How Amazon Comes Up with Its Best Ideas

In Reinventing the Organization, Arthur Heung and Dave Ulrich explain “how companies can deliver radically greater value in fast-changing markets.” They focus on several companies, including Amazoin, Facebook, and Google, in the U.S.; Alibaba, Huawei, and Tencent in China; and Supercell in Europe.

Amazon, for example, is forming close relationships (what I characterize as strategic alliances) with external partners that are able to expand its ecosystems in smart homes, digital content, and the marketplace.

Here is what Heung and Ulrich learned about how Amazon comes up with its best ideas.

“The idea generation model of Amazon truly follows the principles of think big, test small, fail fast, and learn always, with the following characteristics embedded in the process:

o Creative abrasion: The ability to geberate ideas through discourse and debate. Amazon encourages creative abrasion through its PR&FAQ tool.

[Note: A press release (PR) Frequently Asked Questions (FAQ) is a customer-centric document for designing new products. … An Internal FAQ, answering any questions from internal stakeholders that have come up during the product development process.]

The person who comes up with an idea needs to debate with other colleagues how this innovation serves customers and differs from existing services or products. The discussion is intense and fact based.

o Creative agility: The ability to experiment through quick pursuit, reflection, and adjustment. Once a PR&FAQ is approved, a two-pizza team can be formed to build a prototype and test the idea internally within a six-month period.

o Creative resolution: The ability to make integrated decisions that combine disparaten or even opposing ideas. Along the process, innovation needs tgi satisfy and test competing demands, for example, functionality vs. user-friendliness. [Please see Page 176 for more discussion of creative resolution.]

[Please see Pages 170-185]

As these characteristics show, Amazon clearly generates ideas to anticipate customers, create innovation, and change quickly.”

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To learn more about Arthur Yeung and his work, please click here.

To learn more about Dave Ulrich and his work, please click here.

Reinventing the Organization was published by Harvard Business Review Press (September 2019).

 

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