Business Performance Consulting, Leadership

Disruption and Long-Term Strategy, the Amazon Way

Listening to Amazon CEO Jeff Bezos‘s recent interview with the Harvard Business Review, you can hear an executive who’s planning on winning the the long-game. This is a CEO who has put customer value above profits. Wall Street is letting him get away with it. Below are a few Bezos gems from the interview:

  • becoming long-term oriented means putting effort into aligning customer and shareholder interests
  • successful invention requires long-term alignment to overcome the many failures along the way and to learn from them
  • to innovate, don’t lock yourselves in a room; instead find inspiration in the world around you
  • earning the trust of customers over time is more important that raising prices in a quarterly term
  • understand how to reach and meet the root cause of what your customers really need and want
  • hiring people energized by thinking about the customer instead of hiring those with the conqueror mentality creates a customer focused culture

Henry Blodget recently said Amazon is like Rick’s Cafe in Casablanca in that it “constantly sacrifices short-term profit in the interest of serving other constituencies and values, including customers, employees, and the community,” so “it’s certainly no mystery why Amazon continues to take over the world.”

Critics of Amazon’s strategy describe it as investing time and money into any and every thing, trying to do too much without the discipline required to run disparate sets of businesses that will eventually weaken the company.

Balancing shareholder demands while trying to focus on the long-term is no easy task. The market demands publicly traded companies make money. If profits don’t appear, shareholders tend to sell their shares. Why do Amazon’s shareholders not care if profits are not emerging?

To keep shareholders on side while not producing profits requires a CEO able to retain a committed band of investors who have faith in the strategy and leadership to allow the continued pursuit of growth and customer loyalty instead of profit chasing.

Leading for the long-term and remaining fiercly dedicated to the customer means Bezos may actually be worthy of the recognition he and Amazon is getting as Apple starts to slip. Similarly, how much of this is attributed to the leader vs. the organization? How successful would Amazon be if Bezos stepped away from the helm?

Wall Street has (for now) granted Bezos a free pass to pursue excellence and value for his customers and investors. It is no surprise he’s quickly becoming one of the world’s leading CEOs but can others follow?

  • Does your organization most value quarterly profits or long-term customer and investor alignment?
  • At what points does your organization involve customer needs in its planning and strategy?
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