Innovation Strategy of Amazon: A Case Study

This report explains the business innovation strategy of Amazon, focusing on the latest innovation trend of Amazon Go. It discusses the link between innovation and Amazon, the innovation strategy and its importance, and the impact of the innovation trend on Amazon. Recommendations for Amazon's future success are also provided.

Running head: INNOVATION STRATEGY
Assessment 1
INNOVATION STRATEGY
AMAZON
MGMT20132 Innovation and Sustainable Business Development
Assessment No: 1
Name of the student:

1INNOVATION STRATEGY
Executive Summary
This report explains the business innovation strategy of Amazon. A brief introduction to the
topic is given. Design thinking is the innovative theory taken into consideration. The latest
innovation trend in Amazon is seen. Amazon Go is the new shopping store where people can buy
anything without any kind of checkout required. Further, a link between innovation and Amazon
is seen where many factors are discussed. It includes the organizational environment, innovation
trends, innovation capabilities and innovation value. Amazon’s innovation strategy is discussed
and how it played an important role. Innovation impact on Amazon Go is seen where retail is the
main problem. Lastly, a set of recommendations is made for Amazon and following those will
give a great success to the company.

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Table of Contents
1. Introduction..................................................................................................................................3
2. Description...................................................................................................................................3
2.1 Design thinking......................................................................................................................3
2.2 Innovation Trend of Amazon.................................................................................................3
2.3 Link between Innovation and Amazon..................................................................................5
2.4 Innovation strategy and the importance of it.........................................................................6
2.5 Impact of an Innovation trend................................................................................................7
2.6 Recommendation.................................................................................................................10
3. Conclusion.................................................................................................................................11
Reference List................................................................................................................................12
Appendix........................................................................................................................................14

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1. Introduction
In business at some point in time, there is a need for innovation. This is a creative process of
making new things or products. Businesses can apply new ideas and this will help the business to
succeed in the near future (Prajogo, 2016). It is an important component in a business because
the employees get a display of their ideas and others get a better understanding of products.
There are many benefits of innovation in business. It increases the productivity of the
organization. It also gives a competitive advantage over other companies by executing new
processes. In this report innovation in Amazon is going to be seen.

4INNOVATION STRATEGY
2. Description
2.1 Design thinking
Design thinking is a method in which innovation can be understood. The innovation must
contribute to organic growth and value to the customer. All the unmet needs are fulfilled through
design thinking cycle in a particular situation. Design thinking is a solution to the problems that
are faced by the company (Elsbach & Stigliani, 2018). Design thinking works because it has
natural flow ranging from research to rollout. The design criteria are decided because of
customer experience, data processing and brainstorm solutions (Liedtka & Ogilvie, 2011).
Innovators can collaborate on essential things due to design thinking. All workplace politics can
be overcome by design thinking. It also helps in shaping experiences for the innovators and
stakeholders.
2.2 Innovation Trend of Amazon
Amazon mainly focuses on e-commerce, artificial intelligence and cloud computing
(Amazon.com. 2019). It is one of the largest internet revenue companies in the world. It was
founded by Jeff Bezos in July 1994. Amazon is headquartered at Seattle, Washington, US. The
company provides many products and services to the customer. Currently, there are 647,500
employees in the company. The revenue of the company is US$232.887 billion and net income is
US$ 10.073 billion. In the United States, Amazon is one of the biggest and valuable retailers.
The company has also acquired the whole food market in the year 2017 whose value was $13.4
billion. The company is coming up with the latest products and services with the help of new
technologies.

5INNOVATION STRATEGY
The latest innovation which yet to spread worldwide is Amazon Go. This is a different kind of
store which is currently running in the United States. In this store, people do not require to check
out. The company is trying to give the most advanced technology for shopping purpose. This
also people prevent to wait in lines. People just have to download the Amazon Go application.
The company is using technologies similar to those used in self-driving cars. This shopping store
uses computer vision, deep learning and sensor fusion. The just walk out the technology of the
company does detect the products that are taken or returned to the shelves. People can leave the
store once they are done with buying things. The charge will be deducted from the account and
receipt will be given online. There are employees working in the Amazon Go store to prepare
ingredients and stock up shelves and help the customers. This innovation will make Amazon
highly successful especially in the United States. The Amazon Go application has all the
information for the customers and their queries. People can easily find specific products on the
Amazon Go application just by clicking discover the option. The Amazon Go offers many things
like ready-to-eat food for breakfast, lunch and dinner. The grocery ranges from milk to bread,
cheese and locally made chocolates. There are special Amazon meal kits available with all the
required ingredients so that the meal can be made in 30 minutes.
2.3 Link between Innovation and Amazon
The organizational environment: The Company tries to meet the demand of the e-commerce
market. They have a traditional and cultural set of behaviours which helps to inspire the
employees. Amazon is always in a search of fresh talent so that more innovative products can
come up in the market. They also give a push to the employees so that they can take a risk and
explore new ideas. The environment inside the organization helps in giving a proper online retail

6INNOVATION STRATEGY
service (Dlata, 2017). The company has few characteristics like boldness, peculiarity and
customer centricity.
Innovation trend: Amazon is coming with the latest trends that are taking over the market
(Callanan, O'Shea & O'Regan, 2016). The trends include Cashless society that is Amazon Go.
It’s a new walkout shopping service. The next one is Amazon’s acquisition of whole foods. The
company has taken over the whole food market where they are trying to merge offline and online
shopping together in order to give a seamless experience. Amazon has a prime wardrobe option
which helps people trying three clothes if the different brand and they can accordingly choose
whether to keep it or not (Dolata, 2017). The company’s latest device Echo is now giving fashion
advice to the people.
Innovation Strategy: Amazon follows a particular innovation strategy for making their
innovations successful (Lyytinen, Yoo & Boland Jr, 2016). They firstly work on customers.
They look after the needs of the customer and understand their difficulties. The company is
having a deep culture of writing. This is done before a new product is developed. This is a
collaborative process and helps the employees to find the requirement of the product. They also
reinvent office meetings. Amazon tries keeping a small office meeting so that employees can
digest the information and work accordingly. They also believe in testing, learning, improving
and repeating. This strategy always works for the company and hence new and innovative
products are launched easily.
Innovation capabilities: Amazon always tries to promote their technologies and innovation
(Pedersen, Gwozdz & Hvass, 2018). The innovation capabilities give the company to understand

7INNOVATION STRATEGY
the technical change process. The innovations done by Amazon have economic value in the
market.
Innovation value creation and capture: This simply means Amazon looks after the customer
who is buying products from them. They also help people who are using their services like
Amazon Prime, Amazon Fire-stick and Echo. There are value creations for the shareholders of
the company as they contribute to the company. There are some components through which
value creation and capture can be measured. They are valuable to the customer, cost of
production and price.
2.4 Innovation strategy and the importance of it
Amazon does follow certain strategies before innovating new products (Nylén & Holmström,
2015). The company has a culture that can tolerate failure. The company takes many risks to find
out what the customers need. Amazon keeps on experimenting and some of them come out to be
successful. The employees are given the proper amount of time and permission to lead their
experiments. In this way, the company stays innovative and hence they start losing the fear of
failure. The company strategically learns from its mistakes and tries to move forward with their
work. Amazon tries to invest only in some selective technologies. The company is having its
main strengths in cloud computing, voice control and machine learning. They do not blindly
invest in any technology because that can cause confusion and stress within the company. They
try to mainly focus on emerging technology which will reduce employee work and problems.
Amazon has an innovative ecosystem. They have a major emphasis on innovation and have
always been connected to the entrepreneurial ecosystem. This helps the employees in sharing
ideas and problems within the organization. Strategic planning of innovation will be fruitful for
Amazon (Lincoln & Andrew, 2018). It will give a competitive advantage to the company from

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others who sell the same products. An improvement in the business model can be seen through
strategic innovation. It also gives deep customer focus makes the company more pioneering.
This strategy gives long term focus on the stakeholders of the company. The major importance of
the strategic planning of innovation is that the company only spends a limited amount of money
and tries to make the innovation successful (Pisano, 2015).
2.5 Impact of an Innovation trend
Creating many innovative products together can sometimes create a huge impact on Amazon.
According to the latest innovation of Amazon Go, the company is facing both a positive and
negative impact. The new technology is cutting the work of middleman. This is the biggest
criticism faced by Amazon. The company is removing competition through the shopping store.
Amazon Go is facing the major impact of theft and self-checkout (Jackson et al., 2016).
Although the technological system seems to be airtight there might are problems related to
storing. The store is maintained at a technological level and hence the company needs to improve
its accuracy in order to have less of negative impact on them. Innovation can sometimes cause
disruption in the retail process of the company. Innovation can sometimes cause complication
and there might be much confusion in the retail management of the company (Salerno et al.,
2015).
A business canvas model (Osterwalder & Pigneur, 2010) will further explain the impact of the
innovation trend of Amazon.

9INNOVATION STRATEGY
KEY
PARTNERS
 Affiliates
 Logistics
Partner
 Network of
sellers
 Authors
and
publishers
 Technic
people
CUSTOMER
RELATIONSHI
P
Automated Service
Self Service
CUSTOMER
SEGMENT
 Global
consumer
market
 Group
Leverage
 Individual
Leverage
VALUE
PROPOSITION
 Price
 Convenien
ce
 Vast
selection
 Instant
Fulfillment
 Fast
checkout
KEY
ACTIVITIES
 Production
and design
 Merchandis
ing
DISTRIBUTION
CHANNELS
 Amazon
Go
 Affiliates
KEY
RESOURCES
Physical warehouses
Web applicationand
development
COST STRUCTURE
 Low-Cost Structure
 Economies of Sales
REVENUE STREAM
 Sales of assets
 Monthly subscription fee
 Acquisition and investment

10INNOVATION STRATEGY
2.6 Recommendation
Any company before innovating products needs to organise innovative activities. Such activities
bring out new ideas and creativity. The employee can openly give their suggestions and ideas
(Ahn, Yoon & Kim, 2018). An informal discussion or meeting can be done. Employees can
make a list of ideas for innovation and present it to the seniors. Innovation capabilities also
should be developed in a proper manner. It should be given equal importance while making a
new product. Special labs should be made to carry out proper research. The company should
financially fund for the research and innovations. All material requirements need to be checked.
The workforce should be increased so that more employees can work on innovations. Companies
can take up different innovation initiatives. They can encourage their employees to try out small
innovation tasks. Even after failure in this field the company can motivate their employees.
Small things should be kept in mind while trying to create new things. All the resources should
be provided as a step of initiative towards innovation products (Foroudi et al., 2016).
Organisations need to ensure that innovation has a value in society. Innovation is only
considered when it’s valuable. The new product must be beneficial to customers and all the
requirements should be met. The product should bring great success to the company. The
stakeholders should be satisfied with the product and hence would encourage bringing new
products to the market.
Amazon also has to follow a certain recommendation that would increase its market value
worldwide. They should properly survey the market to understand the needs of the customers.
The innovation done by them should be environmentally friendly as people avoid using harmful
things. The company needs to ensure that the innovation would be successful in the years to
come. It should also give a healthy competition to other companies. Amazon should spend a

11INNOVATION STRATEGY
limited amount of money on any particular innovation. They should also hire a bigger workforce
for the smooth functioning in the company. It is necessary to understand own capabilities and
innovation values and hence work accordingly.
3. Conclusion
The report is done on the innovation strategy of Amazon. A proper introduction of the business
innovation strategy is given. The company is done the latest innovation which is Amazon Go.
This is a grocery shopping store where people can just check out without standing in lines. They
use Amazon Go application and special technologies for working. For this innovation design
thinking, the theory has been used. The company and its innovation were briefly described. A
link between innovation and Amazon was found. The organizational environment, innovation
trend, innovation value and innovation capabilities were seen. The innovation strategy of
Amazon was discussed in details. The importance of such strategy showed how Amazon brought
the new technologies and inventions in the market. The impact of innovation trends on Amazon
was seen. Amazon had positive as well as negative impact through their innovation. A set of
recommendations were given which if followed would give great returns and success to Amazon.

12INNOVATION STRATEGY
Reference List
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Appendix
Figure: 5 Different phases of design thinking process
(Source: Liedtka & Ogilvie, 2011)