Innovation @ Amazon Ricardo Rentería, Head of North Latam - The Business Factory
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Innovation @ Amazon
Ricardo Rentería, rrrenteri@amazon.com
Head of North Latam
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 »
Several understand the situation…
“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
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 Bezos
CEO, 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 ServicesL’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 downloadsExample of GE reinventing it’s core
by 2020 $15Bn of revenue from
software – top 10 software
companies in the world ($5.5m
today)
I have $1 billion in productivity improvement
(inside the company) that I need to drive,
between now and 2020
9000 workloads to AWS – 9000 apps to 4000
apps, 34 DCs to 4 DCs – but why?Amazon is innovating across many domains Drone Development Fire OS Kindle In-house Entertainment Grocery Delivery Video Streaming Cloud Computing Cross Site Shopping
Amazon innovating way of reducing costs In 2015, Amazon spent $11.5B in shipping costs
Amazon’s Innovation Approach
Focus on Your Customers
Experiment Frequently
Measure, Improve and Iterate
Move Fast, and Be Nimble
Foster LeadershipInnovation Methodology Working Backwards Narrative process Primitives Build upon existing services Single-threaded teams • Release • Measure • Iterate
Mechanisms
Mechanisms
Focus on Your Customers Work backwards from the customer (1) Press Release (2) FAQ
Customer Focus Defines Your Business Model:
Value, Selection, and Convenience
experimentation via primitivesMeasure, Improve, and Iterate
“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 quicklyExperiment Frequently
“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 failureAmazon Website – 1000’s of A/B Tests…
Move Fast and Be Nimble “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
Foster Leadership The secret sauce at Amazon is the Leadership Principles
Think Big, Dive Deep Have Backbone; Invent & Simplify Disagree & Commit 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 cultureFormulaic Cultures
Well-defined vision
Process-Oriented Open culture to outside
Over optimized team coordination Look across domains
Value system above breakthroughs Reinvent and retarget processes
ComplacentSunCorp 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 Empower others
Autonomous teams Encourage novel thinking
Disruption vs incremental growth Build process for risk taking
“Go big, or go home”Amazon Launches Seller Services
Amazon Launches Amazon Web Services
AWS in 10 years
1,000,000+ $11B+ 58%
Active customers Run rate YOY growth
per month Q3 2015 to Q3 2016Understand 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 cardEncourage a structure for innovation time
Atlassian and Ship It Days
24-hour hackathon to
work on anything related
24-hour hackath
to Atlassian products
work on anything r
and ship it in 24tohours
Atlassian prod
and ship it in 24Emphasize 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 Jeff Bezos
be patient » CEO, Amazon.com(mechanisms * culture) f(innovation) = (org * arch)
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