Tuesday, March 10, 2009

Why Jeff Bezos is leading a $19B revenue company and will lead a much larger one

Jeff Bezos was given a one hour interview on Charlie Rose the other day. For those pressed for time, I have summarized key take-aways below. Despite being somewhat long, I think it's really worth seeing.

Key points:

Unlike many companies, Amazon's strategy is built around things that stay the same (fundamental customer needs) rather than what will be different. The bedrock of their strategy is built around three common attributes, sought by all customers:

Low prices
Fast delivery
Selection

Therefore, Amazon's mission is to serve customers through lower prices, speeding delivery and increased selection. This strategy is married with an execution philosophy that recognizes that we live in a complex world, if you can simplify it for your customers, they will value it.

The Kindle is an example of how expansively the company will dream, and seek to execute the vision. The device disruptively hits all three strategic criteria as its promise is to someday offer every book ever printed (in any language), available in 60 seconds, for a price far less than a physical alternative.

While designing the product, they had the vision of enabling the reader to enter the world of the author, then get out of the way. A B&W 'e-paper' screen was selected as it's easier on the eyes and has a dramatically longer battery life than a color alternative. It was designed to be a purpose driven reading device, and specifically not designed for reading 'sippers'. For these informal readers, the Kindle software was introduced for non-specific devices such as the iPhone.

Turning back to strategy/culture, Amazon chooses to obsess over customers, rather than competitors. Bezos' belief is that if they do well with customers, they will be rewarded with an extension of their trust into new categories.

The company has tried many initiatives that have failed. A9 in search and auctions are two high profile examples. Yet, lessons from auctions led to a different way to look at the business and led to the birth of the successful 3rd party affiliate business. It also drove home his belief that me-too companies tend to not do well. Even if you are a big me-too.

I was struck by the contrast between Sony and Amazon. Sony does not lack for a strategic framework that brings them a timely entrance into many high growth categories. Yet, their execution in e-books, game consoles, music devices, phones and so many other markets has led them to being a consistent me-too in all.

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