Amazon's Smart Innovation Strategy

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Amazon's journey forward will likely be marked by a series of transformations, as it continues to pursue its vision unafraid of white space, business model innovation, or renewal.

To be built to transform requires the courage to focus on delivering value for the customer first. Identifying value begins by thinking of an important unserved or underserved job that customers want done and then coming up with a well-defined value proposition to address that job, however foreign to your current offerings that may be. "If you want to continuously revitalize the service that you offer to your customers, you cannot stop at what you are good at," says CEO Jeff Bezos. "You have to ask what your customers need and want, and then, no matter how hard it is, you better get good at those things." With a well-defined customer value proposition serving a focused, well-articulated job, business leaders and project teams can work together to design the appropriate profit formulas, key resources, and key processes the company needs to thrive.

To do this, business leaders need to become business model thinkers, to understand that both the current model underpinning their existing business and any new models they may devise are complex systems with interdependent elements that must work together to deliver real value. To build these systems, they must think like architects or engineers, to begin with blueprints, build prototypes, and develop working structures that can deliver on new areas of opportunity. Although they can't devise all the answers up front, they can ask the right questions. Then they must pursue those answers like an artist would, exploring with a process of structured creativity that allows everyone involved to freely imagine the possible, not just the easily done.

Business model innovation thrives in cultures of inquiry, environments in which new value propositions, new ways to turn a profit, and ideas for new business models are met with interest and encouragement. In built-to-transform companies, managers recognize that becoming is part of being, and that the road to the next big thing can be traveled only by those with open minds.

This article is excerpted from Seizing the White Space: Business Model Innovation for Growth and Renewal by Mark W. Johnson (Harvard Business Press, February 2010).

Provided by Strategy and Innovation—published twice-monthly by Innosight, an innovation consultancy. Innosight's approach and proprietary tools facilitate the discovery of new, high-growth markets and the rapid creation of breakthrough products and services.

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