As an interesting addendum to the post below I came across this Quora answer from an ex-Amazon employee to the question ‘What allows Amazon to be so innovative?’. Alongside mentions of visionary leadership, entrepreneurial culture and future-focused approach, there is of-course talk of the relentless customer focus for which Amazon is famed (and the ‘working back from the customer’ approach that I’ve mentioned before).
Following the links led me to this brilliant Bezos-ism about why, when so many companies claim to be customer focused, so few pull it off. I’ll quote it in full because it’s so true:
“Companies get skills-focused, instead of customer-needs focused. When [companies] think about extending their business into some new area, the first question is “why should we do that—we don’t have any skills in that area.” That approach puts a finite lifetime on a company, because the world changes, and what used to be cutting-edge skills have turned into something your customers may not need anymore. A much more stable strategy is to start with “what do my customers need?” Then do an inventory of the gaps in your skills. Kindle is a great example. If we set our strategy by what our skills happen to be rather than by what our customers need, we never would have done it. We had to go out and hire people who know how to build hardware devices and create a whole new competency for the company.”
But the really interesting bit for me was around the long-term view that Amazon explicitly takes of its business. This is one of the big challenges that face many organisations threatened by rapidly changing markets – attempting to balance priorities which are inevitably focused on delivering short-term shareholder value or hitting the next quarterly profit target, with allocating time and resource to stuff which, whilst not contributing to intermediate objectives, will likely have the kind of long-term value that can transform a business.
The author links to a 1997 letter from Bezos to shareholders that included a section called “It’s All About the Long Term”. He wrote:
“We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions…. When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.”
Reading that vision, and looking at where Amazon are today, it’s worth reflecting on the short-term tail-spin that many organisations get themselves into, and just how damaging that can be.
Original Post: http://neilperkin.typepad.com/only_dead_fish/2011/10/playing-the-long-game.html
