Amazon has 237 million active customers. If it were a country, it would the fourth-largest in the world. In the United States, Amazon owns a 30% marketshare in e-commerce … not exactly a niche market.
To what can we attribute Amazon’s growth? After all, they have access to the same tools, people, software and infrastructure as every other retailer. The answer is simple, but trickles down into every nook and cranny of the business: Amazon is built on a culture of innovation.
In 2013, Amazon spent $6.5 billion on research and development. It’s an impressive sum but just five percent of the federal government’s annual R&D spend. It’s fair to say that an investment in R&D doesn’t equate to innovation. The key to innovation isn’t money … it’s a willingness to test relentlessly, fail often and improvise quickly.
At Amazon, innovation is bred into every facet of the business, from the top down. Here’s a snippet of Bezos’ view on innovation from a 2011 shareholder call:
If you invent frequently and are willing to fail, then you never get to that point where you really need to bet the whole company. [Amazon Web Services] also started about six or seven years ago. We are planting more seeds right now, and it is too early to talk about them, but we are going to continue to plant seeds. And I can guarantee you that everything we do will not work. And, I am never concerned about that. We are stubborn on vision. We are flexible on details.
