As Amazon becomes the second tech to be worth more than a trillion dollars, it is worth bearing in mind what Jeff Bezos once said were the keys to his success.
One of the lessons of innovator's dilemma is that you can listen to your customers too carefully. This was one of the conclusions of Clayton Christenson's classic study, looking into why large, dominant companies fail. It's the ides that comes seemingly from nowhere that disrupts.
If Apple had listened to research, it would never have released a touchscreen phone, for example.
Jeff Bezos, CEO at Amazon, and now with a net worth of around $167 billion, easily the richest man in the world (with the possible exception of Vladimir Putin), says he is customer obsessed.
But that is not the same thing as only ever giving the customer what he/she says they want.
He once explained it: "Customer obsession is inventing on their behalf. It is not their job to invent for themselves.”
Amazon shares have doubled in the last year, risen roughly nine-fold in five years, and a thousand times over since IPO in 1997. For a few hours on September 4th, it was worth more than a trillion dollars. Around $100 billion less than Apple, and bigger than Microsoft and Alphabet by a little more than a hundred billion dollars.
“If someone comes to you with a business plan and they say it is disruptive,” said Mr Bezos, “you should ask them to explain it in a more-simple way, and ask them why customers are going to adopt this?” He explained: “Invention is not disruption, only customer adoption is disruption. At Amazon, we invented a lot things that customers did not like at all, and they were not disruptive to anyone. It is only when customers like the new way, that something becomes disruptive.”
And that takes us to one of the three pillars upon which Amazon is based.
And that is customer obsession.
The second is being willing to invest and pioneer. “Customer obsession is not just listening to customers,” he said: “customers are always dissatisfied, even when they don’t know it, so customer obsession is inventing on their behalf. It is not their job to invent for themselves.”
Henry Ford followed a similar philosophy, supposedly saying “if you asked people what they want, they would say faster horses.”
The third pillar is thinking long-term. “I ask everyone not to think in two to three-year time frames, but to think in five to seven-year time frames.” When someone congratulates him on a good quarter he thinks that “those results were baked in several years earlier. I am working on a quarter that will happen in 2020, not the next quarter.”
But this is not natural, he suggests. It is hard for humans to think like that. Books about “get rich slowly schemes are not big sellers.”
He had some good words about experimenting and failure too.
“You cannot invent or pioneer if you cannot accept failure . . . To invent you need to experiment and if you know in advance that it is going to work, then it is not an experiment.
“Failure and invention are inseparable twins. If I said you had a 10 per cent chance of making ‘X return’, you should still make that decision, even though you will be wrong nine out of ten times.”
But maybe this is the metaphor that budding business leaders may like to learn
“Everyone knows that with baseball if you swing for the fences you will get more home runs, but you will strikeout more. But that analogy does not go far enough, because with baseball you can only get four runs, the success is capped at four runs. But in business, every once in a while you step up to the plate and you hit the ball so hard you get a thousand runs.”