Doing things the Amazon Way: Lesson for Product Managers in Experimentation and Innovation

I recently read an article by The Wall Street Journal - "Amazon's Next Big Hit Remains Elusive" discussing the company's search for a "fourth pillar," or a new business that can rival the success of its online shopping, Prime membership program, and Amazon Web Services (AWS) cloud computing platform.

Amazon has invested heavily in a variety of new ventures in recent years, including smart home devices, health care, and whole foods. However, none of these businesses have yet to achieve the same level of success as Amazon's core businesses. While it’s dubious that all of these ventures can emerge as ‘fourth pillar’, I’m particularly bullish that their strong experimentation culture will help them find another pillar. 

But, what is this experimentation culture, how Amazon embraced this and why is it important for companies and product managers to intertwine the culture of experimentation and innovation with their product teams.

Experimentation: In his book, The Innovator's Dilemma, Clayton Christensen argues that successful companies often fail to disrupt themselves because they are focused on meeting the needs of their current customers and improving their existing products. This can lead to them ignoring or even underestimating new technologies and entrants to the market.

Experimentation is one way that companies can overcome the innovator's dilemma. By experimenting with new technologies and business models, companies can learn about the needs of new customers and develop new products and services that meet those needs.

Amazon's success can be attributed to a number of factors, including its customer focus, its willingness to innovate, and its long-term thinking. Amazon is also known for its ability to overcome the Innovator's Dilemma, which is a theory that explains why successful companies often fail to disrupt themselves with new technologies.

The Innovator's Dilemma argues that successful companies are often reluctant to disrupt themselves with new technologies because they don't want to cannibalize their existing businesses. However, Amazon has a history of disrupting its own businesses with new technologies and business models. For example, Amazon started out as an online bookstore, but it has since expanded into a wide range of other businesses, including e-commerce, cloud computing, and streaming entertainment.

One of the ways that Amazon has overcome the Innovator's Dilemma is by creating new businesses that are separate from its existing businesses. For example, Amazon Web Services (AWS) was created as a separate business unit from Amazon's e-commerce business. This allowed AWS to focus on developing and selling cloud computing services to businesses of all sizes, without having to worry about competing with Amazon's other businesses.

Another way that Amazon has overcome the Innovator's Dilemma is by investing in new technologies and business models even if they are not immediately profitable. For example, Amazon invested heavily in Amazon Prime even though it was not profitable for several years. However, Amazon Prime is now one of the company's most important businesses.

Amazon's success in overcoming the Innovator's Dilemma is a testament to its customer focus, its willingness to innovate, and its long-term thinking. The company is always looking for new ways to disrupt itself and its industries, and it is not afraid to invest in new technologies and business models, even if they are not immediately profitable.

Product managers can learn a lot from Amazon and their story of overcoming the Innovator's Dilemma. Here are a few key lessons:

• Focus on the customer: Amazon is laser-focused on the customer experience. The company is constantly innovating and launching new products and services that make it easier and more convenient for customers to shop.
• Be willing to experiment and fail fast: Amazon is not afraid to take risks and experiment with new ideas. The company knows that it will fail sometimes, but it learns from its failures and moves on.
• Think long-term: Amazon is not afraid to invest in new technologies and business models, even if they are not immediately profitable. The company is focused on the long-term and building a sustainable business.

Amazon's willingness to fail fast and learn from its mistakes has allowed the company to become one of the most successful companies in the world. This culture of experimentation is a key reason for its success. By constantly trying new things and failing fast, Amazon is able to learn and innovate quickly. This allows Amazon to stay ahead of the competition and develop new products and services that meet the needs of its customers.