Amazon Embraces Theory of Evolution

The life cycle of the successful business today, with "successful" defined by remaining on the S&P 500, is 18 years. That's less than two decades to launch, nurture and grow a company, compared with a lifespan of 30 years in 1983 and 57 years in 1958.

Those sobering stats come from Mark W. Johnson, whose new book is called "Seizing the White Space: Business Model Innovation for Growth and Renewal." Given that harsh reality, Johnson spells out why he believes the name of the game today is transformation: building a brand capable of shifting with the peripatetic tides of doing business in the 21st century. For Johnson, Amazon personifies the very model of that modern brand.

Since it launched with a splash in 1995, Amazon has grown to the largest online retailer in the world. From its roots as a Web-based bookstore, Amazon’s product line now includes movies, music, books (all digital or hard copies), plus computer software, video games, electronics, apparel, furniture, food, toys and a mind-boggling "much more." It operates standalone websites serving Canada, United Kingdom, Germany, France, Japan, and China. But Bezos is not just after global domination.

From early on, the ability to transform (not only with the times, but anticipating shifting trends) was embedded in Amazon’s DNA. "If you want to continuously revitalize the service that you offer to your customers, you cannot stop at what you are good at," states Jeff Bezos, Amazon's CEO and founder. "You have to ask what your customers need and want, and then, no matter how hard it is, you better get good at those things."

Amazon watched the “adjacencies” of their core business, and kept adding value propositions for their customer base: an easy-to-pay (one-click) and easy-to-ship functionality; a brokerage service for used books, catering to both buyers and sellers; a Web services platform for IT geeks; and Lab126, its skunkworks R&D lab which produced the hugely popular Kindle e-book reader.

There are two primary ways to extend a business, according to Bezos: "Take inventory of what you're good at and extend out from your skills. Or determine what your customers need and work backward, even if it requires learning new skills. Kindle is an example of working backward."

Aptly named after the largest river in the world, and growing from a trickle (books) to a veritable tsunami of items and services for sale, Amazon's initial goal was to include a product for every letter in the alphabet. Bezos claims that Amazon was inspired by "regret minimization framework," his personal compensation for not staking a claim in the pioneering days of the Internet.

“A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well. What's dangerous is not to evolve,” cautions Bezos.

Turning from seller to buyer by acquiring Zappos.com last year, Bezos made a move to re-energize Amazon's DNA with a smaller brand. The purchase indicated that Amazon could learn a thing or two from a nimbler, social media-savvy and hyper-customer-focused e-tailer whose breezy founder and CEO, Tony Hsieh, much like Bezos himself, isn't scared of change or new technologies.

Watching Bezos plot Amazon's next move is much like watching Steve Jobs take Apple into new frontiers. It's not about innovating for innovation's sake, but anticipating what consumers need before they're even aware they need it. And unlike Jobs, the humble Bezos has managed to avoid building a cult of personality around his personal brand (and avoiding the slings and arrows) that go with fame.