Why is Bezo able to take risks into new territories? Because "we can analyze quantitatively rather than to have to make intuitive judgments." What's so great about this type of business model is that it does not rely on luck throughout the process. It only relies on luck at the front end of the risks, minimizing the risk throughout the enterprise. Bezo is the current king of data driven decisions, and I think that over time it's enabled Amazon to not only pass it's many competitors (buy.com / half.com / yahoo.com / google products etc.) but also quickly overcome dis-advantages. Compared to the amazing roll of luck, insight, cunning, and high risks / high rewards culture of Apple, Amazon is really the company to emulate. Without Jobs, can Apply keep it's streak alive? No one is certain. It sometimes feels that with each not product Apple is betting the company. That's certainly what people were saying about the ipad. And that's what makes watching Apple so thrilling. Without Bezos, Amazon appears to be poised to continue it's great leadership. Watching Amazon might not be as thrilling, but the details are simply spectacular. While Jobs may get the accolades, I think think that Bezos deserves the crown.
While I support the endorsement of Amazon's data-driven culture and strategy, I don't think it's fair to describe Apple as its opposite. Apple is not the gut-driven, "bet the company" firm that the general public seems to think it is. Its bets are very data-driven, albeit not quite as real-time-data-driven as a company like Amazon's, whose business model allows for more real time data in the first place.
In broad strokes, I think I'd describe the two companies this way: Amazon innovates through optimization of new markets, while Apple innovates through creating new markets. This isn't a wholly fair description of either company, and as we know, there are exceptions in either direction. But that's the business model of the two companies at a 30,000-foot glance.
As you've hinted, probably the best way to differentiate the strategies of the two companies is on the risk/reward dimension. Amazon operates on a risk-minimization model, while Apple is risk-seeking in favor of outsized rewards. This is partially because Apple is still a hardware company (for now, at least), and it needs to keep reinventing its products to stay ahead of the commoditization of hardware.
I've sent it to some of my coleagues an article menting this ("Steve Jobs does customer development" [1]). Still, people refused to accept any evidence that getting facts is better than going with your gut.
This is the problem with people that don't believe in facts: they don't believe in the fact that this belief is bad for them.
True. There are exceptions to the statement I made, which is why I pointed out that it's not wholly fair. In fact, Amazon's entire existence can in many ways be said to have been the creation of a new market.
Even still, I think it's fair to say that Amazon primarily innovates these days through rapid and extensive iteration, especially on its consumer side.
The full quote: Ninety-plus percent of the innovation at Amazon is incremental and critical and much less risky. We know how to open new product categories. We know how to open new geographies. That doesn’t mean that these things are guaranteed to work, but we have a lot of expertise and a lot of knowledge. We know how to open new fulfillment centers, whether to open one, where to locate it, how big to make it. All of these things based on our operating history are things that we can analyze quantitatively rather than to have to make intuitive judgments.
In other words, you can measure things after they become variations on a theme, because you know what to measure, and you can measure them against past successes and failures. They've minimized the "nova" in innovation. When something is truly new, like the first time Amazon opened a new product category or a new fulfillment center, quantitative analysis isn't as helpful. "Stuff is up 12%, and crap is down 5%." "Is that good or bad?" "I dunno."
I expect it would play out fine. If people are asking WWJBD and answering it themselves (and fairly well) then I'd say the culture will survive long after Jeff leaves.
You have to admire Bezo's approach to new ideas...
"On the day you decide to give up on it (hypothetical idea), what happens? Your operating margins go up because you stopped investing in something that wasn’t working. Is that really such a bad day?"
I do appreciate the silver-lining attitude, but this really only applies to risks that are marginalized by the amount of success you're already experiencing. It wouldn't be all that great a day if say, we were talking about how much more expendable income you have now that you've foreclosed on your house.
Still, I think that's a big part of his point.. to take risks early and often enough that you can (afford to) think about them this way.
I find the product development strategies of the major technology companies quite interesting. I'm talking about Eric Schmidt's "Gang of Four". [1]
On the one hand you have Apple. Apple innovates as good as, and perhaps better than the other three. But it doesn't have very many products. And while I have no knowledge of this, I'd bet it doesn't start-and-stop products as frequently as the others. And it probably doesn't have as many "active" products going on at any one time. (Maybe it does behind the scenes, but I would be surprised if it did.)
It may take some iteration and prototyping to see that you could actually turn an iPhone into a tablet.
But I'm pretty sure Jobs "saw" the tablet long ago. In his mind, it was just a matter of when.
In the case of Apple, I see experimentation occurring as a result of the vision laid out by Jobs and other senior executives.
When it comes to the others, Amazon, Facebook, and Google all seem to implement the "fail fast" strategy. In this case, experimentation leads to vision. Instead of vision leading to experimentation.
What's interesting is that Apple used to be more like the others. It had many products and segments. And very little vision. But that strategy brought it close to death. [2]
Discovery is important to all of them. But the journey seems to be different.
I disagree with your points about Apple - just because the vision is the only thing we (as the general public) sees. You cannot discount how many dead end products that are prototyped within Apple - and with their resources, they are able to build pretty much anything. From raw silicon to SOC to hardware prototypes of all kinds. Amazon probably requires the assistance of external parties to prototype the production of something like the kindle, but I believe Apple has the resources to assemble the iPad (at a low volume) in-house completely (ie from the silicon to the boards, to the plastic mouldings and final assembly and packaging.
I do believe that Apple also follows an internal "fail fast" strategy - it's just that we don't see the iterations.
I don't think Jobs is a Moses type see-all super visionary character - he just knows what's good - has "good taste". His lieutenants come up with product ideas to fit his vision, and he bashes the hell out of the bad ones. Kinda like what Google does, or Amazon does, or Bill Gates does (when he was around).
In that light, I don't think you can separate Apple from the rest of the "Gang of Four" - in fact, I think these ideas of "fail fast" and extreme agility, flexibility, and scale unite all 4 companies.
What I was literally struck by was the fact Bezos seemed to echoing the book, Little bets how breakthrough ideas emerge from small discoveries. I've stated before that I believe that is directly related to the concept of lean startups http://news.ycombinator.com/item?id=2475535
I don't think those are the same: two different uses of "that". The example from Bezos seems flat-out wrong to me. I had to read it three times to figure out what he meant. Would be interested to see other examples.
This is a great quote on vision and execution: "We are stubborn on vision. We are flexible on details"
That "Why We Do This" doesn't change (and hence it's important to have the Why instead of 'here are X cool features') but the execution can differ. Great stuff from a great business leader.
