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-
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
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.