Build a Culture of Innovation: Four Lessons to learn from Amazon

In the ever-evolving business landscape, where innovation remains the key, Amazon has continuously set itself one step ahead. The company has made clear statements to every business that the barriers to innovation can be broken with the right amount of commitment.  Organizations striving to be more adaptive, creative, and resilient should explore the best practices Amazon deploys to build differentiation and drive growth.

Amazon is the third largest public company by revenue in the world, behind Walmart and China’s State Grid. For the quarter ending March 31, 2024, Amazon’s revenue was $10.431B, a 228.85% increase year-over-year.

Amazon’s approach to innovation relies on a set of methodologies, concepts, and tools that span culture, process, and technology. It is the key reason why Amazon is named the world’s most innovative company. 

First rule: be fully customer-centric

Amazon’s mission is to be the ‘Earth’s most customer-centric company’.  To facilitate this ‘customer obsession’, all employees are empowered to be creative and innovative – to find ways to make customers’ lives easier. To achieve this goal, the company follows the ‘Working Backwards’ methodology.

At its core, ‘Working Backwards’ is a process that starts with your customers and their needs. It encourages you to envision your desired outcome, a product or service that truly benefits your customer, and then work backward to realize/implement it. It’s all about beginning with the end in mind.

So, one way to stay ahead is to empower a culture that relentlessly focuses on customers – to earn and build their trust regularly. This requires purposefully building a culture of customer-centricity amongst employees who can proactively innovate on customers’ behalf.

Adopt a Day 1 business outlook

CEO Jeff Bezos has always been a strong proponent of the “Day 1” business outlook. The Day 1 culture means that the company treats every day like it’s the first day of their new job/startup. The strategy aims to keep up the sense of dynamism and adventure that defines new enterprises and avoid the lack of responsiveness that can set in within established systems and business models over time. 

Adopting new technologies

Amazon didn’t just overtake Walmart as the world’s most valuable retailer by chance. There’s a culture of technology adoption and innovation present.  

Amazon has been an early adopter of the latest technologies. By leveraging artificial intelligence, big data, robotics, IoT, cloud computing, etc., the company has been able to thrive in the rapidly evolving e-commerce industry. It has enabled Amazon to offer faster and more reliable service to customers, further setting them apart from their competitors.

Moreover, the groundbreaking technologies that Amazon embraced were not solely conceived by Jeff Bezos. In fact, a large chunk was obtained/approved from the collective ingenuity of Amazon employees.

Embracing agility, experimenting constantly, and accepting failure

Amazon’s success can be attributed to its ability to scale rapidly and adapt to changing market conditions. They look at strategy from a different lens and don’t limit themselves to taking a defensive approach.

Most importantly, they are always looking to experiment and aren’t afraid to fail.  Amazon sees failure as the necessary flip side of innovation. If you are not failing, you are not pushing the boundary. And if all experiments succeed, they are not really experiments.

Note: Some of the popular products/services by Amazon that didn’t quite turn out well are Fire Phone, Amazon Local, Amazon Wallet, Amazon WebPay, Amazon Spark etc.

Remember, all these are not a one-size-fits-all process; they are a guiding light that shines brightest when tailored to your unique needs. However, CTOs and other business leaders can give it a try and watch the ideas transform into solutions to drive the organization’s success to new heights!

In brief

While most organizations try to stay focused, Amazon has successfully diversified its business in every direction. By leveraging innovation, it has achieved operational excellence in every business it touches.