Strategy: “To ‘Get Big Fast’ by investing
aggressively in new product categories and new businesses, by spending money on
brand awareness and getting new customers.”
Amazon’s strong market initiatives and its evolving presence
in a number of business verticals has always kept me excited and tuned in. The
agility with which they move into the emerging markets makes them a leader and
a market maker to a large extent. So, is the agile methodology just built-in
the roots of their organizational culture and strategic fundamentals? And have
there been any major changes in their agile thinking?
Well, it has been an increasing adopter of the agile
methodology amidst an exponentially rising competition and shortening of time
to market. Amazon was born in 1994 as an online retailer, aimed at distributing
the top 5 products that people like to purchase online. After a careful
analysis of the market products, the list incorporated compact discs, computer hardware, computer software,
videos, and books. Thereafter beginning
their online retail operations in 1995, the dot com bubble burst in the later
part of 20th century saw many such businesses wiped out from the books
of e-commerce start-ups. However, the long-term vision of Jeff Bezos, the
founder, helped Amazon to hang around and build on their retail operations. Time
Magazine featured Jeffrey Preston Bezos as Person of the Year in 1999, calling
him "king of cybercommerce." But to
say the least, the journey was never easy with competitors like eBay eyeing for
an almost similar market.
Thereby, soon after it launched their online auction
service, and expanded its footprint in the industry, while experimenting with
the idea of online auction market framework. It also formed an alliance with
Target Stores for warehousing and delivery of goods purchased through their
online portal. Next year, they went announced the launch of their Amazon Web
Services platform. In essence, we can observe signs of fast-changing strategic
initiatives and an agile development style right back then. In the initial 6
years of its growth, it had penetrated into e-commerce, auction markets,
partnered product distribution/shipment, amidst the dot cum bubble burst.
However, racing into 2013 with an established business
footprint, their emphasis on agility has become deeper and they have moved from
portfolio agility to essentially strategic agility. They are no longer tapping
into the formed market potential but they are visionary and shaping the cloud
computing market with their diverse set of offered services. Their AWS
portfolio has seen tremendous growth and stands near the $3billion mark in
revenues. Another exciting suite of products are the low-cost, user-friendly, and
task efficient range of Kindle(s). They are an offset of their digital content
publishing business, offering ebooks, their media content library and their
newly introduced mobile browser “Silk” which is optimized for easy and
efficient access to cloud data services.
The rationale behind this transformation form portfolio
agility to strategic agility is embedded in the current state of affairs in the
web and telecommunication industry and its rapid evolution. The approach of
portfolio agility is linked to aligning your business focus to the bigger share
of target market, hence increasing the income potential and scope. Strategic
agility, which Amazon can be said to have been following now, deals with leading and transforming the market through
your own interpretation of the future trends. It assumes a leadership position
in the business arena rather than being a follower or adopter.
So what has caused Amazon to move so swiftly, face the
competition upfront and build a great customer base. It’s their well-formed
vision identified by a unique set of capabilities and translated into reality
through effective leadership. Their recruitment policies have transformed over
years to support only the best talent, people who are the “masters” of their
domain, so that speed and quality are ensured. Their continuous growth and
agile practices is further propelled by its HR practices of “bar raiser”
interview rounds, which is to ensure its functional momentum is maintained. They
have essentially mapped the organization’s capabilities with the employee’s
core competencies and leadership ability.
Amazon
has multiple growth verticals having different strategies depending on the
market position of their products in each. This multi-faceted growth strategy
requires great customer focus and market insights which it fosters through its exceptional
employees and able leadership. Their online retail solutions have been a consistent
revenue earner for their business. However, an interesting trend to look out
for is its increasing rising % of revenues in cloud storage services and its device
sales. There has been a random but substantial advance in the web services and
cloud market that has driven Amazon into this parallel growth strategy.
The question now is, are they agile enough to ride
this emerging but unpredictable market trend?
References:
1. “How
Amazon’s Unconventional Business Model Changed Me From Hater To Customer For
Life.” Business Insider. Accessed June 13, 2013.
http://www.businessinsider.com/why-amazon-is-so-hugely-successful-2012-12.
2. “The History of Amazon.com | eHow.” eHow. Accessed June 13,
2013. http://www.ehow.com/about_5377195_history-amazoncom.html.
3. Vladimir Matovic. “Amazon Business Model.” Technology, January 3,
2012. http://www.slideshare.net/Vlacke/amazon-business-model.
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