Managing Innovation at Amazon: Future Capabilities and Challenges

This report focuses on the significance of innovation within Amazon, the leading online service provider. It examines Amazon's innovation roadmap, designed to attract and retain customers, and highlights the importance of leadership planning and effective strategies for implementing innovative ideas. The report covers Amazon's future innovation capabilities and potential roadblocks, including its vision for 2020 and beyond, with a focus on new products like Amazon Go and Amazon Drones. It also analyzes Amazon's strengths, weaknesses, opportunities, and threats, emphasizing the company's commitment to customer satisfaction and employee empowerment. The report delves into the evolving online retail industry, the impact of technology, and the changing consumer behaviors, concluding with Amazon's innovation requirements for 2020 and beyond. The report emphasizes the need for new skills, innovative mindsets, and effective manpower organization to maintain a competitive edge.

Managing Innovation

EXECUTIVE SUMMARY
This given report focuses on basically importance of innovation at workplace. This report
is on Amazon which is largest online service provider. So in this report it is mentioned that how
innovation is still important for big companies like Amazon. Reason behind is that to establish
innovation in services of A,Amazon in order to attract and retain customers. Basically, foremost
purpose of this project is to develop the innovation road map which helps an organization while
launching creative products. Along with this, it will also highlight the significance of leaders
planning and effective strategy for implementing innovative ideas at workplace. To sum up, this
report focuses on future innovation capabilities of Amazon and their blockages as well. Also
points out towards vision 2020 and new developed and innovated products for example, Amazon
Go and Amazon Drones, etc. Amazon has created more than 125 jobs in US every day from
fulfilment centres to corporate offices, Amazon has invested $100 billion. With this, Amazon
empowers small and medium sized organizations to reach more and more customers. They view
innovative and creative ways to make positive and long lasting impacts on customers so that they
can visit to Amazon again. They also encourage their employees as Amazon cares for them.
Amazon has innovation and yes looking for new innovations for future. Amazon care for their
customers and hence get motivation from them to innovate.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION ..........................................................................................................................1
Purpose of the report..............................................................................................................1
Future of the industry 2020 and beyond.................................................................................1
Organization innovation requirements 2020 and beyond.......................................................3
Building future innovation capabilities for organization........................................................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Managing innovation is a term that defines departure of present process to new innovated
process of doing things. Simply put, establishing new methods and plans to existing products to
attract customers. Foremost objective or purpose of this assignment is to highlight the innovation
talent of an organization by showing the efficiency of its leaders. Additionally, shows that
company needs to focus on their strategy before implementing unique products. Firstly, report
focuses on importance of innovation in workplace (Biemans, 2018). Secondly, this project is
based on Amazon which is largest online service provider in retail online sector. Amazon
provides best services to customers to satisfy them in terms of online services. Lastly, report
focuses on 3 things; future of vision 2020 of Amazon & beyond that, innovation requirements of
Amazon and building innovation capabilities of Amazon.
Purpose of the report
Innovation is concept to bring something new that is new product, idea or process. In this
highly competitive market it is important to bring innovation in business to attract profit and
growth. Amazon company is international e-commerce company provides A to Z products from
books, apparels, electronics, stationary, toys, pantry etc. They also produces consumer
electronics like Kindle, fire stick, fire TV, Echo and Cloud technology solutions etc. In this
report, we will determine the need of innovation in an organization as well as its planning and
purposes. We will also discuss successful planning methods of innovation in present and future
time (Andriopoulos and Lewis, 2010).
Future of the industry 2020 and beyond
Online retail industry is most growing industry in which process of selling the goods and
services by means of internet takes place. Online retailing or e-tailing follows B2C business
model therefore customers directly interact with the business and no intermediaries are involved.
E-retailers can be of two type:
1. Pure Play E-retailers: These e-retailers do not have any physical outlet such as amazon
and can only access via internet.
2. Brick and Click E-retailers: These retailers serves online and offline both which means
they own physical distribution system as well as online sites (Schilling, 2010).
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Online Retail Industry is highly developing industry due to its advantages like time saving, 24*7
access from anywhere, huge discount offers, easy comparison amongst many alternatives etc.
Buyers can also check full description of product and select any payment method like COD, net-
banking, e-wallets etc. In high digitalization scenario, use of technology is rapidly increasing due
to which needs and demands of customers are also increasing. Today many people are working
and have busy schedules therefore they have less time to explore and desire more comfort and
relaxed free time. Through online shopping people get their desired products just on one click
and can explore many option without doing any physical efforts (Seebode, Jeanrenaud and
Bessant, 2012).
E-retailing can make a big impact on retail industry in up-coming scenario due to following
reasons:
1. Shopping with smartphone: Smartphones have become default screen for brand
engagement and means of transaction of e-commerce, further more it is also found that
four out of five smartphone users make a thorough research as well as compare them with
alternates goods and services that are available online before purchasing them. Hence, to
increase online market e-retailers should work to make the shopping experience more
satisfactory, enjoyable and informative.
2. Pricing strategies are dynamic: In e-retailing sector prices are set flexible according to
demand and supply of the goods and services as well as on competitors. This market is
price sensitive and dynamic prices allows to monitor competitors pricing strategies. E-
retailer can take advantage of low stocks of competitors and boost their own sales and
profit.
3. Technology and Expert Systems: E-retailers can gather information about preferences
and choices of their customers by exploring their most searched data. This will help to
influence and attract the customers buying behaviour. Therefore to handle and manage
customers data and its analysis e-retailers can use artificial intelligence (Dodgson, Gann
and Phillips, 2013).
In scenario of 2020, growth of Online retail industries will predictably result in the following
manner:
 The routine shopping will increase via online market, but for cherish experiences
people will prefer offline market: Buyers will prefer online market for their day to day
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shopping and specific needs but to explore and get experience, offline market will be
targetted. However it will also be explored for shopping fun and cherish experiences.
 Retailers will increasingly relay on automated machines: To decrease manpower or
workforce and to make quick and efficient work, retailers are using robot technology of
packaging and delivery of the product. This method is time saving and delivers efficient
work for clients. In coming scenario of 2020, use of robot technology will increase more
rapidly.
 Brick and morter retailing will keep growing: However after the growing trend of
online businesses, traditional store formats are suffering but innovative store with great
shopping experience are keep on growing. Therefore online stores have an opportunity to
establish their physical outlets (Jaw, Chen and Chen, 2012).
 High use of technology as well as social media: In present scenario Facebook live,
messenger, and Instagram are most used marketing techniques adopted by some online
retailers. In 2020, online retailers take advantage of changing marketing trends and
advertising as well as use of e-wallets and net banking.
Organization innovation requirements 2020 and beyond
Amazon Innovation Requirements: Amazon is the largest Internet Retailer in world in
terms of market capitalization, profit and revenue. It was founded in 1994 by Jeff Bezos. Since it
is the largest online retailer but at some point, it also needs innovation in its criteria of working,
which needs;
4. New skills.
5. Innovative mind set.
6. New ways of doing things and organizing manpower.
Now-a-days, most of the retailers are advancing their work criteria and expected
behaviors to enhance their work experiences and to beat competitors. For example, Amazon have
two main objectives; innovation and growth (Tushman, Lakhani and Lifshitz-Assaf, 2012).
While discussing about past of Amazon, following details are there:
2000's: According to market sources, Amazon was not making profits since four to five
years, stakeholders were also complaining that company is not reaching to profits equal to
investments they have made. So, Amazon was not justifying investments and stakeholders said
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that this company will not survive in long term. So, Amazon was trying to overcome these
situations.
Amazon Drones: Amazon Drones is new innovation of Amazon which is a delivery system in
which it will use remote controlled actions to transport goods from company's orders fulfillment
centers to the consumers. They will use GPS navigation and have electric motors that
automatically makes them environmental friendly.
SWOT analysis of Amazon is discussed as follows-
Strength:-
 Most prominent strength of Amazon is
that this organization is consider as
world's leading online retail
association. Basically, company derives
its majorly strength from three-pronged
strategic thrust that is; on cost
leadership, differentiation and focus.
However, this strategy aids in
minimizing the gains.
 Company is getting succeeded in
fulfilling the demand of customer with
their effective or superior logistics as
well as distribution systems (Osborne,
2013).
Weakness:-
 Amazon has to be cognizant of losing
its strategic advantage as it moves away
from its core competence.
 Amazon is offering free shipping to
their customers which might affect their
profit level and danger of losing their
margins.
Opportunities:-
 Amazon can easily increase the
portfolio of its offerings as this helps in
generating maximum company
revenue.
 Amazon have an opportunity to expand
their business across the global
marketplace because of customer
demand.
Threats:-
 Amazon is worrying about their online
shipping because of theft and hacking
which leaves the customer data
exposed.
 Aggressive strategy of price enforce
company to face lawsuits from their
publishers as well as competitors in
retail industry (Osborne and Brown,
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2011).
Amazon studios are famous innovation of Amazon.
Some of these are:
 Amazon is viewing beyond Demographics: Amazon is engaged in online retailing with
customers throughout their websites. First and foremost step of Amazon to innovate
online shopping is to drag more and more information about customers. For this, Amazon
can search places like social media profiles of customers or their web browsing histories
like, what people are searching. They can also add filters as like; searches accord to name
and age. By this, Amazon will get to know about demands of customers.
 Amazon is trying to help customers: Amazon is looking for innovating ways to help
customers in what they are looking for. The simplest way to target more consumers is to
make them comfortable in searching and finding all relevant information under one roof.
After so many years after launching, Amazon still needs for innovation in work areas because
there are so many competitors standing in front of Amazon. And because of stiff competition,
Amazon has several innovation requirements (Nambisan and Sawhney, 2011).
An advantage to be looked of Amazon is, that people are visiting it because they are
getting what they want, as in they like their way of offering services and products and their
quality as well. But competition is stiff against other online service providers and they are also
good at their point. As discussed earlier, 3 needs of innovation; Amazon will have to develop all
new skills to innovate themselves in online retail market, like to prepare their staff to participate
in decision making and to share their opinions regarding because only with the help of staff that
will possible in establishing new skills in Amazon. Amazon's second need is to develop
innovative mind set. This basically means, to first prepare themselves to think innovative
because if they do not that mind set, how they will convey that things to their staff. Third thing is
to organize their manpower in terms of thinking and performing innovative. This needs extensive
convincing power because change is always resisted by staff members (Krishnan and
Ramachandran, 2011).
Innovation Requirements of Amazon by 2020 and beyond: Amazon has to get their
innovations in run by 2020 because of growing competition and to compete against it, their work
areas has to develop. And requirements beyond 2020 is important for Amazon is to stand and
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maintain its position in online services marketing. Hence, services of Amazon is too good to use
and people will visit it in future too until it will be able to maintain and withstand by its position
(Talukder, 2016).
Building future innovation capabilities for organization
Amazon has various blockages in way of innovating their future capabilities because so
many things are there to be considered, like who are their competitors, what are their strategies
and plans, how much knowledge Amazon have, etc.
Organisational Knowledge: Organization comprises of individuals and they have their
own knowledge. When they all together pool their knowledge within an organisation it will help
them to gain more knowledge and experiences from other people. That shared knowledge cn
together can be used to make organization more effective and efficient.
Knowledge Transfer: If an individual working in an organization, have some knowledge
and not shared by everyone than how it will convert in knowledge pool. So to gain benefits, it is
essential to share that knowledge from everyone within an organisation (Jain, Triandis and
Weick, 2010).
Cross-functional Co-operation: There are various teams in an organisation which
performs different functions. So, for effective functions and better outcomes, it is necessary to
co-operate with all teams. For instance, HR team and Finance team.
Amazon is having staff members and all of them have knowledge in their perspectives.
When they discuss and share that knowledge within other individuals of Amazon it will convert
into organizational knowledge. But, this can be blockage for Amazon when this information has
not been shared with others because knowledge always increases with sharing. Now, Amazon
has various functional teams in which maintaining co-operation is must because change is
always resisted by everyone in first time. So to manage resistance, co-operation is a must.
Because if teams are working in isolation then their employees will never follow co-operation.
Synchronisation between teams is must to maintain various tasks at one time because there are
lot of things to do for team leaders and to avoid overlapping, this is must to delegate everyone
their roles and responsibilities (Van Lancker, Wauters and Van Huylenbroeck, 2016).
Biggest threat to Amazon are their competitors which are also improving themselves to
survive. So, Amazon has to overlook on their competitor's strategies and policies to fight for first
position.
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Innovation Capability: Innovation capability can be defined as the capability to
transform ideas, knowledge and experiences into new trends of products and processes which in
turn is beneficial for company and stakeholders as well. It is possible only if main organisation
and their staff along with work to innovate their capabilities to stand strong in stiff competition.
Innovation is technique to bring new and profitable change in the strategies, processes or product
in a business. By innovation an organisation can have much profit and help to examine the
efficiency and capabilities of the business. To implement successful innovation approach it is
necessary for the organisation and leaders to plan for it. The innovation method is planned in
following steps:
Problem Recognition/Goal: Initial steps of innovation planning needs to set goal or to
recognize the problem of an organisation. This will help in proper planning and ways to resolve
the purpose as well as in determining efficiency and duration of innovation strategy. By this
organisation can also measure the actual and standard performance after the implementation of
innovation (Huizingh, 2011). Some areas to consider after setting of goal are:
 Participants
 Budget
 Resources
 Time duration
 Rewards
Idea Generation: Now when an organisation is ready with its goal it has to work on idea
generation phase. Any business should not limit their ideas till brainstorming, they can also go
for experimentation or idea campaign. However brainstorming is the best method when time is
limited or small team is involved for one specific purpose. This also enhance team work.
Designing and Measuring Concept: Here the organisation work on the selected idea or
method, and prepare its framework, thereby the they will make a report of it. In report they will
include their goal, its duration and desired results from it (Bernasconi, Harris and Moensted,
2013).
Pre-implementation: This is the experimental phase, where an organisation can take a
trial of the selected method to determine its efficiency. This will predict whether to implement
the strategy for long or not.
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Implementation: After determining the efficiency of innovation plan, company can
implement the plan for their planned duration. After implementation of strategy it is important to
take timely feedback of deviation from actual to standard performance of the organisation with
respect to purpose of innovation (Gassmann and Schweitzer, 2014).
To implement this process successfully, needs the following:
 Internal Coordination: The coordination between all the department is necessary to
implement any strategy successfully in an organisation. To get successful results it is
important to acknowledge all the departments of an organisation and build coordination
between them. To make successful implementation of this strategy Amazon can assure
the coordination amongst its all departments (Drucker, 2013).
 Communication: There should be strong communication of goals and strategies among
all to bring the desired results. Employees should also give their feedback regarding the
process. Leaders should always communicate with their followers to motivate and boost
them. The management at Amazon should have effective communication in their
organisation to negotiate with their employees to be productive and contribute in the
innovation strategy.
 Unity in goals of individuals as well as organisation goals: The goal of organisation
and employees should have some unity to bring better results and avoid conflicts. This
will also help in making clear roles and responsibilities. For this, Amazon should discuss
the end purpose of the innovation with its employees. This will also help in making the
team responsible and feeling of trust and confidence will raise in them (Den Hertog, Van
der Aa and De Jong, 2010).
 Strong financial Resources: To implement innovation it is necessary to have strong
financial resources, so that company can invest for better growth as well as do not suffer
much if fails. Amazon is the biggest online retail industry and have strong financial
resources to put forward for innovation and increasing more profit (Dodgson, 2018).
 Experimentation: Before implementation of strategies, it is always necessary to do
experiment so that the company would not suffer much losses. Before the final
implementation of strategy Amazon company should perform an experiment on small
level to know its efficiency.
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 Resources: To implement innovation strategy , it is important to gather all the necessary
resources required to perform the method and set specific time to complete the goals. A
few resources like time, training needs and manpower are required to perform innovation
strategy at Amazon to bring successful results.
By the above information it is obtained that leaders at Amazon can plan and implement
the innovation strategy in appropriate and successful manner by the coordination and
contribution of their employees and proper availability of resources (Antikainen, Mäkipää, and
Ahonen, 2010).
Innovation Capabilities of Amazon: Amazon is growing fast in establishing
innovations I their capabilities. These are:
 Continuous view towards evolve and improve: Amazon always take a view to
introduce new things and to stand true over them. They always take care upon their own
evolution and this is the fact that Amazon is fast and rapid in introducing new products.
Amazon has a strongest position in retail marketing industry and always take care to
maintain that position against competitors (Wang and Tsai, 2014).
 Separate form Competition: Amazon always provides the comfort level to their
customers in such a way so that they can't go anywhere else. This is a victory for
Amazon. They always start with smalls and ensure that either these small stuffs will go or
not. If yes, they pour some extra things in, to attract the customers.
 No fear of new Entries: Market is ever ready to allow new entrants in it and same is
happening. Amazon is largest online retailer in industry and there are so many
competitors against it. But, they never get scared of new entries in same market, instead
they focus on innovating their products and processes in such a way so that no one can
beat their position. Due to their continuous innovation in their product, service or
experience, channel and business model they have set a standard of its services which is
unbeatable. Their customers loyalty is increasing day by day due to their satisfactory
experience with amazon. To improve this loyalty amazon offers their customer great and
profitable deals as well as safe alternates for e-transactions.
 Priorities are customers: Amazon always put their customers always on first priority
which is good for themselves, at the end of day. They always tries to give their customers
a better experience (Dawson and Andriopoulos, 2014).
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Future Capabilities of Amazon: Amazon is highly capable to met customer's needs and
demands at present. But to maintain its position in this rapid growing competition it is necessary
for Amazon to innovate their present capabilities. However it not only innovate is products it
also bring changes in its customer service and experience as well as its business model. Amazon
is going to innovate its services in 2020 by launching labour-less marketing and purchases as
following:
 Amazon Go: Amazon is going to introduce a store in which no humans are required,
except customers. Amazon Go is kind of store in which customers can go and shop
products and no checkout is required for that. Customers can take their products and go
however amazon go is already started in 2018 at five different locations for
experimentation and market analysis, which will help in its successful launch or
implementation in 2020. This experiment and analyses will help amazon to serve
satisfactorily to its customers.
 Amazon Prime-air (Drones): Amazon Drones are new innovations of Amazon in order
to attract customers and make shopping easy for them. Drones themselves go and tell
qualities of products to customers. There is no human capital required in serving
customer's needs and wants. These drones are existing services in UK and have been
experimented to its fullest, although company have not announced these services globally
yet. Amazon is continuously trying its best to improve its drone services and launch it all
over the world till end of 2019 or 2020 (Bhat, 2010).
By the above discussion, this can be drawn that Amazon need to follow all these things to
build future innovation capabilities for them to survive in this stiff competition.
CONCLUSION
To conclude this report, it has been analyzed that innovations are indispensable and
important to make strong position in market among various competitors. This report contains
future innovation capabilities of Amazon in which initially it has been explained that what are
the Amazon innovation requirements and how they can be innovated to survive competition
which requires developing new skills and establishing them into products of Amazon to offer
into market. In between, report tells about two main objectives of Amazon; innovation and
growth and whole report is based on these 2 principles. Secondly, it explains about 2020 vision
of Amazon in which they are planning to innovate their products by 2020 because of growing
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competition and beyond of it too. Reason behind is that to maintain its present position. In
addition, report flashes out the future capabilities of Amazon for innovation in which 3 things are
there. By linking out these 3 contents, report is next considers blockages that are hurdles in
between way of Amazon. On the other hand, report contains a part of new innovations of
Amazon to again capture big market, for example, Amazon Drones and Amazon Go. To sum up,
this can be conclude that to build future capabilities, Amazon need to follow above guidelines.
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