We’ve all heard that we should zig when others zag. Find that blue sky, be unique. But it’s harder than it seems. Here are 6 ways Amazon went their own way.
After smashing the digital bookstore space, Amazon had to deal with the new digital world.
Steve Job even invited Jeff Bezos to Apple HQ for a sushi lunch, where he goaded Jeff by showing him the yet to be released iPod. The iPod launched in 2003 and digital media age was born.
What would happen to Amazon? At this point they only sold hard copy books.
Bezos is quoted as saying ““You don’t want to become Kodak,”
Kodak did nothing. Not an option. So what did Amazon do? They did the unexpected. If you just read the paragraph headings below, they will read like any business article. But the execution is radically different.
1. Don’t focus on the “what”
The first question usually posed by a management team is this, “What will we do/make?” But Bezos didn’t do that, he organised a team.
“He did not jump straight to focusing on what product to build, which seems like the straightest line from A to B”.
He zigged when they zagged.
“He focused first on how to organize the team and who was the right leader to achieve the right result.”
He didn’t take the bait presented by Jobs.
2. Focused priorities
Amazon already had the infrastructure and relationships (e.g. publishers). It would be easy to tack on the new digital division. But they didn’t do that. They formed a whole new division so it could remain focused only on digital. A skunk works if you like.
It’s one thing to create a skunk works, it’s another to be ‘truly’ committed to a skunk works for an undefined category.
3. Clear intent
Should they be a fast follower or invent a new product on behalf of the customers? Bezos said “either approach was valid but that he wanted Amazon to be a company that invents”.
He didn’t want to be a copycat version of the iTunes store because “invention leads to greater long-term value for customers and shareholders.”
Most companies will make incremental (or even massive) improvements existing categories. He didn’t do that, he invented. I don’t do that, do you?
4. Understand the market
Amazon was in the aggregator between the content creators and the content consumers. They added value by sourcing and aggregating a massive selection of goods in one place.
But in the digital world, anyone could source an electronic file and pass it through to consumers. Amazon could quickly lose its competitive advantage.
This meant moving out of the middle to either side of the value chain. Apple clearly moved to content consumption. Amazon could move the same direction, except that it didn’t have the skills set.
Apple already had a 1st mover advantage with music and Amazon hadn’t conceived a compelling enough music device.
Video hadn’t gone digital yet, and was an opportunity, but internet speeds were too slow for the massive volume of data and movie studios were a huge barrier.
But e-books were in their infancy, as expensive as printed versions, and they were a category Amazon understood.
They believed customers would want an iPod equivalent in the book category.
Amazon didn’t just see itself as the most successful bookstore in the world.
5. Start from the customer.
Most companies would ask, “what can we do next with this skill set?” At Amazon they would figure out what the customer needs and then ask, “Do we have the skills necessary to build something that meets those needs? If not, how can we build or acquire them?”
Who does that? I don’t. It means completely reorganising (hiring and firing) the workforce.
They then worked backwards from the customer’s need for digital books and invented their own device. This is despite having never built hardware.
This device was taking way longer than expected and chewing cash. During a heated exchange with finance someone pointed to Bezos and asked point blank, “How much more money are you willing to invest?”
Jeff’s response? “How much money do we have?”
And so the Kindle was born and changed Amazon forever.
As a side note, the Kindle was also Amazon’s first foray in to cloud storage for the books, which they later developed to the new uber-lucrative Amazon Web Services (AWS).