re the reason we’re successful: Put the customer first. Invent. And be patient.”

Stay in front of your customers

His team does not look at the world and think about how they will stay ahead of the competition. Instead, they think about how they will stay ahead of their customers. “When [competitors are] in the shower in the morning, they’re thinking about how they’re going to get ahead of one of their top competitors. Here in the shower, we’re thinking about how we are going to invent something on behalf of a customer.” Ironically, retailers grumble about how they cannot continue to lose market share to Amazon.

While retail continues to see its growth in the online channel, brick and mortar retail has stalled, even though over 90% of all retail dollars are spent in brick-and-mortar channels. Today’s innovation for retailers are iterative, small and conservative steps that retail management can get behind because it will not cause too much disruption. They are simple digital extensions they can begin to bring to their stores.

The opportunity of bricks and clicks

Brick-and-mortar retail is not growing as an industry because, for the most part, it is the same old same old. But there is tremendous opportunity for experimentation within the channel – new ways to deliver what the customer wants.

Customers want a great experience, at their convenience, and with plenty of choices. Iteration will NOT get you there. Only radical innovation and disruption will. If it doesn’t come from the legends of omni-channel retailers out there today, we will see it delivered by the 100 plus ecommerce pure-plays that are actively looking to open brick-and-mortar presences.

Bezos stresses to his teams “I don’t think that you can invent on behalf of customers unless you’re willing to think long-term, because a lot of invention doesn’t work. If you’re going to invent, it means you’re going to experiment, and if you’re going to experiment, you’re going to fail, and if you’re going to fail, you have to think long term.”

Pure plays rewriting the retail rules

Two decades after they first launched, Amazon.com opened up their first brick-and-mortar store in Seattle. This is a trend. Companies such as Blue Nile, Bonobos, and Warby Parker are moving from pure play e-commerce, adding brick-and-mortar retail channels.

We are witnessing the transformation of the physical retail landscape.

Omni-channel retail needs new leaders with an entrepreneur’s vision to thrive amongst the chaos and jump ahead of the curve. We need bold experimentation in the brick & mortar channel. It’s not enough to give your associates mobile devices to enable checkout from anywhere in the store. Apple has been doing that for years. Take a look at what jewelry retailer Blue Nile has done at first with their test kiosks and now with their first successful brick-and-mortar “web room.”  Have you seen Amazon’s first store? There are no prices on the shelves. They’ll leverage people’s own devices to offer dynamic pricing. Will you?

What would you do if you didn’t have to play by the traditional retail rules?

This post was originally published on the IBM Ecommerce blog.