Amazon India

In his 2016 shareholder letter , Amazon CEO Jeff Bezos distinguished

between Type 1 and Type 2 decisions .

Type 1 decisions are irreversible and should be made with caution. Type 2

decisions are reversible, like "two-way doors," and should be made


Amazon’s willingness and ability to make Type 2 decisions has been a

major factor in its success.

That’s according to Scott Galloway, a clinical professor of marketing at

New York University’s Stern School of Business and the founder of the

digital intelligence firm L2.

In his new book, " The Four: Or, How to Build a Trillion-Dollar

Company ," Galloway explains how Bezos’ risk-taking mentality has

helped Amazon become one of the most powerful companies in the


I think neighborhoods, cities, and towns that have evolved are more

interesting and delightful than ones that have been carefully top-down

planned,” he tells me when I meet him at Amazon’s Seattle headquarters

in November. “There’s just something very human” about them, he says.

It’s a surprising answer from a man known for his disciplined adherence

to Six Sigma–style processes and data-driven decision making. But it’s

also revealing. Over its nearly 22 years, Amazon has moved into one

sector after another and gentrified it, even if that meant tearing down its

own existing structures. Amazon’s Echo smart speaker rose on the lot

where its Fire Phone flamed out. The latest version of Amazon’s

streaming music service, Amazon Music Unlimited, was constructed on

top of its initial music store, Amazon MP3, which opened nine years ago.

Amazon Studios’ Emmy Award–winning original TV shows are built

upon a crowdsourcing platform that the company first introduced in

2010 for aspiring scriptwriters. Even the company’s fashion

business—Amazon is now the second-largest seller of apparel in the U.S.,

according to Morgan Stanley—evolved from brand experiments in

outdoor furniture (2004), home goods (2008), electronic accessories

(2009), diapers (2014), and now perishables such as organic, fair-trade-

certified coffee.

Joke all you want about drone-delivered kale and arugula. Amazon’s

$13.4 billion bet to take on the $800 billion U.S. grocery business by

acquiring Whole Foods fits perfectly into the retailer’s business


model.Unlike almost any other chief executive, Amazon’s founder,

Jeff Bezos, has built his company by embracing risk, ignoring obvious

moves and imagining what customers want next — even before they

know it.

Key to that strategy is his approach to failure. While other companies

dread making colossal mistakes, Bezos seems just not to care. Losing

millions of dollars for some reason doesn’t sting. Only success counts.

That breeds a fiercely experimental culture that is disrupting

entertainment, technology and, especially, retail.

Bezos is one of the few chief executives who joke about how much

money they’ve lost.

Amazon’s (AMZN) earnings this past week are a sign of how corporate strategy

has shifted. Amazon does things differently, but only as differently as Apple. What

is their secret?

Nick Vitalari and I describe the evolution of a new corporate strategy in The

Elastic Enterprise, where we also have a special focus on Amazon and Apple. That

strategy involves harnessing 5 new enterprise dynamics, along with important but

easy-to- grasp adjustments in leadership style. Here’s the detail.

First a recap of those results from Forbes’ contributor Susan Kella: Amazon’s net

sales were $13.2 billion in the quarter compared with $10 billion a year ago, a

34% rise driven largely by sales of the Kindle Fire introduced in the Fall. Susan


"Amazon’s stock is volatile as management makes surprise shifts in strategy with

substantial capital investments and with long lags to positive cash flow.

It is precisely the ability to make surprising shifts that characterises a leadership

team that knows how to grow a strategic options portfolio and to master radical

adjacencies. Radical adjacency is the ability to go beyond normal business

practice and to seize opportunity in widely adjacent markets – think Apple in

music, smartphones and, soon, TV. That, in turn, is made possible through these

five new strategic dynamics.

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