TABLE OF CONTENTS
Amazon – Best Example of a Serial Business Model Innovator
Amazon – Best Example of a Serial Business Model Innovator
Have you ever asked yourself how Amazon can reinvent itself over and over again, and how Amazon came up with ideas such as Amazon Prime, Amazon Fresh or Amazon Kindle? Inventions, you spend with at least a certain amount of time of your day.
According to Julian Birkinshaw (2016, para. 1), “Amazon is the single best example of a serial business model innovator” due to the fact that the technology company “has relentlessly built new businesses alongside its existing ones” (Birkinshaw, J. & Brewis, K., 2016, para.1).
This paper shall discuss the characteristics that Amazon has been made into what it represents today as well as real-world examples that support each point and that oppose each point.
Amaz on has invented a customer-centric culture that means the company focuses on the customers instead of reacting on competitor movements and on changes in the market. It is a process that puts the customer and its needs in the center and allows Amazon to be more innovated by being patient simultaneously (Birkinshaw, J. & Brewis, K., 2016). Amazon Dash, as one example, was invented due to the customer need for faster reorders of daily used products (Rao, L., 2017).
Furthermore, the technology company applies a strategy of cannibalization (disruption), even if it implies to dismantle its own line of business. Amazon sets high expectations for itself by being always the incumbent of the market that it operates. It is not willing to accept any stagnation. This characteristic allows it to be more flexible in any approach. Amazon Kindle, an electronic book reader, reinvented Amazon’s traditional book store business (Birkinshaw, J. & Brewis, K., 2016).
Amaz on’s strategy of diversification has extended its existing lines of business as well as has accessed new markets. Diversification of its actual business was often criticized by market observers. One of the outcomes of this strategy is Amazon Studios that produces movies to be shown on Amazon Prime (Birkinshaw, J. & Brewis, K., 2016).
Moreover, the company is a driver of innovation that is defined by setting ingenious people up to solve market challenges and to reinvent newness. It has established a high pace of innovation by doing so. It applies a process that puts the customer and its needs in the center to react with expertise on it by moving fast. Amazon demonstrates its rethinking of the traditional way of encounter problems. Amazon Fresh is a grocery delivery service that is just one example for the success of this characteristic (Birkinshaw, J. & Brewis, K., 2016).
The risk-acceptance mentality is another characteristic that makes Amazon to a serial business model innovator. Its acceptance to learn from failure to get to invention or to get to overthink its business strategy also leads the company to success. Fire Phone failed after entering the smartphone market (Birkinshaw, J. & Brewis, K., 2016).
Amaz on’s start-up mentality and structure which is characterized by a flat hierarchy that operates as a start-up which is based on idea management. Employees are prompt to show inventiveness. The technology company also invests most of its profits into the growth of Amazon (Birkinshaw, J. & Brewis, K., 2016).
The next paragraph states the more or less successful application of each of the points above in other companies.
This paragraph presents two real-world examples, Starbucks and AirBnB, that benefit of a customer-centric culture which are followed by two real-world examples, Norwegian and Walmart, that operate with a competitor-focused culture.
Starbucks, a coffee company, has a customer-centric culture because a.o. it serves its on- the-go customers by improving its mobile order and payment platform (Bowman, J., 2016).
AirBnB, a house-rental company, invented ‘host an experience’. This customer service expands the company’s program by offering adventures (IOL, 2019)
Norwegian, an airline, has focused on short-haul-travel due to high competition and low fuel cost on short distances (Wolff-Mann, E., 2019).
Walmart, a retail corporation, invented due to the high competition a grocery delivery service across the United States (Meyersohn, N., 2019).
This paragraph presents two real-world examples, Schibsted and Uber, that benefit of a cannibalization/disruption of its own product/core business which are followed by two real- world examples, Kodak and Xerox, that were almost wiped out because they were cannibalized by other businesses.
Schibsted, a media group, created a new digital business by investing in online marketplaces and cannibalizing its own core printed media business (Staeritz, F. & Torrance, S., 2019).
Uber, a car-sharing company, invented Jump, an e-bike rental, which has started cannibalizing rides of its car-sharing business model in 2018 (McFarland, M., 2018).
Kodak, a camera-related company, missed the rise of digitalization and was almost cannibalized by social media and mobile phone apps (Anthony, S., 2016).
Nokia, a smartphone company, has been almost cannibalized by Apple and a few other competitors because it missed the smartphone revolution (Kaul, V., 2018).
This paragraph presents two real-world examples, Alibaba and Dr Oetker, that benefit of a strategy of diversification which are followed by two real-world examples, Apple and McDonald’s, that operate with one product line in several markets.
Alibaba, an online and mobile commerce company - similar to Amazon - , a.o. opened a technology hotel FlyZoo. The hotel demonstrates Alibaba’s prowess in artificial intelligence (Cadell, C., 2019).
Dr Oetker, a food processing company, operates successfully 5-star hotels and ocean carrier Hamburg-Süd besides its main food business (Karabell, S. 2015 & dpa, 2018).
Apple, a technology company, sells successfully its smartphone, watches, computers as well as music and television software to its customers across severel markets (Martin, 2016).
McDonald’s is a fast-food company that continuously extends its food assortment by launching, e.g., a vegan Happy Meal in Sweden (Young, S. 2019).
This paragraph presents two real-world examples, WeWork and Spotify, that benefit of their positions as a driver of innovation based on customer needs which are followed by two real- world examples, Macy’s and Slack, that puts its core competencies in the center of the process and are more likely going to fail.
WeWork, a workspace-sharing company, will invent own branded coffee shops in the near future and complement its own core business (Burke, T., 2019).
Spotify, a music streaming company, will launch an in-car music streamer and it will be the first of its kind. It will be its first step into the hardware music business (Cohen, S., 2019).
Macy’s, a department store chain, is not a driver of innovation in the retail sector and misses the bus as well as loses more and more of its market share to its competitors (Stein, S., 2019).
Slack, a team collaboration tool, pioneered and moved fast in its market opportunity which is going to close because of Microsoft or Facebook, that copied the idea and have a larger user community. Slack hassles to catch up with those giant technology companies (Waters, R., 2019).
This paragraph presents two real-world examples, SVI World and 3M, that benefit of a risk-acceptance mentality which are followed by two real-world examples, Google and 3M, that failed by launching a new product, but have learnt their lessons.
SVI World, a talent license and training company, learnt in the hard way that it had to change its business model from focusing on talent performance products that depended on one client to today’s business model (Tigar, L., 2019).
3M, a manufacturing company, invented one of its most successful products, post-it notes, by accidentally inventing a light, but easily removable glue (Lavanger, J., 2016).
Google, a technology company, has launched Google Glasses, but it discontinued it after two years due to disappointing sales (Comen, E. et al., 2018).
Burger King, a fast-food company, has offered a healthy alternative to its french fries, but failed by offering it more expensive as well as by not bringing the message to its customers (Comen, E. et al., 2018).
This paragraph presents two real-world examples, SAP and Airtame, that experience the benefit of a start-up mentality which are followed by two real-world examples, Procter & Gamble and Volkswagen, that work with a multi-level organization structure and a coordinated idea management.
SAP, a software company, has launched SAP Fieldglass which keeps up the start-up mentality since it opened 20 years ago and has pushed innovations in user experience and artificial intelligence (Nordli, B., 2018).
Airtame produces wireless HDMI solution and is growing due to a.o. a flat hierarchy that encourages its employees’ creativity and criticisms (Gyalokay, J., 2018).
The Procter & Gamble Company, one of world largest consumer goods corporation, works with a 3-way matrix over the last 20 years and invented brands and products a.o. Tidepods or Always Infinity (Seeking Alpha, 2018).
Volkswagen, the world’s largest car producer, has a multi-level matrix which sells successfully car brands as a.o. Skoda, Volkswagen, MAN, and Lamborghini (Chaliawala, N., 2018).