Professor Galloway on why Amazon keeps winning – they can do whatever they want, and they know others cannot.
By pairing a grand vision for the future with a shareholder base accustomed to waiting for the profits to roll in, they’ve changed the way a generation of tech CEOs think about profitability vs growth:
What caused this? Simple: firms mimic success, and the most successful firm in the world is Amazon. Amazon’s core competence is not operations, the cloud, or even technology, but storytelling. Jeff Bezos’ ability to paint an extraordinary vision (“Earth’s Biggest Store”) and register steady progress against that vision is rewarded with the cheapest capital in the history of business. And…
Cheap. Capital. Is. Awesome.
Amazon can try 10 things for every one thing peers can. When I sit in board meetings, directors usually ask management to come up with ideas that provide advantage, relative to required investment — we want cool ideas, that don’t cost too much. I’ve never been in an Amazon board meeting, but I believe management is charged with coming up with cool ideas that are ridiculously expensive, as others can’t follow. The majority of (actual) wars have not been won with strategy, bravery, training, or superior equipment, but brute force. At the end of WWll, the Allies had 38 gallons of gasoline for every one the Germans did. Amazon is the retailer with 38 gallons.
The ramifications – and potential downside – at Scott’s blog.