Anatomy of Innovation
By David Dorf on Mar 08, 2010
Sustaining innovation while growing is difficult for most companies, but some seem to consistently deliver like Apple, Amazon, and Walmart. Take Amazon for example. After reading several interviews with Jeff Bezos, I took these things away:
- A key difference b/w entrepreneurs and professional managers is that entrepreneurs have a strong vision and won't compromise on it. Jeff is stubborn on strategy, and flexible on tactics. For example, he demands vast selection, low prices, and fast delivery because he knows his customers will always want that. He compromises on how to deliver on those promises over time, but won't bend on the three pillars.
- Entrepreneurs are good at invention because they are willing to fail, think long-term, and can deal with being misunderstood while people catch-up to their thinking. If you're not good at those things, then focus on sustaining innovation, which is making incremental improvements to the business. Any company needs both invention and incremental innovation to be successful.
- Jeff extends his business model in two ways. Amazon Web Services is a good example of thinking forward, leveraging existing skills to do something new and grab new customers. The Kindle is a good example of thinking backward from a customer need, then acquiring the necessary skills to build the product.
While the stock market seems to value his company differently from year to year, Jeff ignores conventional wisdom and continues to invest in innovation, in good times and bad. A similar retailer is Best Buy. They've been innovating on several fronts. You can read about the genesis of Twelpforce in this posting. Not only does Best Buy look to their employees for ideas, they also look to customers via their IdeaX website (which was recently open-sourced, BTW).Both of these companies now offer wish list functionality that is independent of their e-commerce operations. That tells me it must be a good idea. I've discussed Amazon's Universal Wish List before, and Best Buy now has a similar offering called Giftag. It allows you to capture gift ideas from all over the web, store them in one place, and share them via various mediums.
Amazon and Best Buy are easy examples, but this blog is full of stories about retailers that are innovating either internally or by partnering with interesting solution providers. If you want to be around in ten years, you can't stop innovating.