by Tom Halton
Amazon! The word now means above all the 2nd company in history to pass $1 Trillion in stock valuation. Gone is the automatic identification with mythical ancient Greek warrior demi-goddesses. Gone the name for a woman with moxie who stands up for herself, her beliefs, and those she cares about, and will not brook resistance. Gone is the great river basin universe of exotic life providing a lion’s share of the Earth’s oxygen. Now in popular mythology the domain of the new Zeus, Jeff Bezos, holds sway. Only the Titan, Apple remains to challenge Amazon for premier position in the stock market.
We all hear regularly the woeful tale of how Amazon’s online behemoth tolls the death knell of bricks & mortar business after business. The closure of independent high street booksellers is blamed on Amazon. Difficult times for book publishers are invariably blamed on Amazon’s forays into publishing and stranglehold on book pricing. The recording industry’s decline in profits and demise of the local record store – Yes, you got it – Amazon and the online music streaming stores. In America, the closures of shopping malls are again the fault of the Amazon Colossus trampling small business underfoot in its unstoppable march to world domination.
The blame is not only attributed to poster boy Jeff Bezos and Amazon, but also includes peers like eBay, Apple iTunes & Music, Google Play, Microsoft, Spotify, Rhapsody, and every online business that offers competition to bricks & mortar. Is this fair – is it truly the case that our familiar store buildings are doomed and our community centres, whether village, town, or city, will shutter, rot and die? If it is true, why is it true? If this is something we don’t want to happen then why are we letting it happen? We have the power to shift the balance as a society simply by changing our shopping habits – why do we not?
Equally, if it is true, why are Amazon, Apple, and Microsoft, all opening high street, and mall, stores? Why did Amazon buy a supermarket chain? Start a grocery delivery service? Are we simply seeing the result of a single-minded focus on optimization and creating market share that inevitably leads to brand turnover in the marketplace? We saw this in the past with Mom & Pop stores giving way to local supermarkets, that in turn gave way to the supermarket chains, that again in turn lost out to the Hypermarkets (Wal-Mart in N. America, Tesco in the UK, Carrefour in Europe). These are now in their turn losing out to the online markets going mainstream and the very low price points of the new wave stores like Lidl and Aldi in Europe.
Amazon as an organization has a vision, a strategy, and has developed better ways than most competitors to achieve business goals. Amazon has the courage to try new businesses re-using the same extremely optimized pipeline models already developed for existing businesses. Some of these are traditional sectors that Amazon can (r)evolutionize through product innovation and the use of new, optimized, ways to handle age-old problems as for Amazon.com, Amazon Fresh, or Kindle and Fire devices with film, series, and book, publishing. Some are completely new businesses that did not exist fifty years, or even a generation, ago like Alexa, Amazon Web Services (Global Public Cloud/Utility Computing), Amazon Music (streamed music and more), Amazon Wardrobe (online fashion), space travel (Blue Origin while not strictly Amazon is owned by Jeff Bezos). The list goes on – and will continue to go on until Amazon either stops innovating or is somehow disabled politically by anti-trust or some other public crusade.
What is the real underlying trend we are seeing? In the case of Amazon, it is a laser focus on efficiency and innovation across its business, supply chain, logistics, delivery, and customer experience, coupled with investment in new technology that enables leaps forward in these areas. Amazon believes investment in talented staff, AI, Analytics, re-imagined processes, and optimization of the offering and pipelines from supplier to customer are keys to success.
Is this in some way revolutionary or have all major leaps in value creation shown similar characteristics? The application of his model of mass production and optimized supply chain to automobile manufacturing made Henry Ford the king of that industry for a time. Today the development and application of advanced technology, AI/ML, automation and intelligent tools, are being used by companies in the same way.
When you have vision and know where you want to go, finding better ways to get there through focusing on continual improvement and innovation gives you the competitive edge needed to be a leader. The first to market and early adopters, like Amazon and peers, are making the fastest progress and are not constrained by legacy processes, tools and infrastructures. They have the advantage today, but the underlying technology they use is available to all who want to use, and innovate with, it.
Copyright © 2018 Tom Halton, All Rights Reserved.