Impact of Design Thinking on Amazon's Innovation Strategy

This report analyzes the impact of the advances of design thinking movement on the chosen company Amazon. It introduces Amazon and describes the innovation trend initiated by Amazon. It defines and describes the organizational environment, the innovation trend, innovation strategy, innovation capabilities, value creation and value capture theories of Amazon.

Running head: INNOVATION STRATEGY
INNOVATION STRATEGY
Student’s Name
University Name
Author note

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Executive summary
The purpose of this report is to analyze the impact of the advances of design thinking
movement on the chosen company Amazon. It introduces Amazon and describes the innovation
trend initiated by Amazon. It defines and describes the organizational environment, the
innovation trend, innovation strategy, innovation capabilities, value creation and value capture
theories of Amazon. It describes the creation of innovation strategy and ensures strategic
alignment within Amazon and analyzes its importance. Further, the report analyzes the impact of
the innovation trend on Amazon and analyzes the opportunity and threat faced by the
organization. It used the business model canvas of Amazon to support the analysis. It
recommends ways to organize the innovation activities of the organization, determines the
additional innovation capabilities and initiatives to be pursued by the company. It recommends
ways to ensure value creation by the company and recommends the way to better ensure strategic
alignment with the innovation trend. Lastly, it concludes that the innovation trend adapted by the
company has led to its success. However, it must further enhance its innovation and service
provided and continues innovating its products to face the fierce competition.

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Table of Contents
Introduction to innovation trend in Amazon...................................................................................3
Impact on Amazon by the advances of design thinking..................................................................3
Innovation strategy, capabilities and initiates of Amazon...............................................................4
Importance of innovation strategy and its alignment with business strategy..................................5
Innovation impact on Amazon.........................................................................................................6
Recommendations............................................................................................................................8
Recommendation to ensure strategic alignment..............................................................................8
Conclusion.......................................................................................................................................9

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Introduction to innovation trend in Amazon
Amazon is the largest American e-commerce company which was founded in the year
1994 by Jeff Bezos, it is also known as the ‘cloud computing giant’ originally known for offering
books through its own website (Baden-Fuller & Haefliger, 2013). The company has enabled its
website which allows its customers to offer everything starting from clothes to furniture. Further
its offers digital contents including music, apps and movies. Amazon is a multibillion dollar
provider of cloud based services for its millions of customers all across the globe. Unlike other
companies like Apple, Microsoft, Google, Amazon is not fixated on its tightly designed apps and
other services (Carayannis, Sindakis & Walter, 2015). Some of the company latest innovation
trends have changed the entire world. The innovations brought in by Amazon have changed the
lives of its customers. One such innovation is Kindle e-books. Amazon has provided to its
customers a quick, convenient and the most affordable ways to get books (Johnston, & Bate,
2013). The company works to put the Kindle in many customers as possible with an affordable
pricing. With this innovation, the company took full control over the e-market. It has
successfully become the destination for purchasing books and contents. Amazon has championed
the mass marketing with the introduction of Kindle Amazon. The recent developments in the
technology of e-books have opened a new source of revenue for the authors and publishers. It
provides an easy and convenient way to launch the e-books by authors and publishers.
Impact on Amazon by the advances of design thinking
Amazon is considered to be the most significant force of digital transformation. The role
of design thinking has played a vital role for the success of the company. The two principles

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followed by the company are ‘customer obsession’ and ‘invent and simplify’ (Liedtka, &
Ogilvie, 2011). These two principles of the company are highly correlated with the designedly
approach of developing the products and services that are offered by the company. The company
designedly approach focuses on simplicity, functionality and process. The website store of
Amazon is designed based on the idea of visual complexity which helps them succeed.
Amazon’s design succeeds as it makes use of the basic four principles: Transparent, tangible,
trustworthy and helpful. The visual design implemented by Amazon engages people to a
different level. Moreover, it is immensely useful for its customers (Liedtka, & Ogilvie, 2011).
The system design and functionality of the company are expressly designed to support the core
attributes of the company such as efficient shopping experience. Amazon is highly
straightforward and efficient with an aspiration to meet the needs and requirements of the people
in an efficient way. This has lead to the success of the company. The design thinking approach is
largely adapted by Amazon, has positively impacted the company. Amazon’s design thinking
approach has largely impacted on the world and the companies which are more famous for their
design (Liedtka, 2015). The design principle of Amazon enhanced its areas of opportunity,
innovate its products and create better customer satisfaction.
Innovation strategy, capabilities and initiates of Amazon
The environment Of Amazon is highly designed to encourage creativity and innovation,
the environment is rightly designed develop better ideas and solutions. The online retail giant
fosters fresh talent by employing capable employees and provides them enough authority and
power to introduce new ideas and creativity in the organization (Zhu & Liu, 2018). The core
strategy of Amazon is to focus on investing in latest technologies, improving the web services by

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fulfillment capacity, improving the website services to the customers, the market segments and
enhancing its logistics applications (Rossman, 2016). Amazon highly focuses on growth and
expansion while emphasizing on profitability and revenue generation. The internal capabilities of
the company including building its strategy on things that do not change, it has a strong value
and culture which has impacted their leadership and success in its online retailing service. The
company hires exceptional talent and expects innovation from the team. The company highly
focuses on the importance of customer satisfaction instead of competitor. Additionally the
company creates value by offering to them ever expanding and large section of the products
along with the personalized experience (Johnston, & Bate, 2013). Further, it captures value and
achieves excellent customer services by offering speedy experience and competitive pricing.
Importance of innovation strategy and its alignment with business strategy
The business strategy of Amazon is based on the principle which guides the company
that is its obsession with its customers rather than having a focus on its competitors. The
company has a passion for invention and innovation (Liedtka, & Ogilvie, 2011). Amazon is
highly committed to its operational excellence and its long term business approach. Amazon’s
disruptive innovation strategy allows the company to improve the logistics network and reduce
the cost to customers. The innovation strategy of the company is to turn a new idea into a
successful product and enhance a combines of relentless and flexibility. The company aligns the
business strategy with the innovation strategy by innovating the products and services and
generate value to its customers (Rossman, 2016). This way they accelerate execution of the
strategy by enhancing its decision making process. Aligning business strategy with the
innovation strategy is highly important to achieve sustainable growth in the organizations for

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long term. It is important for the company to utilize its time and effort for developing its
innovation strategy and align it with the business strategy (Dolata, 2017). It is important to have
an innovation strategy with a goal and an objective. The innovation strategy of the company
involves creating value proposition in order to have a strong customer base. Therefore it is
important for the company to set boundaries for its innovation performance expectations and
plan the innovation goals and strategy and achieve positive outcome for the business
organization (Morabito, 2016). The innovation strategy must be planned as a subset of the
business strategy. The innovation strategy of the company must be aligned with the business
strategy. The company must have a unified common goal and objective which helps to align the
business strategy with the innovation strategy.
Innovation impact on Amazon
Amazon major innovation trends are highly consumer oriented and its innovation trend
has helped the company to achieve great success and growth. Innovation trend of the company
helps to maintain its competitive position in the market and attain customer satisfaction (Zhu &
Liu, 2018). The company innovative products and services enable the company to attain loyal
customers and this enables the company to expand its services. The company has increased the
levels of opportunity for the company. The company’s latest trends and innovative approach can
enable the company to position itself as a leader in the online retail market. The company
continuously changes the company’s structure and innovative process by meeting the changing
needs of the customers (Morabito, 2014). In the dynamic and ever changing business
environment, Amazon has implemented a strategy to continuously innovate its products can offer
a most convenient and personal services to its customers. Amazon continues to expand its

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products into various sectors so as to attain customer satisfaction (Pisano, 2015). The company
rightly shifts to an interface-less society with its latest trends Amazon Echo, Alexa, and other
innovations through its highly dedicated platform and encourage the shoppers to purchase
products offered by the company.
A business model canvas of Amazon (Osterwalder & Pigneur, 2010).
Key
Partners
Affiliates
IT developers
Logistics
provider
Distributors
Mergers and
acquisitions
Key
Activities
Research and
development
Marketing
Customer
service
Human
resource
Value
Propositions
It is a consumer-
centric company.
Efficient
communication
with customers
through websites.
It is the world’s
largest provider of
cloud infrastructure
service.
Amazon is
considered to be
most innovative
company.
Customer
Relationshi
ps
Self service
Provide service as
per customer
needs and
requirements.
Amazon’s core
strategy customer
satisfaction.
Free shipping
with Amazon
Prime.
Customer
Segments
The massive
consumer
market,
Teenage,
young adult,
Niche provider
segment
(companies
and
developers)
Key
Resources
Low cost
structure,
Staff, robotics
systems,
Amazon sales
rank,
Channels
Websites
Mobile apps,
Affiliates,
Social media

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Sufficient
infrastructure
Cost Structure
Strong investment in new projects,
Warehouses, offices, employees, research and
development
Revenue Streams
Amazon prime subscriptions, transaction fees,
sales margin
Recommendations
The organization can organize its innovation activities by adhering to its business strategy
and its organizational culture. The innovation activities of the organization must be
communicated to the employees of the organization (Liedtka, & Ogilvie, 2011). The new ideas
must be accumulated in the business which furthers helps the business to drive innovation.
Additionally the company can organize the new ideas and concepts in a way which empowers
the company and they can act accordingly. The company needs to exploit the opportunities and
counter the threats in an efficient manner (Morabito, 2014). This will enable the company to
leverage its strengths and utilize its resources in an efficient manner. The additional initiative
that can be taken by the company to further enhance its customer service and improve the service
provided to its customers (Rossman, 2016). The company can increase its capabilities to improve
its products and properly analyze the needs and requirements of the customers and provide
products and services. Amazon can enhance its operational efficiency, allow more agility in the
enterprise, enhance is cost-effectiveness. By securing and surfacing the new insights, Amazon
can provide new insights to drive the performance of the business (Zhu & Liu, 2018). The

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company can increased its value creation by delivering well managed services and solutions to
its customers. It can infuse automation, artificial intelligence into customer solutions similar to
Amazon Alexa,
Recommendation to ensure strategic alignment
For any business organization, it is important to align its innovation initiative with the
corporate strategy. The innovation tools are to be designed for idea generation. Further, it is
recommended to align the idea generation and thereby innovation along with the business
strategy (Johnston, & Bate, 2013). The organization must encourage random ideas and
encourage incremental improvements. The new ideas and concepts that are proposed in the
organization must fit with the strategic needs of the organization (Rossman, 2016). The company
can incorporate schemes to invite random ideas and concepts which might encourage
incremental improvements of the company. In order to compete with the major competitors, the
company must highly engage with the customers, as per their business strategy and offer to them
innovative products and services as per their needs and requirements (Dolata, 2017). This helps
the company to align the business strategy with the innovation strategy. Ideas and new concepts
must be encourage which must be relevant to the business strategy and aims. The company must
focus not only on the product but its market communication, packaging and pricing. In order to
align the innovation with the business strategy, the company must meet its strategic objectives
(Carayannis, Sindakis & Walter, 2015). The company can pose innovation challenges based on
the strategic needs of the company. It must be ensured that the products and services of the
company reflect s the brand value from the perspective of the customers and employees.

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Conclusion
Therefore it can be concluded from the above analysis that the giant online retail
company Amazon has brought in significant changes in the products and services has helped the
company to achieve success in the organization. The innovation strategy of the company has led
the company to attain leadership position in the market. The company has achieved success
mainly due to its strong innovative strategy and culture, the overarching idea of the company.
The company’s latest innovation trend especially in the field of artificial intelligence has
captured the attention of the customers and attains customer satisfaction. The report has analyzed
the innovation trend of Amazon, the innovation strategy, capabilities, and value creation of
Amazon. It has describes the alignment of innovation strategy with the organization and has
determined its importance. Further, the report uses business model canvas to support the
analysis. Lastly, it recommends innovation strategy, ways to organize the innovation activities,
the additional innovation capability, and initiatives that should be pursued and the ways to create
value. It also recommends the ways in which the business can ensure strategic alignment to
ensure the innovation trend.

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