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Learn from Amazon: zig when others zag

Sep 06, 2010 Business Daily, Strategy

Last week, Jeff Bezos announced plans to release a new-generation Kindle that will be even cheaper ($139) than the current generation, but will make only a few modest improvements in quality and performance. Even as analysts applauded the success of the Kindle thus far, they wondered why Bezos and his colleagues weren’t making the device much more functional, colorful, and powerful. In other words, why weren’t they taking the simple Kindle and enhancing it to go head-to-head with Apple’s iPad and other companies searching for an iPad killer?
To which Bezos offered a strategic insight about his business… “There are going to be 100 companies making LCD tablets,” he told the Wall Street Journal. “Why would we want to be [company] 101? I like building a purpose-built reading device. I think that is where we can make a real contribution.””

William C. Taylor, blogs.hbr.org (3 August 2010)

There are some things I read that make me want to stand up and clap. This was one of them. I have always liked Jeff Bezos, ever since he first launched Amazon.com, my favourite bookshop, and since he refused to engage in followership in the early days of his venture. Barnes & Noble, his gigantic bricks-and-mortar competitor in the 1990s, threatened to kill him off by following him into web retailing. With all its clout, B&N was widely expected to succeed, and Amazon to die an early death.

Incorrect, said Bezos at the time. We don’t react to our competitors, no matter how huge. We do our own thing, and we do it better and better by giving our competitors a better and better deal. Needless to say, it worked. Amazon boomed, B&N wilted. Last week, B&N was put up for sale after years of flat performance.

What Bezos was demonstrating then was an essential strategy lesson: strategy is leadership, not followership. You set an independent course, and you stick to it. In competition, you don’t wait to see what rivals are up to and then run headlong after them; you define your own valuable position and occupy it.

Bezos is at it again. Another giant, Apple, has taken him head-on by introducing the game-changing iPad – the first all-singing all-dancing tablet computer that has taken the world by storm, selling over 3 million units in just a few months. Amazon’s own Kindle e-reader, introduced much earlier, looks pretty lame by comparison. It is bulky, ugly, has a black-and-white screen, and really only does one thing – allows you to download and read books. The iPad, on the other hand, in addition to being an e-reader, is a computer, internet browser, music player, map-reader, photo frame…I won’t go on.

But when Bezos introduced his all-new Kindle recently, all he did was tweak one or two things and lower the price. As he correctly put it: what is the mileage in trying to be yet another iPad killer? No one can match Apple in sexy hardware, so why even go there? Why not, instead, stick to the thing that makes the Kindle distinctive: that it’s just a book reader? After all, it’s lighter, has longer battery life, is easier to read, and has a bigger bookstore.

This battle has only just begun. But Amazon had no hope in trying to create a better iPad than Apple. It does, however, have a hope in convincing readers who just want to read to stick with the device that’s designed purely for that purpose – the Kindle.

Give that some thought this Monday. Strategy is about ‘zigging’ when others ‘zag’, as Bill Taylor entertainingly puts it. Strategy is not about being “pretty good” at everything; it’s about being “the most” at something. Lead in something – product quality, customer service, value, convenience, brand power – or forget it.

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