Wednesday, November 16, 2011

Amazon's Organizational Agility

This past year, with the introduction of the relatively inexpensive Kindle Fire and drop in prices of other Kindles, along with cloud investment and the introduction of trial period Prime Accounts, Amazon seems to be in the spotlight more than ever. In a recent Forbes article, “6 Things Jeff Bezos Knew Back in 1997 That Made Amazon a Gorilla” the journalist states “In my opinion, with Jobs now gone, Bezos is the best CEO in the world.” Not surprisingly, many of the things “Jeff Bezos Knew” relate to organizational agility as presented by Donald Sull’s article, “Competing through organizational agility.” Sull discusses three types of agility: strategic agility (“spotting and seizing game-changing opportunities”), portfolio agility (“capacity to shift resources quickly and effectively”), and operational agility (“exploiting opportunities withn a focused business model”).

The Forbes journalist summarizes Bezos beliefs in the 1990s

1. When you have a window of opportunity, go for the jugular – even if you have to exhaust a huge number of resources.
2. Think long-term meaning 5 – 7 years, not 5 – 7 months.
3. Long-term market share is more important than short-term profits because without long-term market share there will be no long-term profits.

All of these beliefs speak to “strategic agility” and the distribution of “golden opportunities.” Amazon stayed in the game long enough to reap the benefits after some dot-com years of struggle, and was there to leap bravely and boldly at “golden opportunities” when transitioning from an online bookstore to online shop to technology producer.

4. It’s ok to make mistakes but it’s not ok to be timid.

In a 1997 letter Bezos writes “We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.”

This belief aligns with portfolio agility—Bezos essentially stated that resources would move versus being static and that the company would learn from successes and failures rather than spread pain. Amazon today is very different than the business it started as—they moved resources away from some projects into others.

5. Obsess over Customers
6. Be first in a big market

These two knows somewhat related to operational agility. They are priorities that Bezos claimed were disseminated across the company and emphasized from the get go.
I wish I had access to more stories from the inside of Amazon, and how they do data collection and how it is incorporated into their operations so I could see how it aligns with Data to spot opportunities. Are there other ways Amazon’s history illustrates organizational agility?

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