In the new book The Everything Store: Jeff Bezos and the Age of Amazon, author Brad Stone explores the rise of Amazon.com and the man behind it all, CEO Jeff Bezos. While we may all be very familiar with the brand today, the story of how Bezos and his team built an eCommerce giant from the ground up is quite astonishing. Stone states that Amazon needs ‘a chain of small advantages’ to stay ahead. I wish more CEOs thought this way. Almost all my clients look for a silver bullet that will take them to the promise land. It’s not that simple.
Unfortunately, digital products don’t work that way – the reality is that even big ideas require incremental changes via testing and fine tuning. One-Click checkout is a great example. Amazon implemented and tweaked it over time. However, they also prevented it’s main competitors at the time, Barnes and Noble (which has a preliminary injunction against them) and Borders (whose website I managed at the time) from implementing this innovative approach to shopping. In other words, implementing was one thing, preventing competitors from using it was another. Basically, Amazon won its case against Barnes and Noble, who was forced to turn their one-click into a two click approach. And Borders.com backed down and adopted the same type of functionality.
Eventually, they surrendered their monopoly on one-click, but it wasn’t until they had sufficient amount of time to establish a competitive advantage. I know from personal experience, having designed and implemented one-click checkout on eToys, Borders.com, KBtoys.com and a few other websites. It is not as easy as putting a button on web page.
To be successful, small changes require:
- Clear definition of the product and feature
- Agreement on the incremental, evolution change approach
- An agile first-to-market implementation
- A simple method for measuring ROI and Impact
- A process for collecting customer feedback
- A mindset of continuous improvement
With the increasing usage of mobile devices, it will be important to think in incremental improvements. What was it that Neil Armstrong said – “That’s one small step for [a] man, one giant leap for mankind.”
All of this requires the Bezos strategy of starting with the customer and working backward. While this sound obvious and somewhat cliche, I am constantly surprised how many companies don’t talk to their customers on a consistent basis. In fact, last year a client asked me “why would you want to talk to a customer if you already know what they are going to say.” Maybe that’s the problem. Customers often just want to be heard, But better yet, customers might even provide more insights the more you talk to them. Have you ever heard of the 5 Whys? It is an iterative question-asking technique used to explore the cause-and-effect relationships underlying a particular problem. The primary goal of the technique is to determine the root cause of a defect or problem. (The “5” in the name derives from an empirical observation on the number of iterations typically required to resolve the problem.) Here’s an example from Wikipedia:
- The vehicle will not start. (the problem)
- Why? – The battery is dead. (first why)
- Why? – The alternator is not functioning. (second why)
- Why? – The alternator belt has broken. (third why)
- Why? – The alternator belt was well beyond its useful service life and not replaced. (fourth why)
- Why? – The vehicle was not maintained according to the recommended service schedule. (fifth why, a root cause)
- Why? – Replacement parts are not available because of the extreme age of the vehicle. (sixth why, optional footnote)
- Start maintaining the vehicle according to the recommended service schedule. (possible 5th Why solution)
- Adapt a similar car part to the car. (possible 6th Why solution)
If you apply this technique to eCommerce, focus groups and quarterly check ins don’t cut it in this environment. You literally need to adopt a customer and become his/her best friend.
Obviously, Amazon continues to do amazing things. I was particularly impressed recently when they beat IBM in a contract to host the CIA’s web services. Hope they accidently share customer data with the intelligence community : ).
To hear a great interview with Brad Stone, the author of this new Amazon book, listen to the interview with him at NPR’s Fresh Air.