Statistical and Surveyed Research:
Amazon has been analyzed as a textbook example of a company that utilizes open innovation strategies to increase its competitive advantage, and therefore increase its marketshare in e-commerce.
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The back cover of Gierad Laput's book, "Open Innovation" says:
“The most powerful way an organization can create value is to connect with externally developed ideas and convert them into new products, services, or business lines”
1. Amazon Drives Innovation from the Top
Surveys show that 79 percent of senior leaders consider innovation as one of their top three priorities.
Yet day-to-day, what often consumes senior management's attention is the “delivery engine,” rather than the “discovery engine.” Not at Amazon.
2. Amazon Thinks of Ideas as Assets
Amazon not only embraces the concept of open innovation but also regards it as a source for new ideas.
The company collects and curates more than five million ideas each month.
Amazon Creates Value from Ideas as they turn the ideas generated by open innovation into new products, services, and business lines that exceed expectations.
3. Move First, Experiment Constantly, and Fail Fast
When Amazon started out in 1995, it calculated that the typical online customer would want to buy three items a year and ordered them from a third-party supplier.
By 1999, they were wrong.
On average, customers spent $300 annually at Amazon.
It turns out that the Internet was about convenience, selection, and price - not just about price.
Based on their internal research data, Amazon began to experiment with all kinds of ideas to move its customers closer to becoming loyal repeat buyers. And Constantly increase their Security and facilities.
4. Amazon Practices Data-Driven, Customer-Led Innovation
Amazon is especially data-driven when it comes to innovation.
The company constantly looks at its own data to see where trends are emerging.
What offerings are growing the fastest, which channels are producing the most sales, and even which marketing messages result in the highest conversion rates.
Amazon partners with its customers and other third parties to develop new products, services, and business lines.
These partners provide Amazon with an invaluable opportunity to capture learnings about what its customers want next, and how they want it delivered.
6. Amazon Creates Partnerships with Vendors that are Risk-Takers and Trendsetters
In July 2013, Amazon announced it was acquiring LivingSocial, an American daily deals site in a “$175 million all-cash deal”.
Amazon has realized that innovation based on customer needs often starts with small companies - startups typically better able to move quickly and experiment in the marketplace.
7. Amazon Innovates by Providing Deep Technical Guidance to Independent Software Vendors (ISVs)
Amazon is committed to meeting its customers’ unique requirements and continuously seeks opportunities to become a bigger part of their lives.
The company has over 300,000 partners who develop and distribute software, games, apps, and services for the company's websites.
Amazon not only provides technical guidance but also integrates the partner's software and services into its own platforms.
They include big names such as
H&R Block, Intuit, SAP, Autodesk, DocuSign through Amazon Web Services, and many others.
8. Customized Customer Solutions for Security and Compliance
Amazon has been recognized by industry experts as a leader in providing customers with unique security and compliance solutions.
By 2011, Amazon had developed highly customized risk assessments that are made available to customers through its “Providers Program.”
These traffic management tools allow Amazon to determine the correct products and services for each of its customers.
In this way, Amazon can create customized security solutions for specific customer needs.
Amazon offers only solutions that meet rigorous standards regarding IP protection, encryption, and data retention policies.
Information:
Amazon was recently selected by the U.S. Department of Defense (DoD), on behalf of the National Nuclear Security Administration, for an exclusive right-to-compete 5-year contract worth $250 million.
“The reality is that you have to make tough choices…amazon has a single-minded focus on customer-centric innovation in most areas including security”
“For security, we're looking at what is happening today... allowing us to develop a roadmap that is different than what others are doing.”
While the DoD has not explicitly linked data and security, Cohan's remarks reflect a combination of the two and are suggestive of a new research direction for Amazon.
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