Four Innovation Lessons You Can Learn from Amazon

Amazon is everywhere, and innovation is why.

Amazon has been one of the key innovative drivers of the twenty-first century. From its beginnings in a garage selling books over the internet, it’s become a technological and social behemoth redefining not just book sales, but commerce, upending entire industries and putting pressure on entire sectors of the economy to innovate or else. But how did it reach that level of innovation, and what can we learn from it?

Innovate Outside Your Edges

One of the ongoing themes of the Amazon story is that it’s consistently rolled the dice on ideas seemingly outside its core competency. The site wasn’t just satisfied to sell books; it quickly expanded to media, and then to small consumer goods, and now sells almost anything you can buy. Its recent moves, in particular, underscore this. Amazon’s purchase of Whole Foods, for example, brings it to a low-margin, heavily competitive industry and also into the world of brick-and-mortar retail. It’s moving not just beyond dry goods, but beyond its own delivery.

Apply Your Competencies

For a long, long time, Amazon didn’t make money. In fact, Jeff Bezos, the company’s CEO, expounded on the idea of “profitless prosperity,” the idea that even if a company wasn’t technically profitable, it could still grow in other ways. That rather dramatically reversed because Amazon found an unlikely place to become profitable: Amazon Web Services. AWS, as it’s known, started as an internal system for cloud computing to improve Amazon’s retail operations. But it quickly became a consumer product because everybody wanted a website that stored and moved data efficiently. Even if you never use Amazon for retail, and in fact, Amazon tends to lose money on retail to this day, your favorite websites probably use AWS.

And if you pay attention, Amazon has applied this in other ways. Part of the success of the Kindle is Amazon’s mastery of supply chain and buying power; it works with everyone, so it knows where to get the parts it needs at the lowest price.

Amazon constantly innovates outside the edges.

If You Have A Safety Net, Use It

Amazon, for all its acclaim, has failed a lot. It’s repeatedly tried to get into online banking and mobile payments with services like Amazon Wallet, WebPay, and Amazon Local Register, for example, and it’s been stymied every time. Sometimes this is because the company has played follow the leader; Amazon Local Register was one of the many, many attempts to draft off the success of Square. Other times, it just didn’t stand out. But Amazon knew that it could take these bets and lose, and it’s learned something from each of them


Finally, one thing you can’t say about Amazon and its attempts at innovation is that the company is wishy-washy about it. Whenever it attempts to change an industry, it jumps in, feet first, buying companies, leveraging its skills and competencies in clever ways, and pressing its advantages hard. It may win, it may fail, or it may even barely stand out. Amazon Prime Streaming has had some success, but it can’t hold a candle to Netflix. But Amazon still commits, and often that commitment is what wins the day.

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