How Amazon is Very Good at Managing Innovation

Vision. We are always fascinated by this skill. And it is a great skill to have in our view. Does it mean you see everything? Certainly not. It does mean you have the ability to see what many cannot. And then act on these. Vision doesn’t count without action. And not without managing innovation.

While some of the most exciting possibilities of social networks are most likely in the future, there is a myriad of companies that benefit from social networks today.

Amazon.com differentiates itself not as an online store, but as a social network.  Their interface, product line, and customer relationship management, while strong, are easily replicated.  What makes the site a standout is the customer reviews and suggestions.

Before you start, you will benefit from this short video on managing innovation,

Vision is the art of seeing things invisible to others.

Jonathon Swift

For years, I’ve been fascinated by Jeff Bezos’ ability to manage innovation and seeing the future. We write a lot about him and Amazon. They are a great company to follow because of the Bezos vision. And his ability to make good bets on his vision. While everything may seem rosy at Amazon these days, for years, it was amazing to see just how much criticism there was towards some of Bezos’ decisions.

 For years — quite by design — the company focused on growth and expansion over profitability, earning complaints from investors.  More recently, it’s done things that left many scratching their heads, such as the whole Amazon Web Services (AWS) effort, and even the Kindle effort — and yet both have proven to be quite successful.

Geekwire noted that at an Amazon shareholder meeting, an interesting question came from Evan Jacobs, asking if Amazon was taking enough risks. Bezos’ answer is all about his innovation vision. And how he considers his business vision and his ability to act on the vision. Here is Bezos’s interesting response to Evan Jacob’s question.

In a way, that is like the nicest compliment I’ve ever gotten.

 First of all, I think we have gotten pretty lucky recently. You should anticipate a certain amount of failure. Our two big initiatives, AWS, and Kindle — two big, clean-sheet initiatives — have worked out very well. Ninety-plus percent of the innovation at Amazon is incremental and critical and much less risky. We know how to open new product categories. We know how to open new geographies. That doesn’t mean that these things are guaranteed to work, but we have a lot of expertise and a lot of knowledge. We know how to open new fulfillment centers, whether to open one, where to locate it, how big to make it. All of these things based on our operating history are things that we can analyze quantitatively rather than to have to make intuitive judgments.

When you look at something like, go back in time when we started working on Kindle almost seven years ago…. There you just have to place a bet. If you place enough of those bets, and if you place them early enough, none of them are ever betting the company. By the time you are betting the company, it means you haven’t invented for too long.

If you invent frequently and are willing to fail, then you never get to that point where you really need to bet the whole company.

AWS also started about six or seven years ago. We are planting more seeds right now, and it is too early to talk about them, but we are going to continue to plant seeds. And I can guarantee you that everything we do will not work. And, I am never concerned about that…. We are stubborn on vision. We are flexible on details…. We don’t give up on things easily. Our third-party seller business is an example of that. It took us three tries to get the third-party seller business to work. We didn’t give up.

But, if you get to a point where you look at it and you say look, we are continuing to invest a lot of money in this, and it’s not working and we have a bunch of other good businesses, and this is a hypothetical scenario, and we are going to give up on this. On the day you decide to give up on it, what happens? Your operating margins go up because you stopped investing in something that wasn’t working. Is that really such a bad day?

So, my mind never lets me get in a place where I think we can’t afford to take these bets because the bad case never seems that bad to me. And, I think to have that point of view, requires a corporate culture that does a few things. I don’t think every company can do that, can take that point of view. A big piece of the story we tell ourselves about who we are is that we are willing to invent. We are willing to think long-term. We start with the customer and work backward. And, very importantly, we are willing to be misunderstood for long periods of time.

But if you hold back and you say, ‘No, we believe in this vision,’ then you just stay heads down, stay focused and you build out your vision.

That idea of staying the course for the long term has been the key to Amazon’s success. Vision requires the long term. As does innovation.

There are many great business growth campaigns we can learn from. Please post your comments below, offering questions or your own great examples for business growth strategies.

The bottom line

Since as much as 90% of what we learned in a life-time always come to us via visual cues, we should constantly enhance our perceptual sensitivity to the environment, according to information scientists. So, more than 500 years ago, Leonardo da Vinci was right when he said, use all our senses, especially our sense of sight.

Our power of observation and imagination depends on it. Productive thoughts often have their origins in the combinatorial play and dynamics of sensory inputs from environmental cues.

In my view, our thinking cap is often governed by how far we can stretch our power of vision and imagination.

Test. Learn. Improve. Repeat.

More reading from Digital Spark Marketing’s Library:

Remarkable Lessons in Motivation Steve Jobs Taught Me

How to Create Honest Employee Trust and Empowerment

The Story and Zen of Getting Things Done

10 Positive Thinking Ideas from Peers and Mentors

Mike Schoultz is a digital marketing and customer service expert. With 48 years of business experience, he consults on, and writes about topics to help improve the performance of small business. Find him on Facebook, Twitter, Quora, Digital Spark Marketing, and LinkedIn.