Amazon has had an incredible run of sales growth, increasing by an average of 27 percent per year over the decade ending in 2020. With founder and CEO Jeff Bezos set to retire in the third quarter of 2021, will the company be able to maintain its fast growth when his successor, Andy Jassy, takes over?
We don't know the answer to that at 3PLWinner. However, we think the way Amazon has created and scaled new products and services is likely to continue under Jassy. What's more, Amazon's approach could help business leaders like you to boost your company's growth!
Here are five Bezos principles which can benefit your business:
1. Never give up on trying to please your never-ending list of disappointed customers.
One of the most fundamental indicators of a startup's performance is whether it is solving the right problem. Amazon's customer model is that customers are always disappointed, no matter what the company does to try to make them happy.
This reminds of toy joy, an idea I came up with while shopping for toys for my children. They were most excited about the toy after I agreed to buy it and on the way to the store. They were bored with the toy after about a week or two and pleaded with me to purchase a new one. Amazon's aim, according to Bezos, is to provide something better to its constantly disappointed customers. To that end, as he described in a shareholder letter in 2016, he requires Amazon to "experiment patiently, accept failures, plant seeds and double-down [on evidence of] customer delight."
2. Develop a new product by attaching it to a flywheel.
Once a company has a large number of product lines, it should have built a repeatable method for introducing a new product to a large number of consumers — a process that makes the product less costly to produce and distribute as demand rises.
Once a seedling sprouts from the first phase, Amazon uses a flywheel to scale it into a major new revenue stream.
Jeff Wilke, former head of Amazon Worldwide Consumer, explained : A great customer experience increases traffic, which Amazon has made available to third-party sellers via its Marketplace service.
This broadens consumer choice, which boosts growth. Greater size reduces cost per product, which Amazon passes on to customers in the form of lower prices – and the virtuous cycle begins again.
Amazon's AWS company, which Jassy is credited with inventing, is one example of its success in innovation.
3. Have thought leadership in the industry.
To build a successful new product, you must have world-class capabilities.
Amazon was familiar with AWS because it used its systems to operate its e-commerce business. Around ten years ago, Amazon was investing in computers and servers to operate its core business when it realized it could lend the power to other businesses, saving them the expense of developing their own computing systems.
4. Recruit hundreds of CEOs.
As the market for a product increases, you can employ people who will be in charge of making each component more competitive.
Amazon accomplishes this by recruiting "builders" – people with CEO-like skills – for each of its AWS services. "We recruit hundreds of CEOs for our production team. They each have control over their own fate. We present them an opportunity, and they seize it, research it, and create a business around it", Barr said.
5. Reduce costs and inform consumers about how to save the most money.
Keep track of the features of the product your consumers use – and which they disregard. Inform them that you can no longer give them parts of your product that they do not need, which will reduce the amount they pay you and raise the perceived value you are providing them.
Customers stay loyal to Amazon because AWS analyzes their use of the service and recommends how toavoid spending on components that they do not need. "Over the past few years, we've sent out 2.6 million alerts, resulting in annualized savings of $350 million from the Trusted Advisor program. This is in addition to the gains from price reductions".
We'll see if Jassy will encourage creativity once he takes over. In the meantime, you can use the practices pioneered by Bezos to help your business expand faster!