Introduction
The innovation management process is a combination of the management of innovation procedures. It is also related to the change management activities of the organization. Amazon is one of the leading organizations in terms of having innovation practices with them. There are Data-Driven and Consumer-Led innovations that Amazon uses to apply for better performance. Amazon has always appreciated the ways of using multiple innovations in industries. There are lots of Innovation activities that were followed by Amazon to get the desired results for them. The following report will analyze various innovation procedures and processes followed by Amazon. The company has changed the world by their innovation practices and the following report will have managed an explanation about it. The following report will also evaluate the innovation theory utilized by Amazon to have effective results for them.
Theoretical explanation
The innovation theories have become always been supportive for Amazon to get their desired outcomes. There are some innovation theories and frameworks utilized by Amazon for a better digital transformation of their organization. These theories have supported Amazon to get the results that are suitable for them and their organizational image in the marketplaces. The following theories are applied by Amazon in their innovation process in the organization.
Designing thinking theory
There were principles or beliefs of design thinking which were followed by Amazon in their digital transformation activities. Amazon is the most significant force of transformation in the E-commerce industry. There are 44% of sales which Amazon used to make with their online presence. There are leadership principles of design thinking theory that have been utilized by Amazon in their innovation activities. The visual complexity was also managed by Amazon to get a better determination of their digital transformation activities in their organization. The visual complexity is successful in some parts of their innovation process (Branstad and Solem, 2020). The design thinking activities of Amazon are relatable with the designing of the application which they are using to manage their e-commerce business. There are four key principles that Amazon uses to include in their design thinking innovation theory. Here are these principles:
It is the first principle which Amazon is using in its digital innovation process. The experiences of Amazon are very transparent with their consumers. There is a dynamic pricing model which Amazon is using. It is similar to Uber’s loathed surge pricing activities. Amazon speaks about innovation with the help of design thinking activities. The meaningful solutions which could be provided to the consumers can be recognized by the use of design thinking tools in Amazon. The beautiful strategic framework is associated with Amazon which is making people interested in the services which they are providing to their consumers (Thomas, et. al., 2021). There are three parts of design thinking which Amazon is using in their innovation activities. The company is using creativity and rationality at the time of making choices and tradeoffs by using design thinking activities.
Customer-led innovation theory
It is another innovation theory utilized by Amazon in its digital transformation process. Amazon has adopted customer-led innovation for the sustainable growth of its innovation. The strategic partnership with the consumers has been maintained by Amazon in its innovation practices. Amazon believes that in the process of innovation consumer plays a critical role. With the consumer-led innovation, Amazon use to have a strategic partnership with clients and consumers (Rikap, 2020). The goal of this theory is to enlarge the thinking process of the technical team of Amazon to grow its network of consumers and clients. Also, the consumer-led product design was maintained by Amazon to get the results in the favor of their consumers. Amazon uses to include innovation as per the requirements and needs of their consumers. This approach is becoming helpful for them to meet the consumer’s demand and requirements. The innovation which can fulfill the consumer’s requirements has been added by Amazon. The data-driven approaches were also utilized by Amazon in their innovation practices. Amazon not only pioneers new devices and models of business but it also pioneers with the new approaches for having the practices of innovation. Amazon can listen to its consumers and provide the actual products which they want to have (Thomas, et. al., 2021). The consumers of Amazon lead their brand with their valuable feedbacks and ratings for the products of Amazon. There are artificial engineers whom Amazon is having in their team and these are providing enough technical support to Amazon.
There is a risk-taking culture that has been followed by Amazon in their organization to accomplish better organizational goals. Artificial intelligence engineers are having the ability to include the technical elements which are helpful for their organization and their consumers. Amazon always wants to present the products and services as per the requirements and expectations of their consumers. The business of Amazon always tries to accomplish the faster growth of consumers’ expectations. The development of the new Vaccum towards the consumers has also been maintained by Amazon. In consumer-led innovation, consumers do not think about the brand they use to think about the industry and its image. Amazon is a well-known organization in terms of generating innovation in the e-commerce industry. The proper arrangements of the innovation were maintained by Amazon in their organizational activities (Watanabe, et. al., 2020). Amazon use to sell its supply chain directly to the retail consumers and use to buy loyalty with enlarged convenience. The prime membership is one of the important examples of Amazon’s innovation activities. Consumers have become able to get their favorite movies and TV shows on their smartphones. The entertainment activities of Amazon have become supportive for consumers and it is enlarging their loyalty towards the organization.
Theory Application
With Amazon on the verge of becoming the world’s first trillion-dollar corporation, more focus is being placed on the variables that may slow or halt its expansion. The company’s shares dropped 11% in the most recent quarter as a result of the slowdown. Despite this, the fact that Amazon has emerged as the new paradigm for innovation effectiveness should not be obscured by this decline (Garzón, et. al., 2020). They’re a fresh take on the innovation game. They’ve been moving so quickly for so long, implementing so many new products, processes, and business model innovations, that their playbook has suddenly become the benchmark by which every company must measure itself or get left behind.
Applying Design Thinking theory
Bezos, Amazon’s founder, and CEO has worked a how to devote the majority of his time to new ideas. Ideas are delegated to loyal lieutenants, and he oversees their execution. Jeff Bezos is always speculating about the future in the years to come. This quarter’s results are important to him because they will be baked in two years from now(Garzón, et. al., 2020). According to him, the most important part of his work is determining and refining the Innovation Roadmap that will get the organization from where it is now to where it wishes to be in the future, on time and schedule. Facilities, machinery, and employees are commonly cited as examples of an organization’s assets. Amazon also places high importance on the ideas that it acquires from its customers (Berry, 2019).
To Amazon CEO Jeff Bezos, new ideas are the engine for growth. According to him, it’s his job to establish the cultural alignment necessary to uphold the value and respect of new ideas at all levels and to move quickly toward their adoption. Bezos sees his duty as delivering this “opportunity attitude” to every employee, department, business unit, and an outpost of the company. Think long-term, focus on the consumer, and be open to new ideas are three adages that have persisted since the dawn of time(Berry, 2019). Even now, they’re still relevant. Behind the scenes, though, Bezos is rumored to be every bit the voracious hunter who coined “Your margin is my chance” as a competitive cliché.
In 2007, Amazon launched their Kindle e-reader, despite having no previous experience in the field of hardware. Everyone had warned against it. The journey was marred by several difficulties. A game-changer and confidence builder, Kindle was the only thing that worked. The corporation recognized that it could gain new abilities if it was ready to challenge its preconceptions after this phenomenally successful venture into the unknown (Enders, et. Al., 2020). When Amazon launched the Echo, it paved the way for the development of the smart speaker category. Alexa has more than 30,000 built-in skills from third-party developers, many of which are being updated often. The competition is racing to catch up.
Amazon has evolved from an online retailer into a movie studio, hardware firm, grocery store, or web services provider, as well as an idea factory, thanks to its willingness to go first, test, and yes, fail. The key to success is commercialization(Enders, et. Al., 2020). Other companies spend billions researching artificial intelligence and machine learning, but Amazon is interested in monetizing AI and applying it to every element of the company. They are on the search for AI solutions they can integrate into goods, utilize to improve services, and deploy in real sites. An idea or new capacity developed in-house may later be used to make money by the company’s clients.
Applying customer-led innovation theory
He made it clear from the start that Amazon would do more than just sell products; it’d also “assist customers in making buying decisions.” Because of their customer-centric approach, the company decided to let users evaluate books and subsequently all of its goods. The product’s page includes a space for consumers to leave feedback, and they may choose from a variety of ways to do so (Quach, et. al., 2020). Amazon’s goal of being “the world’s most customer-centric corporation” is supported by its unique culture and attitude. To support this “customer obsession,” all staff are encouraged to think outside the box and come up with new methods to make customers’ life simpler.
The company’s goal also influences its product development: rather than creating a product and then asking marketing to sell it, they begin with the client in mind and work backward. We believe that the consumer comes first, even if it means taking a risk to accomplish what is best for them(Quach, et. al., 2020). As an example, when we established our website, we made it possible for customers to provide feedback. This was revolutionary at the time since other shops would not allow it in case an unfavorable review of a vendor they worked with was published. In contrast, the Amazon approach is “customer-centric.”
With the help of Amazon, this approach may be implemented. Before the product has ever been produced, the firm considers how to get there, produces the press release, and distributes it with the business and external stakeholders under NDA all before the product has even been built (Kopalle, et. al., 2020). Whether or whether Amazon decides to pursue the initiative is based on input from its stakeholders, which gives the company the confidence to do so. “This backward strategy means that we are clear and articulate about what a product can achieve for consumers through a public-facing press release before we construct it. Our FAQ brochures include topics such as manufacturing costs and consumer benefits(Kopalle, et. al., 2020).
To avoid wasting time and money, Amazon upgrades its products in phases rather than waiting for perfection. Customers may give their feedback on a vast scale as a result of this iteration throughout time, which helps the company to launch new goods swiftly. Even though some goods fail, the general public has a lower recollection of such failures than they have of their achievements. Even while many Prime members are currently enjoying Amazon Fresh, very few people remember Amazon’s Fire smartphone from a few years ago (Hossain, et al., 2020).
The iterative invention has the added benefit of reducing ‘sunk costs,’ such as testing, by iterating over ideas. It is possible to lower the expense of product testing by allowing the end-users to give their feedback. As a result, the company can benefit from the comments without incurring any further costs. When things go wrong, it’s possible to come out on top. To make the aforementioned Fire smartphone function, Amazon had to invest a significant amount of money(Hossain, et al., 2020).
To save the hardware team from being completely buried, they were diverted and finally gave birth to the Echo. After a series of failures, Amazon’s now-defunct auction site proved to be a huge success story. “To take on eBay, we developed an auction site. It was taken down, but it allowed third parties to sell on our site, which eventually evolved to the Amazon Seller Marketplace. Because of this, prices are kept low and the market thrives (Pallant, et. al., 2020). It was our failure that led to the growth of the seller business, which is today more profitable than our own Amazon items. It’s never too late to learn from mistakes and failures.
Future Development
As Amazon’s expenditures in resolving the challenge of last-mile delivery have demonstrated, I believe we will see Amazon double down on their commitment and ultimately sell extra fulfillment capacity to other retailers and companies who require a dependable alternative to the main carriers. In the beginning, Amazon developed AWS to address a bottleneck within the company, but when the infrastructure was established, the company was able to sell more excess capacity to third parties, such as private businesses and the government (Athayde, et. al., 2019). It’s no different from how Amazon created and now sells capacity for other companies’ logistics networks.
If you wish to ship your FBA (Fulfilment by Amazon) product to non-Amazon consumers, you can use Amazon’s “Multi-Channel Fulfilment.” Amazon has also experimented with delivery programs for third-party shippers and even implemented fit-outs of Amazon solutions in third-party facilities. However, as the infrastructure matures and expands, Amazon will be able to make much greater inroads in this domain(Athayde, et. al., 2019). Consider Amazon as a 3PL for direct-to-consumer companies, a shipping service that anybody can use to send products, and a distributor of warehouse management solutions.
As Amazon’s delivery capabilities improve, I expect changes to the Seller Fulfilled Prime program as well. Increasing limits were imposed on this initiative, which was already difficult to implement, in 2022(Morello, et. al., 2018). If Amazon is on its way to becoming the most dependable shipping service, this promotion may have to be discontinued. SFP users may be forced to utilize just Amazon shipping, in which case they will operate like Amazon’s own mini-fulfillment centers. To further utilize its different AI-driven try-on technologies, Amazon has the chance to develop virtual beauty counters, fashion dressing rooms, and virtual furniture layouts (Morello, et. al., 2018). Investing in Amazon’s immersive, real-time initiatives is an investment in the future of retailing. Up to the end of 2022, we may expect to witness a significant increase in the number of ‘try before you buy’ opportunities for a wide range of products.
This year’s anti-trust probes targeting Amazon’s private label businesses received a lot of attention. Amazon merchants and vendors are concerned that their items are being ripped off directly or that Amazon is exploiting sales data and supply chain data to produce competitor products. For Amazon to be publicly embarrassed for this behavior, when these private label products represent only a small proportion of the categories in which they offer, must be embarrassing to the company (Rizvi, et. al., 2018). Aside from that, I’m not convinced that selling advertising to competing businesses would be a more viable business model for these items.
It is possible, though, that Amazon will suffer more from its growing private label empire than it would benefit from unfavourable publicity and even antitrust action. I predict that Amazon will abandon this tactic in 2021 in favour of alternative approaches to client retention (Rizvi, et. al., 2018). These holding firms are buying up small businesses that have had some success on Amazon and then using their resources to increase advertising and sales volume. This business strategy has its critics, but the reality of the matter is that it raises the level of market savviness overall. It is expected that Amazon’s total competitiveness will rise in 2022 as more Chinese manufacturers offer their products directly on the site (Polacco, and Backes, 2018).
For Amazon to truly take off, it has to be able to seamlessly integrate its multiple shopping platforms. If you try to shop on Amazon.com or Amazon Fresh or Amazon Prime Now, the customer experience is disturbed. It’s my prediction that both platforms will be combined shortly, around 2021, to remove the present uncertainty that customers have when attempting to put together a shopping basket(Polacco, and Backes, 2018).. Brands should also be included in the consolidation. Amazon Fresh items currently have restrictions on marketing features. I expect to see additional demand-generation tools as Amazon expands its supermarket fulfillment capabilities. Amazon Fresh is already available in the United States and the United Kingdom, and I expect it to come to Canada shortly, where Insta-cart has recently begun working with several grocery store chains to expand its food delivery services (Metcalf, et. al., 2020).
Conclusion
The firm is typically effective in producing novel goods and services to boost consumer happiness, but it is still far behind its competitors in terms of assuring employee satisfaction. To achieve success, it must shift its focus from offering new products and services to boost customer happiness to its management challenges to bridge the current gaps in its plans and increase competitiveness. In the future, it must move from its traditional management practices to innovative management, which will make the recommended innovation a well-organized, ongoing practice. Online customer service experience is examined more holistically, taking into account both browsing and goal-oriented behaviours, and exploring the relative importance of the individual dimensions concerning the stages of the customer experience, namely before, during, and after purchase. The research deepens and extends current online experience research and the existing framework, and it broadens our understanding of how consumers perceive their OCSE and how it is influenced by the consumer.
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