Innovation Analysis of Amazon: A Strategic Report (MGMGT)

This report provides an in-depth analysis of Amazon's innovation strategy, focusing on its application of design thinking within its organizational environment. The report examines Amazon's innovation trends, particularly its emphasis on enhancing customer experience through product innovation, business model innovation, and improved logistics. It explores the strategic alignment of these innovations, highlighting how they contribute to Amazon's cost leadership and differentiation strategies. The analysis includes a SWOT assessment of the impact of innovation trends, a business model canvas, and recommendations for future strategies, such as the importance of evaluation, control, and employee engagement. The report emphasizes the creation of value for stakeholders through technological advancements and improved operational efficiency, ultimately aiming to provide a comprehensive understanding of Amazon's approach to innovation and its strategic implications.

Running Head: MGMGT THINK BIG 0
[Type the company name]
MGMGT THINK BIG
student name
5/1/2019

MGMGT THINK BIG 1
Executive summary
For innovation analysis, the selected organization would be Amazon, which is one of the
largest online retailing companies. Design thinking is a major aspect of innovation. It is
important to think out of the box for the companies today to be successful in rapidly changing
environment and industries. The innovation trend of Amazon is design thinking trend or
approach. This is majorly depending on the strategic vision of the company. The company’s
major focus for innovation is to enhance the customer experience through better price offer, user-
friendly website and customer relationship management.
Amazon innovative strategy has focused on product innovation and business model
innovation. Affected the customer experience and reaching the customer quickly with a reduced
delivery time that is creating value for the customer. In addition, reduced leading time would
increase the profit margin for the company that will be creating value for the shareholders, and
investors of the company. Recommendations for Amazon included quality management,
evaluation and control, and employee engagement and retention.

MGMGT THINK BIG 2
Table of Contents
Executive summary.........................................................................................................................1
1. Introduction..................................................................................................................................3
2. Innovation concept and relationships..........................................................................................4
2.1 Amazon organizational environment.........................................................................................4
2.2 Amazon Innovation trend..........................................................................................................4
2.3 Amazon Innovation strategy......................................................................................................5
2.4 Amazon Innovation capability...................................................................................................5
2.5 Innovation Value Creation.........................................................................................................6
3. Amazon innovation and strategic alignment and its relevance...................................................6
4. Impact of Innovation Trends.......................................................................................................7
5. Business model canvas..............................................................................................................10
6. Recommendations for Amazon................................................................................................10
7. Conclusion.................................................................................................................................12

MGMGT THINK BIG 3
1. Introduction
Design thinking is the major aspect of innovation. It is important to think out of the box
for the companies today to be successful in rapidly changing environment and industries. Design
thinking is an iterative process which is non-linear that will be used to understand consumers,
challenge one’s perspective or assumption, identifying and redefining issues and generation of
appropriate solutions. For innovation analysis, the selected organization would be Amazon,
which is one of the largest online retailing companies (Liedtka, Why Design Thinking works: It
addresses the biases and behaviors that hamper innovation, 2018). The company had initiated the
business concept with an innovative idea of an online bookstore. The company major focus is to
consider customer requirements to establish the idea instead of first framing the idea and strategy
and offer to the customer. The company still prefer to understand the needs of the customer and
generate the innovative idea to offer afterward, this reflects the design thinking approach of
Amazon (Amazon, 2018).

MGMGT THINK BIG 4
2. Innovation concept and relationships
2.1 Amazon organizational environment
The organizational environment majorly depends on the culture of the organization.
Through various researches it can be said that the innovation culture is being applied in at
Amazon (forbes, 2019). Moreover, the risk-taking approach is considered, as it has been
identified that the employees are asked to take higher risk in order to improve the performance
and hard work is promoted in the organization (Procter, 2014).
An environment consists of various forces and factors that influence the company’s
performance. The forces can either be external forces that are influencing business from outside
the business like political factors, legal factors or the forces can be internal that exist inside the
company; for instance, organizational polities, structure, and culture (Amazon, 2018).
2.2 Amazon Innovation trend
The innovation trend of Amazon is design thinking trend or approach. This majorly
depends on the strategic vision of the company. For amazon the vision of the company is to
provide a good quality product at minimum prices that will satisfy the customer needs. This
reflects identifying the needs of the customer and think out of the box to fulfil those needs. The
company’s major focus for innovation is to enhance the customer experience through better price
offer, user-friendly website and customer relationship management (Liedtka & Ogilivie,
Designing for growth: a design thinking toolkit for managers, 2011).

MGMGT THINK BIG 5
2.3 Amazon Innovation strategy
The Innovation strategy of the amazon, that the company adopts would be technological
innovation strategy. This strategy includes the use of high tech process to gain competitive
advantage, reduce the cost of the products, and increase the customer experience. Another
innovation strategy would include inventory and logistics management, reaching out to the
customer on time is the major objective of amazon, for which the company must manage the
stock of the product so that the customers are not lost due to unavailability of the product in a
store or due to late delivery of products. For instance in inventory and logistics innovation, the
delivery system included the tracking system, where the customer can check and updated
regarding their package real time position in the process (Procter, 2014).
Digital innovation strategy is the major aspect of the company. The company is reaching
to the customer through online mode, which makes the digital innovation more relevant for the
company.
2.4 Amazon Innovation capability
The competencies of the company to innovate the process, product or business model are
the capability of an organization in innovation. Considering Amazon, the company is found to be
capable of innovation, which can be said through past innovative product innovation. The
company was the first mover in e-commerce business and has been able to compete for the
retailing and e-commerce industry with innovative capabilities (blog.aboutamazon, 2019).
The company major products and service that can reflect the company’s innovative
capability include Kindle, amazon entertainment products like amazon prime videos amazon
prime music, amazon echo, amazon fire TV stick and many more. Moreover, the company’s

MGMGT THINK BIG 6
recent research and the tested product was drone delivery, but delivering the product through
drones is not very easy. There are various issues like legal issues in nations regarding this
technology implementation (amazon, Amazon Global Store, 2018).
2.5 Innovation Value Creation
Creating value for the key stakeholders through innovation is the key aspect for the
company. For instance, technological innovation would affect the customer experience and
reaching the customer quickly with a reduced delivery time that is creating value for the
customer. Moreover, the company can reduce the cost of the products through better
technological use and reduced leading time would increase the profit margin for the company
that will be creating value for the shareholders, and investors of the company (Weisberg, 2006).
3. Amazon innovation and strategic alignment and its relevance
The innovation and strategic alignment is the most crucial aspect, as the innovation can
have a negative result if not aligned with the company’s strategy or objective. For instance, the
company’s strategy is cost leadership and the company innovate in store design or website
design then this will be not aligned to the strategy of the company and even cause an increase in
cost to the company that will be contradictory to the company’s strategy.
Considering amazon innovative strategy, the company has focused over product
innovation and business model innovation. Amazon major strategy is differentiation strategy and
the company major objective is to satisfy the customers need through innovation. This makes the
innovative strategies of the company to be aligned with the strategy of the company. For
example, the technological innovation strategy of the company includes updating the technology

MGMGT THINK BIG 7
and use of better technology. This is to enhance the customer convenience when it comes to
purchasing products online that will be aligned to the primary objective of the company to satisfy
customer needs (Saebi & Foss, 2015).
For example, the customer use to hesitate to purchase from online due to availability of
the product after many days, which problem was identified by the company and with
technological and logistics innovation able to reach out to the customer as quick as possible. This
has also able the company to gain a competitive advantage in the industry over its major online
competitors like eBay, or Flipkart (aboutamazon, sustainability/packaging, 2019).
Another aspect of innovation result of technology is a payment system, which is the
company has introduced to amazon pay with the help of technological innovation, which has
helped the customer to pay through the payment system of Company itself. This has created
value for the customer in the way that it has made the process of return of goods convenient.
Earlier, the customers return to use to take around five business days to have amount back in a
bank account. With the use of amazon pay, the customer can have the immediate amount
credited in their amazon pay account and can use anywhere or at amazon for further purchases
(amazon, Enhance your Amazon experience with Prime, 2018).
4. Impact of Innovation Trends
Impact of innovation trends on amazon can be assessed through SWOT analysis tools,
where the strength weakness, opportunities, and threats of the company can be identified that
was caused due to innovation strategy of the company.

MGMGT THINK BIG 8
Strengths Weakness
 First mover advantage
 Inventory management
 Customer satisfaction
 Enhanced logistic management
 Imitable innovation
 The physical presence of the company
Opportunities Threats
 New product development
 Service enhancement
 Increase in cybercrime
 Increasing Cost of technology
4.1 Strengths
 First mover advantage – The Company has gained the first mover advantage that has led
the company to gain customer trust and customer loyalty.
 Inventory management- The inventory management could help the company to keep the
cost to the company low. Moreover, the company management of inventory is strong, due
to which the company is able to reach to the customer with products on time.
 Customer satisfaction – The customer are seems to be satisfied through the company’s
products and services as the company is customer oriented and serving what is required.
 Enhanced logistic management – the logistics management of the company and
distributors associated with the company has led to reaching out to the customer with
minimum possible time and with ease of return or exchange (aboutamazon,
sustainability/packaging, 2019).
4.2 Weakness

MGMGT THINK BIG 9
 Imitable innovation – The innovative idea can be imitable that is the competitors can
copy the idea. For example, the company was the first mover but now most of the
company are conducting online business and have imitated the business idea of amazon.
 The physical presence of company – The company is not physically present that is the
company is not conducting business traditionally, which is one of the major weakness of
the company as customers are not able to purchase goods in immediate need.
4.3 Opportunities
 New product development – The opportunity that the company has due to innovation
would be producing a new product. The introduction of product category would be due to
the innovation strategy of the company. For instance, the company initiated grocery
product delivery within a day.
 Service enhancement – The Company has the opportunity to enhance the services for the
customers through innovative strategy. The innovative ideas can be generated to increase
customer satisfaction by enhancing customer service (aboutamazon, Innovation, 2018).
4.4 Threats
 Increase in cybercrime – amazon Pay option is the innovative action by the company, but
this may be a threat to the company as the cyber crime has been increasing since years,
which can affect the company’s privacy law.
 Increasing Cost of technology – The technology cost can increase in the future, which is
one of the threat to the company in case of the technological innovation strategy of the
company (Cannon & Edmondson, 2005).

MGMGT THINK BIG 10
5. Business model canvas
Figure 1: (Source: (Osterwalder & Pigneur)
6. Recommendations for Amazon
 Evaluation and control – The technology to be kept updated, it is essential for the
company to evaluate the innovation implemented. It could be possible for the company
that the innovation implemented is either not aligned to the strategy of the company or
failed in the market. Through regular evaluation and monitoring, the result of innovation
can be checked if it is working as per the standards or plan (Tidd & Bessant, 2013).
 Quality management – another recommended strategy would include paying attention to
the quality of products as the major objective of the company is to customer satisfaction.
The company can implement the innovative process for quality management technique to
ensure that the customers are having the best quality product (Anitha, 2019).

MGMGT THINK BIG 11
 Employee engagement and retention – The company major strategy is to engage
customers, but the company can have an innovative idea from other sources as well as
employees. The company must engage employees in idea generation. Moreover, lower
level management are directly in contact with a customer and can closely understand the
needs and expectations of the customer and generate an idea for new product
development of innovation in form of service, or process (Pyka, 2017).

MGMGT THINK BIG 12
7. Conclusion
From the report, it can be concluded that Design thinking is an iterative process which is
non-linear that will be used the understand consumers, challenge one’s perspective or
assumption, identifying and redefining issues and generation of appropriate solutions. The
innovation culture is being applied in at Amazon and the design thinking approach is considered.
The Innovation strategy of the amazon, which the company adopts would be technological
innovation strategy. This strategy includes the use of high tech process to gain competitive
advantage, reduce the cost of the products, and increase the customer experience.
The technological innovation would affect the customer experience and reaching the
customer quickly with a reduced delivery time that is creating value for the customer.

MGMGT THINK BIG 13
8. References
aboutamazon. (2018). Innovation. Retrieved from https://www.aboutamazon.com/innovation
aboutamazon. (2019). sustainability/packaging. Retrieved from
https://www.aboutamazon.com/sustainability/packaging
Amazon. (2018). aboutamazon. Retrieved from https://www.aboutamazon.in/?
utm_source=gateway&utm_medium=footer
amazon. (2018). Amazon Global Store. Retrieved from
https://www.amazon.in/gp/help/customer/display.html/ref=hp_left_v4_sib?
ie=UTF8&nodeId=202043730
amazon. (2018). Enhance your Amazon experience with Prime. Retrieved from
https://www.amazon.com/amazonprime?_encoding=UTF8&%2AVersion%2A=1&
%2Aentries%2A=0
Anitha, J. (2019). Role of Organisational Culture and Employee Commitment in Employee
Retention. ASBM Journal of Management, 9(1).
blog.aboutamazon. (2019). working-at-amazon/the-big-picture. Retrieved from
https://blog.aboutamazon.com/working-at-amazon/the-big-picture
Cannon, M., & Edmondson, A. (2005). Failing to Learn and Learning to Fail (Intelligently):
How Great Organizations Put Failure to Work to Innovate and Improve. Long Range
Planning, 20(2), 247-61.
forbes. (2019). what-is-the-internal-culture-like-at-amazon. Retrieved from forbes:
https://www.forbes.com/sites/quora/2017/10/11/what-is-the-internal-culture-like-at-
amazon/#478109814a50
Liedtka, J. (2018). Why Design Thinking works: It addresses the biases and behaviors that
hamper innovation. Harvard Business Review, 96(5), 72-79.
Liedtka, J., & Ogilivie, T. (2011). Designing for growth: a design thinking toolkit for managers.
New York: Colombia Business School Publishing.
Osterwalder, A., & Pigneur, Y. (n.d.). Business Model Generation. New Jersey: Hoboken.
Procter, T. (2014). Creative Problem Solving for Managers: Developing skills for decision
making and innovation (4th ed.). Abingdon: Routledge .
Pyka, A. (2017). Innovation, structural change and demand evolution: does demand saturate? .
Journal of Evolutionary Economics, 337.

MGMGT THINK BIG 14
Saebi, T., & Foss, N. (2015). Business models for open innovation: Matching heterogeneous
open innovation strategies with business model dimensions. European Management
Journal, 201.
Tidd, J., & Bessant, J. (2013). Managing Innovation: integrating technological, market and
organisational change (5th ed.). chichester: Wiley.
Weisberg, R. (2006). Creativity: understanding innovation in problem solving, science, intention
and the arts. Jhon Wiley & Son: NJ, 104-340.