CIOs formulating strategies for leveraging disruption can learn from practices of established disruptors such as Amazon, says Gartner, in the report Willful Disruption: Amazon Disrupts Through Scale, Richness and Reach.
Amazon does not disrupt in only one way, but rather it behaves in different ways — not disrupting consistently.
The report authors, David Mitchell Smith and Daryl C. Plummer, note utilising self-disrupting approaches as well as more prototypical offensive/innovation-driven approaches have been shown to work for the company.
They point out a new word - ‘Amazon'ed’- is now used to describe the phenomenon of being disrupted by the digital giant.
The company is now nearly 23 years old, and one of the most valuable listed companies in the US. Its retail arm remains its largest revenue source, and is used to fund disruptive areas.
One of the most disruptive endeavours is Amazon Web Services (AWS), which pioneered cloud computing infrastructure as a service over 10 years ago.
AWS now shows higher profit margins and greater potential than any of Amazon’s other businesses, according to the Gartner analysts.
“Amazon takes a long-term visionary approach and uses unconventional mechanisms to achieve its goals.”
Despite its size, Amazon feels like a startup in many ways, they add.
For instance, the company promotes the ‘two-pizza team’ or keeping the size of a development team small enough that it can be fed by two pizzas.
“Amazon does not disrupt in only one way, but rather it behaves in different ways — not disrupting consistently.”
The two analysts list five ways Amazon does this: offensive, defensive, serendipitous, destructive and self-disruptive.
The secret sauce
The report says Amazon’s ‘secret sauce’ is its deep understanding of three often-undervalued aspects of extensive disruption: scale, richness (or variety) and reach (or ubiquity).
The company’s scale in both AWS and commerce has redefined the nature of horizontal scale and spawned a new term, ‘hyperscale’ to describe its cloud offerings.
Amazon takes a long-term visionary approach and uses unconventional mechanisms to achieve its goals
Amazon incorporates richness, or variety, into its strategies. The goal is to provide a very wide variety of products, services and support to its customers.
“Enterprises seeking a path to disruption will find involvement in multiple options for disruption will serve them well as they cycle through options rapidly to discover which ones are the most appropriate,” they advise.
On the third aspect, reach, they state Amazon’s various services are intended to become ubiquitous parts of a growing platform strategy that extends into many business and consumer scenarios.
“The proper use of scale, richness and reach will be a huge determinant of a disruptor's ability to rise to the level of a digital giant,” they conclude.
“The lessons learned should be employed by enterprises, albeit on a smaller ‘scale’, to learn to structure and invest for long-term disruption.”
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