Amazon’s Jeff Bezos on two ways to approach customer-focused innovation

Newsweek magazine, in its year-end "interviews" issue, features an interview with Amazon's Jeff Bezos, who illuminates two different approaches to customer-focused innovation. One way is much harder amd riskier than the other, but also has a bigger potential payoff

Newsweek magazine, in its year-end “interviews” issue, features an interview with Amazon’s Jeff Bezos, who illuminates two different approaches to customer-focused innovation. One way is much harder and riskier than the other, but also has a bigger potential payoff:

“There are two ways that companies can extend what they’re doing. One is they can take an inventory of their skills and competencies, and then they can say, ‘OK, with this set of skills and competencies, what else can we do?’ And that’s a very useful technique that all companies should use. But there’s a second method, which takes a longer-term orientation. It is to say, rather than ask what are we good at and what else can we do with that skill, you ask, who are our customers? What do they need? And then you say we’re going to give that to them regardless of whether or not we currently have the skills to do so, and we will learn those skills no matter how long it takes. Kindle is a great example of that.”

Bezos goes on to explain how Amazon had to learn new skills, such as product engineering, to bring the Kindle e-reader to fruition, which took a big investment of time and manpower over several years. It definitely required a long-term commitment.

Amazon’s approach to developing this product appears to be paying off. Bezos reports that, as of the time of the interview in early December, Kindle was already the online retailer’s bestselling product, as well as the number one most-wished-for product, as measured by people putting it on their wish list. It’s the number one most-gifted item on Amazon.com, in any product category. For book titles that have a Kindle edition, Kindle book sales are 48 percent of the physical sales. That’s up from 35 percent in May.

“The business is growing very quickly. This is not just a business for us. There is missionary zeal. We feel like Kindle is bigger than we are,” Bezos adds.

My biggest big take-away from this interview is that your starting point is crucially important. Are you truly looking at what your customer needs, or are you limiting your innovation initiatives to what your organization is already good at that also happens to coincide with some sub-set of your customers’ needs?

Another insight is that your selection of which perspective to take (customer- vs. skill-focused) also has some significant competitive implications. Obviously, there’s much less competition in the latter approach, because most companies will naturally follow the easier, lower-risk, faster-payoff strategy.

How far are you willing to go to fill your customers’ needs?

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