Learning from Mistakes

Jeff Bezos, the owner of mighty Amazon constantly features in one of the most successful entrepreneurs of modern time. The way he has steered Amazon through all these years, shows his dedication and skill to make things work against all odds. However, even he failed. A lot of articles have come up post this and many different perspectives have tried to solve this problem from a different angle. Jeff Gothelf and Josh Seiden’s book, Sense and Respond tries to look at such cases from a newer perspective:

‘Amazon’s 2014 Fire Phone disaster is a classic example and, oddly, one that comes from the very same company that developed and frequently uses many of the sense and respond techniques we’re discussing—a company we laud in chapter 1 for that reason.

Motivated by consumers’ increasing use of mobile devices, Amazon began the Fire Phone effort in 2010, just as the iPhone 4 was hitting the market. Mobile users were becoming a more important source of traffic to Amazon, and the company wanted more control of the mobile store than Apple would allow. Apple’s rules about what companies can and can’t do in iOS apps include strict rules about commerce, including one that stipulates that Apple gets a 30 percent share of each in- app sale. 2 (The reason you can’t buy a book on the iOS Kindle app is that Amazon doesn’t want to pay Apple 30 percent of each sale.) So Amazon created the Fire Phone initiative to solve a business problem: it wanted complete control over the store that its customers visited on their mobile devices.

But what would be the value to customers? They struggled to find it, in part because of a strict culture of secrecy around this product. Jeff Bezos, CEO of Amazon, had lots of ideas for cool features. But cool and valuable are not the same thing. Over time, Bezos exerted an increasingly heavier hand in the design and development of the Fire Phone and, according to published reports, ignored feedback from his team that questioned his approach. 3 There was no conversation with the market here, only Bezos talking. He insisted that the phone have a series of fl ashy features like Dynamic Perspective, a 3-D display that didn’t require special glasses and could be seen from all angles; but it delivered little consumer value. Bezos assumed that fl ashy hardware features would make the phone more desirable to consumers than an iPhone. Without a continuous two way conversation with his target audience to guide the development of these features, though, Bezos was making a huge guess.

He guessed wrong. Four years later, in July 2014, the Fire Phone went on sale in the United States. Within days it was clear that consumers were unimpressed— with the design, with the ecosystem, and with the gimmicky features Bezos had pushed for so hard. Priced at $199, the Fire Phone was intended to compete directly with Apple’s iPhone, but consumers didn’t see the value. Instead, they saw it for what it was—a way to easily get to Amazon’s store in a way that was better for Amazon but not significantly better for customers.

After a $170 million write- down of unsold inventory, the Fire Phone was available for 99 cents before finally being sunset in late 2015. The behind- the- scenes stories reveal the arrogance in the top down decision- making process that Bezos led. Although people on the team pushed back, they ended up deferring to the boss. After all, he’d been right many times before. Why wouldn’t he be right again this time?

It might have helped if Bezos had listened to the market. Had he approached some of these decisions as assumptions to be tested and questions to be answered, rather than hunches to be followed blindly, things might have been different.’

You can get your hands at the book here.

This is an excerpt from Jeff Gothelf and Josh Seiden’s Sense and Respond.

Credit: Abhishek Singh

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The Penguin India Blog

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