When is Amazon Going to Drive You Out of Business?

Written by

Davin Wilfrid

Published on

February 3, 2020

With apologies to Benjamin Franklin, in 2020 the three certainties in life are death, taxes, and Amazon’s unrelenting march into new business territories. 

The latest confirmation of this comes from a CNBC report that Amazon has started filing to trademark “Amazon Pharmacy” in several non-U.S. countries — a possible signal that the roving giant of the online business world is ready to launch a ground assault on the global prescription drug market. 

If Amazon’s history is any indication, the threat to retail pharmaceutical outlets is real. In its short time on Earth (remember that at 25, Amazon is still younger than most of its 750,000 employees), Amazon has disrupted or taken huge margins in brick and mortar retail, publishing, content streaming, cloud computing infrastructure, grocery stores, smart home devices, and more. 

As a software company that works with more than 30% of the Fortune 100, we know how seriously leaders take this threat. While the David-and-Goliath imagery of the scrappy startup taking market share from the established dinosaur is more dramatic, we’ve heard from several top leaders that the biggest threats they face are from other large organizations moving laterally into their domains. 

Fortunately, the digital era has empowered all organizations — even the dinosaurs — to fend off the Amazon asteroid. The question is whether they can actually execute on the right strategy. The way to protect yourself from Amazon is to be like Amazon.

The Secrets of Amazon’s Success

Every successful company spawns a million think pieces and nearly as many dashed-off books. There is no shortage of admiration for Amazon’s business acumen and no lack of consulting firms, entrepreneurship mentors, and others hoping to diagnose Amazon’s contagiousness

The results are a mixed bag. Amazon’s incredible success is obviously the result of many factors, including effective management practices, good decisions at the exact right time, and pure dumb luck. But one aphorism Amazon founder Jeff Bezos returns to frequently echoes everything we hear from customers and business leaders at large organizations:

Ideas have very little value in business and what turns out to have huge value is execution.”

Source: Jeff Bezos

There was a time when strategy was more important than execution. In the pre-digital days, data was scarce, labor was inefficient, and barriers to entry were high enough to block the Sun. Who in 1980 would have believed one company could simultaneously grab vast tracts of market share from JC Penney’s, Capitol Records, and Kroger? Professional business management was entirely focused on increasing efficiency — doing more of the same with fewer resources, piling more bricks on the defensive fortifications. 

That was then. This is now. The digital age has lowered the barrier to entry into new markets by making data and customers more accessible and generating huge improvements in workplace productivity. Business leaders are more equipped than ever to launch new products or services into adjacent or new markets quickly. Amazon has built its entire operating model on this fact, prioritizing fast decision-making over consensus, empowering small teams to own results, and an organizational hierarchy designed to move quickly into new areas. 

To fend off Amazon, organizations need to emulate Amazon’s ability to execute on strategy. But for most organizations, this remains painfully difficult. In a recent study, only 73% of company leaders believed they had a clearly articulated strategy, and only 44% believed they had communicated that strategy to the employees responsible for implementing it.

Organizations who said they clearly articulated their strategic direction
73%
Organizations who communicated that strategy well to employees who must implement it
44%

In a world where more than half of employees do not understand why they’re doing what they’re doing, is it any wonder companies like Amazon roll into new markets seemingly at will? Is your organization just watching a countdown clock of your own Amazon disruption?

You’ll Need More Than a Plan

It’s worth noting that for all its successes, Amazon has also failed to conquer or meaningfully disrupt several industries. Amazon Destinations, an attempt to enter the hotel deals market, flamed out in six months. A mobile card reader aimed at upending similar products from Square and PayPal lasted just over a year. Perhaps the most famous example, the Fire Phone, failed to compete against smartphone juggernauts Apple and Android and was written off just three months after launch.

In essence, we were not building the phone for the customer – we were building it for Jeff.”

Source: The Inside Story Of Jeff Bezos’s Fire Phone Debacle, Fast Company

In each of these cases, Amazon was moving against digital-first companies that were already well-practiced at rapid strategy execution. In the smartphone market, Apple knew its first-mover advantage would be short-lived, so it set about building an ecosystem of applications and developers to become more of a platform than a device. Google’s OS-centric strategy meant it could capture market share quickly by partnering with multiple hardware makers for massive scalability and price competitiveness. 

Amazon’s effort failed for a number of reasons, not least of which was strategy execution. Wresting market share from Apple and Google would have undoubtedly driven huge value to Amazon by providing consumers a direct path to Amazon’s wide variety of offerings. But the execution of that strategy fell apart, according to insiders. In a rare mistake, Amazon developers relied too heavily on Bezos’s vision rather than the consumer’s needs. The result was a product that offered little of the broad access to either competitor’s ecosystem at a price point that was too high for the value being offered.

The Execution Imperative

So how do organizations get better at strategy execution? The answer, according to leading organizations, requires the ability to improve visibility, resource management, and decision-making all at the same time. A daunting task, but one that is increasingly supported by technology beyond project or program management tools.

Visibility Beyond Status Reports

Lack of visibility is a common challenge for executives charged with high-impact initiatives. The term “business intelligence” dates back at least to 1958, and yet 92% of organizations don’t even report on key performance indicators of strategy execution projects. 

92% of organizations don’t report on key performance indicators of strategy execution projects

The reason is fairly simple. Most software systems are simply not equipped to report on the totality of a strategy execution initiative. Business intelligence and reporting systems are good at tracking ongoing transactional data, but they cannot tell you who is doing what work, how that work maps to the org’s strategy, or whether it’s working. 

Smart organizations are turning to software like Catalant, which enables organizations to track not only strategy execution milestones, but also manage resources from within the organization as well as from a marketplace of over 65,000 independent consultants and 1,000 boutique consulting firms.

Resource Allocation Without Limits

80% of managers say their organizations fail to effectively allocate people to large, horizontal initiatives. The causes of this are many — from organizational silos to lack of support from legacy HR systems — but the impact is clear. Large organizations simply don’t have an easy way to get the right people on the right work at the right time. 

80% of managers say their organizations fail to effectively allocate people to large, horizontal initiatives

Some organizations are already on their way to tackling this issue. At Shell, for example, one large business unit uses the Catalant platform to match skills to projects regardless of the location or functional role of the employee. The results are faster execution of critical projects and improved morale from staffers who better understand how their work contributes to the organization’s strategy. 

“We absolutely believe this is one of the things that’s going to change our company,” says Caroline Missen, Business Advisor to the Downstream Director at Shell.

Informed Decision Making on Workstreams

Strategy execution in the digital age requires more than just pointing the right people in the right direction. As market or internal conditions change, organizations also need the agility to reallocate resources quickly. 

To effectively do this, strategy or functional leaders need to not only understand the status of critical projects at any time but also what resources are available for other work if the early results don’t bear out. This may sound simple, but it requires technology-enabled resource management beyond what HR-centric systems were built to handle.

About Catalant

Catalant helps business leaders get from strategy to execution faster. Our platform enables organizations to better manage their most strategic work with robust resource management capabilities and fast access to more than 65,000 elite independent consultants and 1,000 boutique consulting firms. Trusted by more than 30% of the Fortune 100, Catalant helps organizations like Pfizer, Unilever, and Anheuser-Busch InBev go from idea to results quickly.

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Written by

Davin Wilfrid

Published on

February 3, 2020

Davin is the Director of Content Marketing for Catalant. In his spare time, he builds terrible-sounding instruments.

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