Innovation and Technology Management Report: Amazon's Strategy

This report examines Amazon's innovation and technology management, focusing on its value proposition within the e-commerce industry. It explores the role of innovation, value proposition, and key innovations like Prime, grocery delivery, Kindle, and Fire TV. The report analyzes Amazon's business model, technology, and marketing innovations, as well as the technology adoption life cycle. The innovation matrix is used to understand the types of innovation Amazon employs. The report concludes that innovation is crucial for companies and is successful when a clear value proposition is created for customers. The report highlights Amazon's transformation and growth, placing it in the third horizon of growth, and emphasizes the importance of understanding customer needs and feedback to drive innovation.

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INNOVATION AND TECHNOLOGY MANAGEMENT
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4/18/2019

INNOVATION AND TECHNOLOGY MANAGEMENT 1
Executive summary
The objective of this report was to understand the innovation and role of value proposition in
innovation. Amazon is one of the leading e-commerce companies, which has been the first
mover in this industry and offering all the consumer goods and electronics to the customer to
their doorstep. Innovation is found to be successful when it has resulted in return on investment
that is the reason value proposition is considered relevant in innovation. The innovation by the
company must consider the high-perceived value to the clients and following increased sales.
Amazon is the world’s most innovative tech company in 2017. The major innovation of the
company that has created value for the customers and the company includes grocery delivery,
prime, kindle reader, amazon video, home automation, fire TV, and delivery service. Amazon
initiated the business with online books that have not turned into providing very possible goods
to the customer through transforming its business mode. Moreover, considering the horizon of
growth, it has been observed that Amazon lies under the third horizon and had transformed the
business that has resulted into growth in long term.

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Contents
Executive summary.........................................................................................................................1
The core business activity and the role of innovation in their value proposition............................3
Introduction......................................................................................................................................3
Role of value proposition.................................................................................................................3
Key Innovations at Amazon............................................................................................................4
The innovation matrix......................................................................................................................6
Business model, technology, and marketing innovation.................................................................7
The technology adoption life cycle..................................................................................................9
Conclusion.....................................................................................................................................12
Recommendation...........................................................................................................................12
Works Cited...................................................................................................................................14

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The core business activity and the role of innovation in their value
proposition
Introduction
Innovation management is a very wide aspect of various dimensions and layers. However
innovation itself is usually considered as a variant concept, theories and frameworks, and
multidisciplinary field of study and considers various models. The objective of this report is to
understand the innovation and role of value proposition in innovation through analysing an
organizational case that is of Amazon. The value proposition is initiated in the strategy for
innovation. There are various types of innovation depend on the type of company and industry in
which it is working (Ahlin, 2014).
Amazon is one of the leading e-commerce companies, which has been the first mover in this
industry and offering all the consumer goods and electronics to the customer to their doorstep.
The company initiated by an innovative idea and the company consider innovation as the key to
its success (aboutamazon., 2018). The innovation in the company and various innovation models
would be included in the report further.
Role of value proposition
Innovation is found to be successful when it has resulted in return on investment that is the
reason value proposition is considered relevant in innovation. The addition perceived value to the
new service of the product would increase the rate of return on investment. The value proposition
is responsible for the success of innovation implemented in the business. The innovation by the

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company must consider the high-perceived value to the clients and following increased sales.
This includes understanding target customers and their needs because the customer feedback is
key to innovation (Alves & Sousa, 2018). One of the major results of the innovation in the
business is new product development by the company, the value proposition includes creating
value for the customers and improving the customer loyalty, enhance higher margin, increase
stakeholder value, and greater returns are the results. There must be a balance between
manufacturability, cost of innovation, and customer perceived value (Aksoy, 2018).
Key Innovations at Amazon
Amazon is the world’s most innovative tech company in 2017. The major reason for which
Amazon has considered innovation is relevant to increase the market size by unlocking, by
adoption, and by funding. The productivity is increased through addressable users and tools used
and technology cost is reduced through deduction in price and reduce pay per use. The major
innovation of the company that has created value for the customers and the company includes:
 Prime – This is one of the special membership products, which let the customer to receive
their products within one day, or two with no additional cost. Moreover the innovation
include through the process the product leaves the warehouse on Boeing 767 with its logo
to reduce cost spend with fed ex or other delivery companies (amazon, Enhance your
Amazon experience with Prime, 2018)
 Grocery delivery – the company innovation includes the availability of grocery items
within a day or two with amazon pantry. This is promoting the technology and online
availability to a greater extent making customer’s busy life easier.

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 Amazon video – This innovation by the company makes it enter into a completely new
industry and competing with some of the major competitors in this industry like Netflix,
providing free for their prime members (aboutamazon, 2018).
 Kindle reader – This innovative product at the time of initiation of the company by
providing online reading books and the electronic book said to be kindle. This was a
completely new product to the market (Amazon, Books at amazon, 2018).
 Fire TV – This innovative product has made the connectivity from phone to television
possible. Through this product, customers can watch movies and operate mobile on
phone without spending a great amount on money to purchase Smart TV.
 Home automation - Home automation products like Alexa were another product range by
the company and result of product innovation of the company (amazon, Amazon Global
Store, 2018).
 Delivery service – Innovation through service is been also considered by the company, as
the delivery options for the company have increased. The company has provided a one-
day delivery option, two-day delivery option, and free standard delivery. Customers can
track their order on real time basis (Amazon, aboutamazon, 2018).
Customer focus strategy of the company has been responsible for creating a value proposition for
the customers through the innovation of new product development (Amazon, aboutamazon,
2018).

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The innovation matrix
Figure: (Source: (viima, 2019)
There are four dimensions are presented and understood through the innovation matrix.
1. Radically sustaining – This innovation dimension includes product improvement or
improvement in process in the current market that provides improved value for
consumers.
2. Radically disruptive - This innovation implemented new technology and develop a new
business model. As per this dimension the competitors are not clear (Aksoy, 2018)r.
3. Incrementally sustaining – This dimension includes incremental tactic considering
technology that had led to dramatic disruption (Camison & Fores, 2016).

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4. Incrementally disruptive – cumulative and small alterations in existing technology,
service, and product (Amabile & Rigolizzo, 2015)
Considering amazon case for example, has generally come in radically disruptive strategy while
introducing new technology and new business model or it has been considered radically
sustaining dimension when it comes to product improvement through innovation like delivery
process (aboutamazon, 2018).
Business model, technology, and marketing innovation
This will reflect the source of innovation as the innovation can fall into any of the three
categories
Figure: (Source: (viima, 2019)

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1. Business model innovation – This model includes a rethinking of the business and to
search for new revenue streams. This is done by searching for new methods to provide
value to customers (Dewald & Osiyevskyy, 2015). For example, Amazon initiated the
business with online books which have not turned into providing very possible goods to
the customer through transforming its business model (Amazon, Books at amazon, 2018).
2. Technology innovation – The great innovation needs the technology to be updated or the
use of new technology. This is not only requiring the large investment in technology but
in industries, that has technology as a major player (Coulson-Thomas, 2017). For
example, Amazon is one of the biggest tech savvy companies and has always considered
new technology for innovation, which is always found to be successful. The company did
technological innovation to create value to the customer by providing improved service to
the customers. The company to realize new market possibilities, accelerating the
innovation process of the company, can use new technology. Moreover, it can be done
for new concept testing, and generation of new ideas and developing them into
innovations (aboutamazon., 2018).
3. Marketing innovation – Marketing innovation is found to be as relevant as product or
technological innovation for business success factor. This includes providing a value
proposition to the customers that the competitors are unable to provide. For example in
the case of amazon, prime membership is not just a way to promote but also to create
value to the customer while providing free fast delivery (Dewald & Osiyevskyy, 2015).

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The technology adoption life cycle
The cycle of technology adoption was introduced by Geoffrey Moore that included the research
of diffusion of innovations and social theory among organizations and individual. Diffusion of
innovation is said to be the process through which innovation is implemented and communicated
through various channels among social system members. These channels are responsible for
transmitting information from interpersonal communication networks to mass media. According
to this theory, the major constraints that will influence the dispersion of new idea or innovation
are communication, time and social systems and are called as adopter categories. the categories
of adopters are
 Innovators – These individuals have higher risk tolerance and are attracted towards the
use of new technology. They are the initial people to try out.
 Early adopters – These people adopt the innovation but only if appreciative to potential
products and that may result in a competitive advantage.
 Early majority – Individuals who are adopting innovation but after a long time than early
adopters (Ding, 2018)
 Late majority – These are the individual who adopts to the innovation when it has been
proved to be successful or become necessary to adopt.
 Laggards – These are the last one to adopt the innovation (Bruns, 2013).

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Figure: The technology adoption life cycle (Source: (viima, 2019)
Considering this theory, it can be said that the Amazon is innovators as this was the first mover
in ecommerce industry.
The early market kind is usually supposing intuitive solutions and is frequently motivated by
prospect opportunities. The conventional market is further analytic and eager to tolerate lesser
risk, while the late majority is generally encouraged by real-life difficulties that are existing at
this time. Typically, individuals who drop into this group only want to chase things that are
tremendously likely to occur (aboutamazon, 2018).
According to McKinsey, three horizons of growth is a model for companies to structure their
ideas and findings a proper balance between long-term projects and short term in their portfolio.

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Figure: (Source: (viima, 2019)
Horizon one – Innovation considering core business
Horizon two – New opportunity development in emerging business
Horizon three – Development of new and transformational business (Bruns, 2013)
Considering Amazon, it has been considered the horizon three growth that is transformed the
business and has been seen the growth or result of that development now (Amazon,
aboutamazon, 2018).