Why does a company that started by selling books continue to disrupt so many industries they’re not first considered to be experts in? Amazon has evolved from being an online bookseller to becoming not only “the world’s marketplace” but one of the world’s largest providers of cloud services — creating an entirely new service offering that just a few years ago didn’t even exist. And, in the meantime, becoming a high-tech company that rivals the ones expected to innovate in this area.
That may be the primary reason Amazon has been able to take-off in new markets. First, its CEO, Jeff Bezos is not concerned with short-term profits. His vision is what more CEOs need to reflect on: “We like to invent and do new things, and I know for sure that long term orientation is essential for invention because you’re going to have a lot of failures along the way.” Too many American companies seek just short-term profit, and don’t focus on more than 3 or 4 quarters. If Kindle, Amazon Web Services and Amazon Prime were required to show profits in their first 3 or 4 quarters, they would have never even gone to market.
True disruption comes from those that jump into a market not worried about cost. They usually go in with the lowest cost and quality offering and build from there. Ultimately, becoming a market leader means that you have to continue to innovate and disrupt, or you become less a disruptor and just a profit-making machine. Consider the fate of Polaroid, Atari, RIM and Digital Equipment Corporation: all were once disruptors in their respective industries. Once they reached the top, they stumbled. They stumbled because they stopped innovating and disrupting. Amazon continues to discover new markets, innovate products and services, and is restless once they begin to make inroads into a new market. Apple and Google are the obvious candidates for finding it difficult to create market breakthroughs while servicing the markets they currently dominate.
Disruption is based on creating new and valuable products and services in an uncertain market. Once a company gets too comfortable in their market, they will eventually find it difficult to innovate and disrupt. The challenge is to foster a culture that values creativity and innovation and offers a process that encourages its people to ask questions, uncover new possibilities, and explore without being driven by profit only. Amazon has shown it’s willing and able to enter any market it thinks it can add value to. And then it works from within and continually innovates and disrupts. Companies like Apple, Google and even Microsoft should never forget what happened to the companies that lost their hunger for innovation. Maybe they should listen to Jeff a little more.