What makes Amazon so "prime"? Unlocking A - Z ...
When I read the “The Everything Store”, I was amazed at Jeff Bezos’ magnanimous vision that was portrayed. His clarity and focus on creating value over the years is extensively visible. The book talks about the company's culture and how it focuses on innovating the core. It talks about a mindset that Amazon embraces and pushes its employees to possess. Companies usually associate innovation with tools and techniques but innovation is not entirely dependent on technology or infrastructure, but is a result of merely understanding your mind in context to your environment. Having a mind receptive to ideas, letting other people build on them and demonstrating the willingness to learn new information is key in understanding opportunities for growth within Amazon.
Amazon’s A to Z vision has great depth and a strong underlying meaning.
Adjacencies - Amazon, over the years, has embraced the concept of identifying adjacencies. The Adjacent Possible is truly where evolution and innovation takes place. They started with the online book store, ventured into selling other everyday items, eventually started retailing fashion products, launched a streaming video game network, started selling groceries and now have pretty much taken over everyday activities with the home assistant. They pushed the boundaries that they worked with and thereafter each new opportunity opened up the possibility of other novel opportunities. The continuous evolution of the company has allowed them to experiment in different adjacent areas, and build them into strong franchises.
Beginner's Mindset - There's a strong emphasis on having a beginner’s mindset to increase the potential for innovation. Employees are encouraged to step back and look at something as if it’s the first day of their job. Being dissatisfied or in disagreement is encouraged, since it pushes employees to reflect on what’s not right and find different and more innovative ways to fix it.
Culture - Amazon has a builder's culture and a strong collaborative spirit. They focus on hiring talent that in their DNA want to invent and experiment. Everyone at Amazon is a leader, and they are encouraged to be self-critical by benchmarking themselves against the best, think big to inspire results, and have a strong bias for action.
Deep Customer Focus - Amazon deeply focuses on its customers to create products and services. Amazon believes in starting with the customer first and then working backwards to approach innovation. Over the years they have not only delivered great customer experiences, but also established unparalleled trust and dependancy.
Embracing Risk - By embracing risk and failure, Amazon creates the space for successful innovation. They have a diversified portfolio which helps them distribute risk. Due to the breadth of their portfolio, they realize an additional advantage. Their portfolio can be segmented into star, ability and business products. They can make lots of small bets in the Star products section which are primary image builders, their Ability products are value drivers and would include the Amazon Echo and Kindle, whereas their business products are primarily their volume drivers which continue to keep the core business healthy (AWS- Amazon Web Services)
Failing is okay - Amazon’s willingness to embrace failure on the path to success is a key attribute of their company culture. Amazon allows for “high-judgment failure” and encourages employees to fail, try again, and repeat that loop. The company believes that one or two winning ideas can become critical strategic pieces and pay for thousands of failures.
Goal- Amazon truly exemplifies its A to Z vision of "Delivering everything to everyone anywhere in the world" and is something they take very seriously.
Highest Standards - Amazon has the highest standards in terms of talent and customer focus. They constantly strive to improve their products and processes, and also focus on hiring exceptional talent that is driven to innovate.
In it to Win it Mindset
Jumping the curve - Thinking about the technology S curve, which maps business and product life cycles, it's evident that Amazon is committed to sustaining innovation over time. They focus on the best thing for the company rather than short-term returns on investment. Profit is invested back into the company to ensure the lowest prices and biggest opportunities for success possible.
Know your core competency - Amazon has a clear idea of its core competency (Speed & Efficiency) and their ability yo leverage this contributes to their perceived customer benefit.
Logistic-led revolution - Amazon has leveraged technology driven disruption to strengthen its logistics framework. It focuses on delivering customized delivery options and expanding its regional footprint by building local and highly efficient warehouses . Amazon realized the need to reduce operating costs and dependencies on external providers and thereby started Amazon trucks and crowdsourced delivery options to ensure timely customer delight. Thinking about free shipping and "Prime" delivery, it's clear that Amazon emphasizes on a customer mindset and not an operator mindset.
Monopolies - Amazon created the industry for total domination, and is at a juncture where it owns the market. Amazon captured a massive market share by choosing to "reduce" its profitability and increase adoption thereby creating high barriers for competitors in the future.
Non fear factor - Amazon over the years has had a non fear factor approach, which has led them to diversify their portfolio, and offer something for everyone. Internally, the company’s “Regret Minimization Framework” is responsible for this fearless approach. The mental model encourages one to fast forward a few years and look back at a decision from that perspective. It's a great tool since it urges people to think beyond the moment and observe decisions/ideas in a completely different light. It helps take action and make hard decisions.
One - The idea is to treat each day as if it’s Day One of your job.
Press-Release - Amazon’s press release format is a great tool to ensure that the product/ service fits the customer needs. This single page document can help dive deep into the customer’s mindset and help tailor products/ services around those needs. It’s widely used at Amazon to assess a new idea.
Quick - Amazon is quick to react to market demand and uses "acquisition" as an organizational model of innovation. This gives them a strategic advantage in a specific industry. Amazon’s acquisition of Whole Foods has helped them become a market leader in the online grocery delivery model and has almost caused no disruption to its core business. Thereby, their internal rate of change will always match or surpass the external rate of market change.
Relentless - When I was reading “The Everything Store”, I uncovered a key fact about Amazon - it was originally named “Relentless” because Jeff wanted to encapsulate the company’s endless potential. They even registered and bought the domain name. Here’s a link: www.relentless.com
Spectrum of Products - Amazon has a broad product portfolio which gives it an operating advantage. This allows Amazon to innovate across customer experience, products, processes and services. Success breeds success - As each area succeeds, it accelerates other business areas. Amazon now even dominates the private label market with its own label -AmazonBasics, which started out selling batteries. It has a sweet price point, and in a world, where there is a paradox of choice, AmazonBasics could soon be a default purchase option for many buyers.
Talent - Amazon believes in hiring the best talent and believes in having small teams. The company follows the Two Pizza Rule and believes in focusing its energy on smaller teams, which are fed by two pizzas. The idea of small teams is to empower employees to feel more like founders than employees and to take completely ownership of ideas.
Unique Selling Proposition - Customer Service
Vertical Innovation - Amazon has the right balance of "making relentless progress" and "being the creator of the future". They strategically make the value vs volume trade-off, and ask the right questions.
Working backwards - Amazon believes in working backwards and starts with the customer. Working backwards generates empathy and helps Amazon deliver the best experience for its customer.
X- factor - I believe Amazon has a consistent theme across all of its products - SERVICE. No matter what product the company creates, the company layers it with a service aspect to drive growth, and dominate the market. This Profit- Model based innovation is critical to the company’s success. Be it delivery, web services or fulfillment, the company focuses on creating an ecosystem through its deeply invested service based model. Over the years, Amazon's business strategy has shifted from a consumer facing online retailer to an enterprise service provider, offering critical technological solutions to other businesses.
Yes - The company is always willing to step outside its comfort zone.
Zoom In and Zoom Out - I believe Amazon has the innate ability to focus on the smaller aspects of delivering customer delight such as the One-click Checkout as well as has a keen eye on the bigger picture. They are able to visualize an ecosystem and innovate around it, and also succeed in making incremental offerings that delight their customers.