How Amazon inspires unconventional action

To really inspire unconventional action you often need to set a goal that is so big that it simply cannot be reached by doing business as usual.

Here is an example of that.

When making business decisions Amazon actually starts by removing their financial constraints and asking themselves: How would we make this decision in favour of our customers if there were no constraints and no financial consequences?

With lots of answers on the table Amazon tightens the constraints again by asking a new question: How could we now make all these things and solutions work with the financial constraints we actually have?

For example, before 2002, Amazon offered free shipping of its products during the holidays, but not during the rest of the year. It was clear that customers loved this offer and purchased more products when they didn’t need to pay for shipping. On first inspection, there was no way the company would be able to offer this benefit year-round, because shipping is expensive, and giving it away for free eats into profits. But the Amazon leadership team asked themselves if this is something they would do if there were no financial constraints. The clear answer was yes.

So they figured out how to make it work. By finding ways to increase the volume of their shipments, they were ultimately able to negotiate for lower shipping prices, which made this decision pay off for everyone.

The exercise is interesting because companies tend to think very conventionally when they are restricted by their budgets. They focus on where they can find a 1% or 2% marginal improvement. However, if you really want to make a leap you should not think in 1% or 2% improvements. You should think in 20% or maybe 50% improvements.

Posted on 18th Mar 2014 by Rasmus Ankersen

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