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“Was distribution a commodity or was it a core competency?
Invest in things that give competitive advantage and outsource commodities
The Goal, published in 1984. The book, cloaked in the guise of an entertaining novel, instructs manufacturers to focus on maximizing the efficiency of their biggest bottlenecks.
the book i never read for class :(.
At the end of the day, Bezos, Wilke, and their colleagues reached a conclusion: the equipment and software from third-party vendors simply wasn’t designed for the task at hand. To escape from batches and move toward a continuous and predictable flow of orders through the facility, Amazon would have to rewrite all the software code. Instead of exiting the business of distribution, they had to reinvest in it.
The television episode was the foundation of another official award at Amazon, this one presented to an employee who identified an activity that was bureaucratic and wasteful.
As part of his ongoing quest for a better allocation of his own time, he decreed that he would no longer have one-on-one meetings with his subordinates. These meetings tended to be filled with trivial updates and political distractions, rather than problem solving and brainstorming. Even today, Bezos rarely meets alone with an individual colleague.
Bezos announced that employees could no longer use such corporate crutches and would have to write their presentations in prose, in what he called narratives.
I really like this idea. Requires a culture where team members will read before meetingz
Instead, the narratives were passed out and everyone sat quietly reading the document for fifteen minutes—or longer. At the beginning, there was no page limit, an omission that Diego Piacentini recalled as “painful” and that led to several weeks of employees churning out papers as long as sixty pages. Quickly there was a supplemental decree: a six-page limit on narratives, with additional room for footnotes.
smart having a page limit
Not everyone embraced the new format. Many employees felt the system was rigged to reward good writers but not necessarily efficient operators or innovative thinkers.
Fair point....
“You had to be comfortable saying, ‘I don’t know; I’ll get back to you in a couple of hours,’ and then doing it. You could not ever bullshit or make stuff up. That would be the end.”
This is an important cultural factor. Bullshit kills efficiency and transparnecy
In the end, he got one, bringing home one of Amazon’s first bulk discounts and teaching the company an enduring lesson about the power of scale and the reality of Darwinian survival in the world of big business.
They would let other, more experienced retailers sell everything on the site via Amazon’s Marketplace, and Amazon would take a commission. Meanwhile, the company could watch and learn.
sheepish, one might imagine, but perhaps also just a little bit triumphant.
Ha funny story
Communications vice president Kathy Savitt had persuaded Bezos to splurge
“Treat Google like a mountain. You can climb the mountain, but you can’t move it,” he told Blake Scholl, the young developer in charge of Urubamba. “Use them, but don’t make them smarter.”
“There’s only one way out of this predicament,” he said repeatedly to
employees during this time, “and that is to invent our way out.”
called service-oriented architecture. In
Research this
The company held its first developer conference that spring and invited all the outsiders who were trying to hack Amazon’s systems. Now developers became another constituency at Amazon, joining customers and third-party sellers. And the new group, run by Colin Bryar and Rob Frederick, was given a formal name: Amazon Web Services.
Bezos believed his company had a natural advantage in its cost structure and ability to survive in the thin atmosphere of low-margin businesses. Companies like IBM, Microsoft, and Google, he suspected, would hesitate to get into such markets because it would depress their overall profit margins.
Bezos believed that high margins justified rivals’ investments in research and development and attracted more competition, while low margins attracted customers and were more defensible.
Infrastructure costs were variable instead of fixed, and they could grow in direct proportion to revenues.
Business models that turn company's fixed cost to variable = $$$$$
Bezos ultimately concluded that if Amazon was to continue to thrive as a bookseller in a new digital age, it must own the e-book business in the same way that Apple controlled the music business.
“It is far better to cannibalize yourself than have someone else do it,”
Jeff is not deterred by short-term setbacks.”
This really is the key to a lot of amazon's success
The Innovator’s Dilemma, by Harvard professor Clayton Christensen. Christensen wrote that great companies fail not because they want to avoid disruptive change but because they are reluctant to embrace promising new markets that might undermine their traditional businesses and that do not appear to satisfy their short-term growth requirements.
So true happened at IBM. Must always chase whats best for your customers
succeeded when they “set up autonomous organizations charged with building new and independent businesses around the disruptive technology.”
Need to separate and compete internally
“Kindle also had to get out of the way and disappear so that you could enter the author’s world,”
“I think the reason Kindle succeeded while others failed is that we were obsessive, not about trying to build the sexiest gadget in the world, but rather [about building] something that actually fulfilled what people wanted,”
The new low price for top-selling e-books changed everything. It tilted the playing field in the direction of digital, putting additional pressure on physical retailers, threatening independent bookstores, and giving Amazon even more market power.
It exacted more concessions and passed the savings on to customers in the form of lower prices and shipping discounts, which helped it amass even greater market share—and more negotiating leverage.
This is the amazon cycle they discussed earlier. They know how to dominate sales and distribution with this strategy. The customer eats. Is the customer more important than society?
a 605,000-square-foot temple to the twin gods of efficiency and selection. Products are neatly arranged but seemingly randomly stowed
Would be sick to see
it was getting more out of its assets, and its famously microscopic profit margins started to expand.
“Jeff does a couple of things better than anyone I’ve ever worked for,” Dalzell says. “He embraces the truth. A lot of people talk about the truth, but they don’t engage their decision-making around the best truth at the time. “The second thing is that he is not tethered by conventional thinking. What is amazing to me is that he is bound only by the laws of physics. He can’t change those. Everything else he views as open to discussion.”
Very important qualities
Every major company faces decisions over whether it should build or buy new capabilities. “Jeff almost always prefers to build it,”
