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Why Do Companies Innovate?
Innovation = Growth
« …innovation is now recognized as
the single most important ingredient in
any modern economy…In short, it is
innovation – more than the application
of capital and labor – that makes the
world go round »
“I want to cannibalize my company before someone else does?”
CEO Global Game Developer
“Being digital is not enough –we need to co-create with innovative
companies?
COO Large UK Insurance Provider
“Rate of tech change is exponential but we think linear”
Board Member Global Telecom
Several understand the situation…
But innovation is hard…
…how can companies build an effective
innovation system and a cultural environment that
will foster and support human creativity and drive
technological progress?
Innovation reiqures culture that fosters invention
« I think frugality drives
innovation, just like other
constraints. One of the
only ways to get out of a
tight box is to invent your
way out » Jeff BezosCEO, Amazon.com
Three capabilities organizations need to sustain innovation
But it also requires
tools to accelerate experimentation
« Invention requires two
things: the ability to try a
lot of experiments, and
not having to live with
the collateral damage of
failed experiments »Andy Jassy
CEO, Amazon Web Services
L’Oreal is turning screens into application brushes
At one time,
L’Oréal made cosmetics, period
Today, it is an app producer
with 1.4 million downloads
Example of GE reinventing it’s core
9000 workloads to AWS – 9000 apps to 4000
apps, 34 DCs to 4 DCs – but why?
I have $1 billion in productivity improvement
(inside the company) that I need to drive,
between now and 2020
by 2020 $15Bn of revenue from
software – top 10 software
companies in the world ($5.5m
today)
Amazon is innovating across many domains
Drone Development Fire OS Kindle In-house Entertainment
Grocery Delivery Video Streaming Cross Site ShoppingCloud Computing
Amazon innovating way of reducing costs
In 2015, Amazon
spent $11.5B in
shipping costs
Focus on Your Customers
Experiment Frequently
Measure, Improve and Iterate
Move Fast, and Be Nimble
Foster Leadership
Amazon’s Innovation Approach
Innovation Methodology
Working Backwards
Narrative process
Primitives
Build upon existing services
Single-threaded teams
• Release
• Measure
• Iterate
Mechanisms
Mechanisms
Work backwards from the
customer
(1) Press Release
(2) FAQ
Focus on Your Customers
Customer Focus Defines Your Business Model:
Value, Selection, and Convenience
experimentation via primitivesexperimentation via primitives
“Our theories determine what we measure.”
– Albert Einstein
Identify your assumptions
Look beyond your frame of references
Be a “Culture of Metrics”
A/B test for optimization
Improve and iterate quickly
Measure, Improve, and Iterate
“Want to increase innovation? Lower the cost of failure”
– Joi Ito
AWS Services enable experimentation via primitives
Companies can build on existing services
Rapid prototyping and iteration are key
Embrace failure
Experiment Frequently
Amazon Website – 1000’s of A/B Tests…
“When a feature or enhancement is ready, we push it out and
make it instantly available to all.” – Jeff Bezos
Speed of iteration beats quality of iteration
Encourage single-threaded focus
Enables self-directed teams
Fosters ownership & autonomy
Move Fast and Be Nimble
Foster Leadership
The secret sauce at Amazon is the Leadership Principles
Think Big, Dive Deep
Have Backbone;
Disagree & Commit
Invent & Simplify
Bias for Action
How to Seed & Cultivate Innovation
With Your Customers?
First, innovation is not a goal,
it’s an ongoing process
Commitment to Innovation
30 missions prior to Apollo 11
moon landing
50% failed!
Understand your customer’s
company culture
Formulaic Cultures
Well-defined vision
Process-Oriented
Over optimized team coordination
Value system above breakthroughs
Complacent
Open culture to outside
Look across domains
Reinvent and retarget processes
SunCorp Uses AWS to Foster Innovation
“The lesson we learned is we constantly understate our
ability to solve problems. And the biggest constraint isn’t time
and money, it’s the constraint of thought”
Agile development
DevOps and Continuous Deployment
Innovation days called “FedEx Days”
Entrepreneurial Cultures
Primary Inventor
Scrappy
Autonomous teams
Disruption vs incremental growth
“Go big, or go home”
Empower others
Encourage novel thinking
Build process for risk taking
Amazon Launches Seller Services
Amazon Launches Amazon Web Services
AWS in 10 years
Active customers
per monthRun rate
1,000,000+ $11B+ 58%YOY growth
Q3 2015 to Q3 2016
Understand your customer’s function for growth
Encourage your customers to experiment
Adobe Uses Innovation-in-a-box
Kickbox program to boost
Internal innovation:
$1,000
Notebooks and Post-its
Chocolate
Starbucks card
Encourage a structure for innovation time
Atlassian and Ship It Days
24-hour hackathon to
work on anything related
to Atlassian products
and ship it in 24 hours
24-hour hackathon to
work on anything related
to Atlassian products
and ship it in 24 hours
Emphasize the importance of measuring progress
Jointly recognize and reward innovation
AWS Community Heroes
Share and give back to innovation
Principals of Amazon Talks
Stay focused on your vision
Amazon: 1997 Letter to the shareholders
“It’s All About the Long Term
We will continue to focus relentlessly on our
customers.
We will continue to make investment decisions in light of
long-term market leadership considerations rather than
short-term profitability considerations or short-term Wall
Street reactions.
« We've had three big ideas at Amazon that we've stuck
with for 18 years, and they're the reason we're
successful: put the customer first, invent, and
be patient »Jeff Bezos
CEO, Amazon.com
f(innovation) = (org * arch)(mechanisms * culture)
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