As the Holiday Season draws in, our thoughts turn to gifts. They may also turn to peace and goodwill, but mostly our thoughts are about the presents.
Topping the list this year are gadgets. All kinds of electronic goodies with buttons and screens and apps and promises of untold fun and convenience and, indeed, productivity.
And near the top of the gadget list is Amazon’s Kindle. In case you missed it, this little device has disrupted the publishing industry and has challenged assumptions up and down the publishing supply chain. Amazon has upended everything from delivery, commissions and printing, and has further accelerated the decline of physical book stores.
In previous posts about The Efficiency Trap, we looked at companies that failed to manage disruptive innovations in the marketplace. Although it invented the digital camera, Kodak was too focused on current operations to recognize dangerous developments in the marketplace. Dell also perfected its operations but had nothing in the pipeline when competitors copied them.
While those strategic errors are interesting to study, it is also worth looking at firms that seek out disruptive innovation. In his book, The Everything Store: Jeff Bezos and the Age of Amazon, Brad Stone outlined how Bezos sought to embrace impending changes in the publishing world.
Expressing admiration for such visionaries, Stuart McGoldrick, an English entrepreneur based in Ireland, said:“They do something I wish I could do … They saw with absolutely clarity changes that are opportunities. They never saw them as threats.”
After watching Apple leapfrog over, “in quick succession, Amazon, Best Buy and Walmart to become the top music retailer in the United States,” Bezos started thinking early about the transition to digital books, Stone wrote.
The Amazon CEO set up a skunkworks called Lab126. “They were to disrupt Amazon’s own successful bookselling business with an ebook device while also meeting the impossibly high standards of Amazon’s designer in chief, Bezos himself,” Stone said.
The bet paid off. In May 2011, the New York Times reported that Amazon sold more ebooks than printed books. The icing on that cake is that kindle owners buy four-times more books than they did before owning the device.
Clearly Bezos and Amazon got it. Kodak and Dell could have gotten it, too. But what of people who just don’t have a clue? Believe it or not, they are still around.
Neil Leyden, head of the International Digital Services Center in Dublin, Ireland, described the laggards:
“The extent to which they embrace digital still only encompasses having a website or maybe even having some sort of social media presence. The task is usually relegated to the ‘marketing guy’ – someone of a younger age who ‘understands that sort of thing’ while everyone else can get on with the ‘real’ business.”
This mindset poses an existential threat to businesses, Leyden argued. “They neglect to see how profound the change going on around them is.” The challenge for policy makers is that the attitude is most prevalent in small and medium companies — “the growth engines of any economy.”
Leyden’s team has come up with a framework to help these companies evolve before they are swept away by innovative competitors.
The process is simple, he said, but execution is not. Transformation must come from the Board down. “There is compelling proof that the rewards are there … But there is also an element of ‘leap of faith’ that the board must be prepared to make,” he said.
Leyden’s five steps:
- Technologies & Platforms
- Cloud & Analytics
- Content Creation
- Payments & Collection
- Distribution & Delivery
More on the framework is available on the IDSC site.
In the meantime, the festive season is here. If you are giving or receiving a Kindle, remember the changes it has wrought. The process for Amazon may have been simple but execution was not.
It upset almost everyone in the publishing industry with its innovation. Bookshops, which were already on the ropes, got another body blow. The Authors’ Guild criticized many aspects of the Kindle. Publishers were unhappy with Amazon’s new pricing. They fought back and then found themselves in court facing anti-trust charges.
One could argue with Amazon’s approach. But if Amazon didn’t push the Kindle, some other company would have done it and nabbed Amazon’s business in the process.
