Amazon’s Innovation Recipe
“For nearly half of Amazon’s 13-year history, [the company has] been in Wall Street’s doghouse, largely because [Jeff Bezos] insisted on massive spending to build the capacity that supports new services (…) Amazon [has] emerged as the undisputed e-commerce champ [and] has embarked on the most ambitious new growth initiatives (…) The plan to sell access to Amazon’s vaunted computing infrastructure has taken off with startups and recently with some corporations (…) the Kindle, a device unveiled last fall for reading electronic books, could be big enough to matter for the $14 billion company.”
Read Peter Borrow’s article, “Bezos on Innovation“, and Robert D. Hof’s 2006 article “Jeff Bezo’s Risky Bet” on BusinessWeek.
Amazon began in business in the mid 90s becoming profitable in 2003. Note that the company gets about 40% of its sales third party sellers listing and sell products on Amazon. Their business has grown from their initial online book store to a full-blown web based department store involving and delivering services to third party retailers of all sizes in the process. These are some well known examples: Borders, CDNOW, HMV, NBA, Sears Canada, Shop@AOL, Target, Virgin Megastores, and Waldenbooks.
The company made the news late last year when launching the Kindle and, most recently, its corporate computing business is getting a lot of attention. Basically, the cloud computing initiative enables other enterprises to leverage Amazon’s own data centers by paying only for the computing and data storage they need, a utility-type business and pay-as-you-go model. At present, the Amazon claims to be serving 300,000 clients.
The following are the drivers behind Amazon’s innovation:
- Be long term oriented: innovate in good and tough times and get ready to handle criticism in the meantime.
- Manage the innovation spectrum: leverage the kind of fine-grained innovation that happens on a daily basis and embark in selected large scale innovation projects.
- Develop adjacent markets and new competencies: deliver things your customers care about and improve the customers’ experience.
- Frugality and constraints drive innovation: be creative.
- Acquisitions: the Internet Movie Database (IMDb), PlanetAll, Junglee, Alexa Internet, Accept.com, Joyo.com, BookSurge, Mobipocket.com, CreateSpace (formerly CustomFlix), Shopbop, dpreview.com, Brilliance Audio, Audible.com.
| J. de Francisco |  |
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| Chicago, 18 April 08 |  |
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