Why Amazon is eating the world

Amazon is regularly put forth as one of the preeminent exemplars of the modern, innovative corporation and many have written about what makes them ‘special’. This article identifies an aspect of Amazon’s behavior that contributes to their success that is indeed different from how most companies behave. The behavior in question – creating their own ‘evil twin’.

Amazon is opening up every aspect of their business as a platform that others can use and is, in essence, enabling companies that directly compete with their core business.

As the author points out:

“Each piece of Amazon is being built with a service-oriented architecture, and Amazon is using that architecture to successively turn every single piece of the company into a separate platform — and thus opening each piece to outside competition.”

In other words, each of the services Amazon uses internally, also competes in the open market. An example is their Fulfillment By Amazon (FBA) program in which independent vendors offer products that are fulfilled by Amazon. A company selling a product through their own store on Shopify (Amazon is nowhere visible to the customer) can use the Amazon FBA program! In this way, Amazon insures that their fulfilment service doesn’t become complacent by just servicing the internal Amazon system.

In the Amazon ecosystem, there is nowhere for poor performance to hide.

This provides Amazon an insurmountable, lasting advantage. They have built a feedback loop that constantly tests their offerings against the best alternatives. No wonder that their internal teams are forced to do better or fail.

Amazon’s behavior could be a model for other companies. Enabling others to compete with your own established businesses is anathema to most executives, but could be the key to becoming more innovative and successful in the long run.

Original Article »

 

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