Bezos on innovation, customer-focus and long-term thinking

Business Week has a great interview with Jeff Bezos as part of their innovation issue. The interview is entitled How Frugality Drives Innovation, but Jeff talks about far more than frugality. Here’s my favorite bit:

Q: Every company claims to be customer-focused. Why do you think so few are able to pull it off?

A: 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.

Well worth a read. Another great line: “The key is to pick things that you think are really iimportant, and then focus on them.” It seems obvious, but so few of us do it as consistently as we should!

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  • http://www.gandalf-lab.com Niraj J

    I am confused !!

    I thought the move to AWS was really a skill and competency based decision.

    Since Amazon has great competency in Datacenter management ,w hy not expose this to the outside world.

    If it was as a result of “My customers want AWS” . I would be hard pressed to believe that Book buyers and retail shoppers had datacenter needs.

  • http://colemanfoley.blogspot.com Coleman Foley

    The Kindle design shows half-competency, not competency. The good point is the one about delivering what customers need, and trying to make your skills follow it. Unfortunately for Amazon, they just can’t get the skills. They’re way behind everybody else on hardware.

  • http://www.stapleton-gray.com Ross Stapleton-Gray

    I think the jury is out on who needs Kindles.

    But there’re some useful ideas here. I think there are really two (or more) paths for businesses to follow: fitting new technologies to customers, or finding new customers for given technologies. If you’re Black & Decker, you’re probably exploring new ways to create holes in things (pulsed plasma?) but you may also be expanding your oferings in sub-horsepower electric motor-driven tools, into new market segments.

    AWS reminds me of the origin of Sprint, which sprang, IIRC, from the fact that the Southern Pacific Railway had laid communication lines along its right-of-ways, originally to handle its various needs for switching & signalling, but lo, a new market for the excess capacity beckoned.

  • http://www.sikantis.net sikantis

    As everwehere the most important to attract people is to be honest and showing esteem toward everybody. Great post, thanks.

  • http://bexhuff.com bex

    interesting… of course, this implies that the most important skill is determining what your customer needs.

    That means coherent market analysis trumps research and development every time. At least, if you care about making money.

    I don’t disagree… but I’m curious to see how many “alpha geeks” follow you down this path…

  • http://paulbuchheit.blogspot.com/2008/03/ideas-vs-judgment-and-execution_9197.html Charles Thayer

    I think Jeff Bezos’s comment is right in line
    with one I saw on Paul Buchheit’s blog, where
    he quotes Marc Andreessen:

    “I’ll assert that market is the most important factor in a startup’s success or failure.

    The product doesn’t need to be great; it just has to basically work. And, the market doesn’t care how good the team is, as long as the team can produce that viable product.

    Conversely, in a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn’t matter — you’re going to fail.”

    /charles thayer

  • http://tim.oreilly.com Tim O'Reilly

    bex –

    I don’t think Jeff was talking about “market analysis” (a la political polling) but a focus on filling real needs that the customer has. If you don’t think there was serious R&D in the kindle (or in Amazon’s other offerings), you’ve got to be kidding. You’re setting up a false dichotomy.

    Take O’Reilly. When we decided to do deep books on hard topics, we had a belief about what customers really wanted. We then had to do lots of work to bring products to market that matched that belief. But it is the conviction that certain topics matter to our customers that drives our best publishing. And polling for the obvious choices is actually the opposite of that deep conviction.

  • Alex Tolley

    It’s an interesting interview, but I think it is mostly BS.

    let’s start with offering what the customer wants. Sound good. Most companies actually state that is their goal. But how do you know what the customer wants? Most customers don’t. Amazon has done well (at least in books) because despite its occasional missteps, it offers a very good buying experience. The selection is huge, books are cheaper than retail, some books are partially browsable, reviews are accessible and useful and purchase is very quick (even without “one click”).

    We don’t yet know how successful the Kindle will be. However, going by my wishes and those of many bloggers and their commentators, the Kindle does not offer what the customer wants. It is possible therefore that Amazon has not acquired the product design competency it thinks it has.

    Bezos is likely fooling himself, hardly a unique problem for successful CEOs. He believes the success was all due competency, and therefore that it can be replicated, even in new domains requiring differing competencies. I’d give him the benefit of the doubt for now, but I suspect Bezos has a severe dose of hubris.

  • http://online-social-networking.com/about Larry Brauner

    Very interesting.

    Reminds me of when I worked for Eric Marder. He had the right idea. He always said, “We’ll sell it. Then we’ll figure out how to do it.”

  • http://shine.yahoo.com/astrology/ Morgan Fleming

    Hey guys, May be the U.S. much better off sticking to Syria’s Assad?