Stay curious and always keep refreshing your sources of information. Do you like to stay curious and learn things from new places? How about CEO letters to shareholders? That is probably true if you are a shareholder. But what if you are not and just interested in the business? I believe the Bezos shareholder letter tells a lot about the Amazon culture, Jeff Bezos, and Amazon’s business strategy. I made sure to read them carefully.
While some of the most exciting possibilities of social networks are most likely in the future, there are a myriad of companies who benefit from social networks today.
Amazon.com differentiates itself not as an online store, but as a social network. Their interface, product line, and customerrelationship management, while strong, are easily replicated. What makes the site a standout is the customer reviews and suggestions.
For years, I’ve been fascinated by Jeff Bezos’ innovative vision and Amazon’s action and ability to execute. We have written a lot about him and Amazon. (See our article on why the Wal-Mart e-commerce strategy won’t beat Amazon.)
They are the most innovative company around in our humble opinion. Their innovation is in everything they do, not just technology.
Related material: 10 Growth Hacking Tactics … What Would Peter Drucker Say?
In this latest shareholder letter, 3 key elements of Amazon’s business strategy come to the forefront. Let’s review a summary of what the letter tells us about these strategy elements:
Information technology is by far the most important element of Amazon’s business strategy. Hands down in my opinion.
The Cloud and Amazon Web Services
Unless you work in technology or corporate logistics, you might not have known that Amazon was ahead of Google in the cloud business.
Most consumers will have encountered the cloud in the form of services where Google is strong—email (Gmail), document storage (Google Drive), and the like.
To understand the scale of the war brewing between them, it helps to understand that what Amazon and Google are really contesting is who gets to eat a bigger portion of the total corporate information-technology pie.
All the warehouses of servers that run the whole of the internet, all the software used by companies the world over, and all the other IT services companies hire others to provide, or which they provide internally, will be worth some $1.4 trillion in 2014, according to Gartner Research.
This is some six times Google and Amazon’s combined annual revenue last year. Not surprisingly, both companies have said at one point or another that this new revenue stream has the potential to be larger than all their current sources of income.
Amazon Web Services (AWS) is a collection of remote computing services that together make up a cloud computing platform, offered over the Internet. The most central and well-known of these services are the simple storage service (S3) and the elastic compute cloud (EC2). In 2010, Amazon launched 61 new services and features.
In 2011, that number was 82. In 2012, it was 159. In 2013: 280. They are also expanding their geographic footprint, with 10 current AWS regions around the world, including the East Coast of the U.S., two on the West Coast, Europe, Singapore, Tokyo, Sydney, Brazil, China, and a government-only region called GovCloud. The development teams work directly with customers and are empowered to design, build, and launch based on what they learn.
Prime
Prime was launched nine years ago: an ‘all-you-can-eat’, two-day shipping for a flat annual fee. At that time, Amazon had one million eligible Prime products. This year, they passed 20 million eligible products. They have added new digital benefits – including the Kindle Owners’ Lending Library and Prime Instant Video.
Amazon culture and values … logistics and delivery
Fresh grocery delivery
After trialing the service for five years in Seattle (no one accuses Amazon of a lack of patience), they expanded Amazon Fresh to Los Angeles and San Francisco. Prime Fresh members pay $299 a year and receive same-day and early morning delivery not only on fresh grocery items but also on over 500,000 other items ranging from toys to electronics to household goods.
They’re also partnering with favorite local merchants (the Cheese Store of Beverly Hills, Pike Place Fish Market, San Francisco Wine Trading Company, as examples) to provide the same convenient home delivery on a great selection of prepared foods and specialty items.
Their goal? To continue the methodical approach – measuring and refining Amazon Fresh – with the goal of bringing this service to more cities over time.
A vast market in online services.
Online services
Prime Instant Video
Prime Instant Video was launched in 2011 to provide customers with streaming video on demand, analogous to books.
In 2011 with 5,000 titles, they’ve grown selection to more than 40,000 movies and TV episodes.
The Amazon Studios team continues to invest heavily in original content and will compete in the new TV market of the future.
Fire TV
In the last month, the Amazon team launched Fire TV. Not only is Fire TV the best way to watch Amazon’s video offerings, it also embraces non-Amazon content services like Netflix, Hulu Plus, VEVO, WatchESPN, and many more.
In addition to Prime Instant Video, Fire TV gives you instant access to over 200,000 movies and TV episodes available a la carte. As a bonus, Fire TV also lets you play high-quality, inexpensive games on your living room TV.
Amazon company culture statement … listening to customers
Nothing gives Amazon a better result than “reinventing normal” – creating innovations that customers love and resetting their expectations for what normal should be.
Frustration-free packaging
Here Amazon’s battle is against annoying wire ties and plastic clamshells wrapping of products. An initiative that began five years ago with a simple idea that you shouldn’t have to risk bodily injury opening your new electronics or toys, has now grown to over 200,000 products, all available in easy-to-open, recyclable packaging.
Packaging designed to alleviate “wrap rage” and help the planet by reducing packaging waste. They include over 2,000 manufacturers in this Frustration-Free Packaging program.
Amazon Smile
In 2013 Amazon Smile was launched. This program’s goal was to create a simple way for customers to support their favorite charitable organizations every time they shop. When you shop at smile.amazon.com, Amazon donates a portion of the purchase price to the charity of your choice.
You’ll find the same selection, prices, shipping options, and Prime eligibility on smile.amazon.com as you do on Amazon.com – you’ll even find your same shopping cart and wish lists. In addition to the large, national charities you would expect, you can also designate your local children’s hospital, your school’s PTA, or practically any other cause you might like.
There are almost a million charities to choose from.
The Mayday button
Mayday reimagines and revolutionizes the idea of on-device tech support. Tap the Mayday button, and an Amazon expert will appear on your Fire HDX and can co-pilot you through any feature by drawing on your screen, walking you through how to do something yourself, or doing it for you – whatever works best. Mayday is available 24×7, 365 days a year.
Amazon’s response time goal is 15 seconds or less. This last year they beat that goal – with an average response time of only 9 seconds on their busiest day, Christmas. Pretty impressive, yes?
Amazon, we believe, is the most innovative company in America in an industry built around constant innovation and change. Why may you ask?
We believe there several good reasons. First, as one of the creators of the e-commerce industry, they will know the industry is in its infancy and is built on a foundation of new technology and constant introduction of new ways of doing things.
Second, they know their future is based on those trends. They also know to do new things well, they must be good at trying new ideas in many areas as experiments. These experiments, they realize, will not all work as planned, and some percentage will fail. They know and accept this without worry.
Here is where you can read the entire Bezos letter.
There are many great business growth campaigns we can learn from. Please post your comments below, offering questions or your own great examples of business innovation strategies.
So what’s the conclusion? The conclusion is there is no conclusion. There is only the next step. And that next step is completely up to you.
It’s up to you to keep improving your business strategy adaptation. Lessons are all around you. In many situations, your competitor may be providing the ideas and or inspiration. But the key is in knowing that it is within you already.
Need some help in capturing more improvements for your staff’s leadership, teamwork, and collaboration? Creative ideas in running or facilitating a team or leadership workshop?
Call today for a FREE consultation or a FREE quote. Learn about some options to scope your job.
Call Mike at 607-725-8240.
All you get is what you bring to the fight. And that fight gets better every day you learn and apply new ideas.
When things are not what you want them to be, what’s most important is your next step. Call today.
Test. Learn. Improve. Repeat.
Are you devoting enough energy to innovating your social media strategy?
Do you have a lesson about making your advertising better you can share with this community? Have any questions or comments to add in the section below?
Mike Schoultz is the founder of Digital Spark Marketing, a digital marketing and customer service agency. With 40 years of business experience, he blogs on topics that relate to improving the performance of your business. Find them on G+, Twitter, and LinkedIn.
Digital Spark Marketing will stretch your thinking and your ability to adapt to change. We also provide some fun and inspiration along the way. Call us for a free quote today. You will be amazed at how reasonable we will be.
More reading on the business process from Digital Spark Marketing’s Library:
Are you one that has an interest in innovation and perhaps learning more about innovative services through real-life examples?
Then, if you are like us, you’ll pick several businesses that have a high innovation culture and follow their activities. The Amazon innovation culture will be your example of Amazon innovation culture to learn from.
So to bring an important discovery to market, you first need to identify a real-world problem it can solve and connect to engineers who can transform it into a viable product or service. Then you need to find customers who are willing to drop whatever else they’ve been doing and adopt the innovation on a large scale.
The best way to predict the future is to create it. – Peter Drucker
Amazon, I believe, has one of the very best innovation cultures in an industry built on constant innovation and change. Why may you ask?
There several good reasons. First, as one of the creators of the e-commerce industry, they will know the industry is in its infancy and is built on a foundation of new technology and constant introduction of new ways of doing things … they know their future is based on those trends.
They also know to do new things well, they must be good at trying new ideas in many areas as experiments.
These tests, they realize, will not all work as planned, and a high percentage will fail. They know and accept this without worry.
In this blog, I want to examine a recent e-commerce delivery innovation example that Amazon tried out, the introduction of Amazon lockers.
The concept is pretty simple. Amazon offers customers in select locations the option of having their package delivered to an Amazon Locker instead of to their street address.
When the package arrives, customers receive an email letting them know where to pick it up along with the code to unlock it.
Because most of the lockers are being placed in locations like convenience stores, often the customer can receive their package 24 hours a day.
This is a significant advantage for one segment of their customer base …the one that has trouble receiving their packages – either because they live in an apartment or condo that ‘s hard to deliver to, aren’t home to sign, or because they are worried that their package might be stolen.
But the motive for the experiment is not one based just on customer service alone, as companies like Amazon pay up to 20% more to have packages delivered to a residence.
So, delivering a package to a locker helps Amazon save money too – contributing to offset the costs of installing and maintaining the lockers.
So who should have come up with this potential innovation? FedEx, DHL, UPS, and the US Postal Service all missed this as a possible change that any of them should have developed.
Innovative services examples.
The inspiration for this potential change was sitting in full view all along.
The US Postal Service installed multiple mailbox solutions in many subdivisions long ago to increase efficiency, and make it so that anyone receiving a package receives a key in their mailbox that opens a larger box in the same unit for package retrieval.
When most people think about innovation, they think about startups. And indeed, new firms like Uber, Airbnb, and Space X can transform markets.
But others such as IBM, Procter and Gamble, 3M, and now Amazon have managed to stay on top for decades, even as competitors rise to challenge them and then, when markets shift, disappear just as quickly into oblivion.
While it’s true that small, agile firms can move fast, larger enterprises have the luxury of going slow. They have loyal customers and an abundance of resources.
They can see past the next hot trend and invest for the long term. There’s a big difference between hitting on the next big thing and developing it consistently, generation after generation.
We often think of innovation as inventing new things, but we may be smarter to think of it as recombining old ones.
The truth is that significant breakthroughs usually come from combining ideas from different domains. Often very different, sometimes weird ideas.
Increasingly, companies will succeed and fail according to the quality of the digital experiences that they offer.
So why wait? Go after the shockingly disruptive innovation for your business.
Let’s discuss how you could achieve this goal.
Innovative services … begin with a small problem
Peter Drucker once wrote, “Effective innovations start small. They are not grandiose.” He was spot on.
Take a look at any big thing and, inevitably, it’s modest origins.
Microsoft became one of the world’s most valuable companies by focusing on software, an area so inconsequential at the time that IBM was willing to write it off.
Apple made a splash with the Macintosh to a significant part by capitalizing on innovations that Xerox tossed aside.
The great thing about thinking small is that you can risk failure because failure is sustainable.
You can falter, pick yourself up and try again. Eventually, you’ll get it right, and when you do, there are no limits.
If you can survive, you can thrive.
Innovative services ideas … problems based on customer input
Zara is one of the greatest examples of process innovation.
The founder, Amancio Ortega started his business in the year 1975 as a single store in La Coruña (Spain). Ortega, once a tailor’s assistant learned the value of controlling all steps of the production and distribution process, later he applied it all to the Zara chain. And started refining the process steps based on this critical concept.
Every day, store managers report customer feedback information to headquarters, where it is then transmitted to a large team of in-house designers, who quickly develop new designs and send them to factories to be turned into clothes.
Echevarría said that is because the customer is always determining production — not the other way around. An interesting thought isn’t it?
Every piece of clothing the company makes has, in a way, been requested.
A business model that is so closely attuned to the customer does not share the cycle of a financial crisis.
The production of ideas is just as definite a process as the production of Fords; – James Webb Young
In his book, A Technique for Producing Ideas, James Webb Young explains that while the process for producing new ideas is simple enough to explain, “it requires the hardest kind of intellectual work to follow so that not all who accept it use it.”
It is a lot like the Amazon work culture, eh?
He also explains that working out where to find ideas is not the solution to finding more of them, but rather we need to train our minds in the process of producing new ideas naturally.
The two general principles of ideas:
James describes two principles of the production of ideas, which I like:
An idea is nothing more or less than a new combination of old elements
The capacity to bring old elements into new combinations depends largely on the ability to see relationships
This second one is crucial in producing new ideas, but it’s something our minds need to be trained in:
To some minds, each fact is a separate bit of knowledge. To others, it is a link in a chain of knowledge.
To help our brains get better at delivering good ideas to us, we need to do some preparation first.
The bottom line
Are Amazon lockers a potential moneymaking innovation?
Yes, we think so, many because there are many more add-on applications associated with the electronic side of the delivery to customers yet to come (more on these in a future blog).
Whether they make the transition from interesting experiment or invention to innovation, time will tell.
But the fact that Amazon is expanding their research is a good sign that the transition from invention to innovation will be made.
Remember, to improve your innovation skills build on creative convergence … your ability to new relationships between different ideas to form up a new idea.
So if you want to find a truly great innovator, don’t look for the ones that make the biggest headlines are that are most inspiring on stage. Look for those who spend their time a bit off to the side, sharing ideas, supporting others, and quietly pursuing a path that few others are even aware of.
This innovation of the Amazon locker is an excellent example of creative convergence.
What are some of your experiences with utilizing creative convergence and innovation? Please share one with this community.
Need some help in improving the innovation process for you and your staff? Innovative ideas to help the differentiation with your toughest competitors? Or maybe ways to innovate new products and services?
Call today for a FREE consultation or a FREE quote. Learn about some options for innovation workshops to get noticeable results.
Call Mike at 607-725-8240.
All you get is what you bring to the fight. And that struggle gets better every day you learn and apply new innovative ideas.
When things are not what you want them to be, what’s most important is your next step. Call today.
Test. Learn. Improve. Repeat.
Do you have a lesson about making your innovation learning better you can share with this community? Have any questions or comments to add in the section below?
Digital Spark Marketing will stretch your thinking and your ability to adapt to change. We also provide some fun and inspiration along the way. Call us for a free quote today. You will be amazed how reasonable we will be.
More reading on creativity and innovation from Digital Spark Marketing’s Library:
Learn How to Think What No One Else Thinks
Generating Ideas by Convergent Thinking
Amazon and Managing Innovation … the Jeff Bezos Vision
The Secrets to Building an Innovative Culture
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 G+, Facebook, Twitter, Digital Spark Marketing, and LinkedIn.
