I received an email from Amazon a few days ago informing me that they were refunding me $2.50 on an item that I had preordered. The reason offered for the refund was “pre-order price protection.”
Two things about the email got my attention.
First, the company had reached out to me of its own accord. If someone had walked up to me minutes before I read the email and quizzed me on Amazon’s “pre-order price protection” feature, I would have got an F, because I would have replied – “what’s that?”
Second, and even more interesting was the claim at the bottom of the email – We are building the world’s most customer-centric company.
Since customer-centricity is a hot topic and a priority for several business professionals and companies I decided to dig deeper and discover what makes Amazon so customer centric. Amazon’s own explanation – a place where you can find and buy anything online – doesn’t quite cut it from me. It may serve well as an advertisement for the world’s largest online bazaar, or as a vision statement, but not as an explanation.
So, I went digging to understand how Amazon – the entire company – organizes itself around the customer. I decided to use Jay Galbraith’s 5-point framework of Strategy, Structure, People, Processes, and Rewards to guide my inquiry.
Strategy and Culture: The true character of a company is revealed by the choices it makes and not by the slogans on the T-shirts it wears. Every company wants to get closer to its customers. Few succeed. Because despite the rhetoric, most companies still love their brands, technologies, and factories more than they love their customers. Not Amazon. It has very successfully crossed this chasm – its strategic choices are directed by a simple dictum, what’s good for the customer in the long run is good for us. It is strategically obsessed with continually creating and innovating customer value; it doesn’t waste its energy and/or resources obsessing about itself or its competitors.
Structure: Agility and Flexibility are greatly valued traits in organizations. However, without the spinal strength of conviction, agility and flexibility is merely blowing in the wind. As the great poet Kipling advises us:
If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
Translated, in an organizational setting, it is the balance between the exuberance of the shorts with the pragmatism of the suits that holds the key to future performance. Amazon has done well in striking a balance between when to throw the organization chart out of the window and when to dig in and let experience rule.
Processes: The fundamental goal of most processes should be to provide the customer with a hassle-free experience. Too many companies are so preoccupied with knocking the socks off their customers that they forget the leaky pipes and flooded basements. Companies first need to get the basics right – customer delight will follow. Amazon’s processes are transparent and motivated by a single dominant concern – how to help customers buy more intelligently. Its One-click check out, Golden Box, Bottom of the page deals, Look Inside, warning messages if a customer is placing an order for something they have already bought before, its willingness to feature negative customer review on its own site – all point to one very simple motivation – if it makes sense from the customers’ point-of-view, give it to them. Simple.
Rewards: So much has been written about the dangers of the next quarter mentality, yet so many companies continue to pursue it zealously. A long-term view is not for the faint of heart. Amazon has very successfully demonstrated the benefits of shunning lollypops and candy for more enduring sustenance and nutrition. By actively deciding against chasing quick bucks Amazon has successfully invested in ongoing customer relationships and built long-term customer equity.
People: I have blogged about and spoken at conferences about the importance of employees to the innovation and customer value creation process on a number of occasions. I am not the only one. Vineet Nayar’s book Employees First: Customers Second (a much misunderstood title) is a candidate for the best book award in the Thinkers 50 competition. Without the right people, customer-centricity will remain a slogan; the employees will hear the sirens, no one will move. Amazon is on the move, it is excessively persnickety about who it hires, and rightly so!
The purpose of this blog is not put Amazon on a pedestal. There is too much of that going on in today’s business world, too much chest thumping – look at me, look at me, see how great I am. The purpose of this blog is to simply give the reader a behind the scenes understanding of the key factors contributing to Amazon’s ongoing drive to becoming the world’s most customer-centric company. That’s it.
Does this mean that Amazon is forever blessed, destined to succeed for all times to come? Far from it! Building the world’s most customer-centric company is a journey, not a destination. Besides, future success is never guaranteed, least of all to today’s most successful.