Every year Jeff Bezos writes an annual letter to shareholders. They’re eloquent, compelling, perfectly articulated moments in time that chart Amazon’s rise from scrappy beginnings, to steady growth and now dramatic ascendancy.
This year’s letter comes at a crucial time for the company: in many ways, it remains a disruptive, challenging, ‘who-says-we-can’t’ start-up, with big bets on the likes of artificial intelligence, machine learning, media, automation and next generation physical retail.
And yet it’s reached the scale and dominance of leader in a ridiculous number of industries. In short, it should be all set for a midlife crisis.
So this year Bezos has tackled head on the secret to remaining scrappy and innovative while scaling across multiple sectors.
The answer is a beautifully simple couplet: maintain unblinking customer focus to unearth the opportunities that customers crave but can’t yet articulate, while ensuring the company is entrepreneurial enough to act on these opportunities at speed.
To put it another way, you have to tackle innovation problems from two sides simultaneously: solving for the needs of the customer and for capabilities of the company.
It’s something we recognize at Fahrenheit 212, a fundamental truth that we apply to any innovation challenge – solving simultaneously for the customer and for the company – we call it money and magic.
Create the magic
For Bezos, the magic side of that equation is built on what he calls ‘true customer obsession’, understanding the customer and realising that what they think or feel most often does not tell you the whole story – “customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great.”
There’s an immensely important, subtle point in there: it’s not good enough to ask customers, or measure responses – you need to observe, understand and make the creative, imaginative, magical leaps required to create a connection between today’s unarticulated dissatisfaction and tomorrow’s unimaginable but indispensable inventions.
Deliver the money
The flip side of the money/magic equation means solving for the capabilities of the business. For Amazon, this implies an almost fanatical dedication to entrepreneurialism.
Bezos sees it as a perpetual Day 1.
“I’ve been reminding people that it’s Day 1 for a couple of decades… Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
It’s a great expression of Amazon’s core-capabilities, distilled into a culture of entrepreneurialism that rejects calcifying processes in favour of high velocity decision making and yes, a start-up level urgency that demands every day be seen as Day 1.
It has meant that since Day 1 Bezos has been able to rapidly act on the stream of opportunities delivered by his team’s customer obsession; to take calculated risks and focus on the long game – weathering the naysayers in pursuit of category creation, channel disruption or technological advantage.
It’s a strategy that is paying off handsomely.
No doubt there will be a few misfires to emerge from Amazon’s innovation pipeline, (own-label fashion? I’m skeptical), but with a two-sided approach to identifying and delivering innovations, you can bet that the foundations are solid enough to sustain Day 1 for decades to come