How Amazon Wins By Using Different Individuals’s Work

Original ideas are in short supply. Anyone can fill a toolbox with great ideas and learn how to use the right ones at the right time. When I was a consulting partner at Arthur Andersen, I knew that someone else had created a methodology, tool, suggestion, or analysis that could get me going. I just needed to know how to find it.
As Jim Collins emphasized in his book Good To Great, the best strikes first. "The pattern of the second (or third or fourth) entrant outperforming the early pioneers is evident throughout the history of technological and economic change," Collins wrote in 2000, leading IBM, Boeing, American Express and Disneyland Proof of this on his theory.
Why? Because the first one to hit the market doesn't always do it right. The products that follow right behind usually get everything the pioneer did without the expensive mistakes. If you've ever climbed a hill through deep snow, you know that being number 2 is a lot easier than being the guy who picks the slope.
While Collins’s theory works at a macro-organizational level, it also applies in many ways to granular operations within an organization. Even Amazon can't automate much of its business. One of my favorite strategies to deal with this is using other people's work (OPW). In many cases, the best way to scale an unavoidable backlog of manual labor is to empower and motivate other people.
For work that is repeatable and on the verge of growing significantly or experiencing dramatic spikes, find ways to get other people to do it for you. By finding ways to get others to make important contributions to a core function while protecting your brand and customer experience, you are transforming the underlying technology and operating philosophy.
Other people's work and the mechanical Turk
Consider just two of the many tasks that must be performed when creating an e-commerce website with a virtually unlimited number of products: (1) evaluating the quality of product images and (2) writing clear and precise product descriptions. Both cannot be handled effectively by a computer. Instead of hiring a large army of people to do these small, but essential, and virtually endless tasks, Amazon gave that task to its customers and partners. A product image management tool was created to collect customer feedback, compare customer images, and report offensive or irrelevant content. It worked very well.
It didn't take long for Amazon to use OPW to manage other processes that couldn't be automated. Customer reviews that were controversial when introduced by Amazon are probably the best-known example of OPW. It enables thousands of Amazon customers to describe, rate, and categorize products for the benefit of millions of other users.
With the right approach, almost any company can find opportunities for OPW. Many of my current customers find that it can be an important step in transforming their business to have vendors, customers or business partners perform activities for which they have greater motivation and expertise, while drastically reducing costs.
Finally, Amazon's basic OPW concept was converted to a platform where others could use the name Amazon Mechanical Turk. It is an online marketplace that gives companies access to a scalable, flexible army of freelancers that they can hire for small manual tasks. Countless companies use this platform every day to benefit from a global employment base, and of course Amazon makes money every time they do so.
Companies like Uber and Airbnb have developed the OPW concept further today. They use not only the work of others, but also the assets of these people, namely their cars and their houses.
OPW and the third-party sales platform
When I came to Amazon with the mandate to create a third-party sales platform, eBay was the dominant third-party sales market. EBay's mentality was very laissez-fair. You simply connected buyers to sellers, taking little responsibility for the customer experience or trust between dealers and buyers. If you have searched for a specific camera model, you may get pages and pages with individual listings that do not help you understand the comparison of the items or sales offers. (Incidentally, eBay has changed and improved significantly in many of these areas, mainly due to the pressure on Amazon Marketplace to succeed.)
In contrast, we defined three main design principles that were important to us in building our third-party marketplace business:
- Present a single item to the customer with an easy-to-compare list of offers to sell that item. We have referred to this design principle as "article authority". Create a single definition of the item that allows multiple sellers, including Amazon, to make offers to sell the item. We wanted to create a marketplace where sellers compete for the order in a way that works for the customer.
- Allow customers to trust our third-party vendors as much as Amazon itself. We operationalized the concept of “seller trust” in a number of ways.
- Offer great seller tools, including multiple sales methods and extensive data, to help traders run their businesses on Amazon. Simple tools were needed for small sellers. Different types of integrated functions should be provided for more demanding wholesale sellers. Documentation, operational metrics, test environments and professional service partners should be developed to help sellers succeed while keeping the Amazon team small.
Obviously, this was an ambitious program that required highly complex integration between sellers and Amazon. It was clear to me that Amazon simply didn't have the human resources to manually control a platform like this on a large scale. We had to serve the third-party marketplace ourselves. We had to provide vendors with easy-to-use, very intuitive tools and a system that pushed sub-vendors out of the market to keep customer trust high.
We quickly realized that the only way to do this is to take a page from the OPW book. Fortunately, Jeff Bezos smiles about projects that should scale a company on a self-service platform.
Amazon continues to use OPW as the "first principle" or basic concept for building strategy. For example, Amazon Flex, where independent drivers collect packages for delivery at Amazon fulfillment centers, focuses on OPW. Amazon Flex is similar to Uber for package delivery. An independent person with a car signs up to deliver for Amazon. This driver arrives at an Amazon fulfillment center, receives assigned delivery orders and places the boxes in his car. Drivers use the Flex application to navigate and confirm delivery of packages to customers' front doors. This independent agent model gives Amazon another last mile delivery option for its retail business.
What skills do an OPW strategy need? Easily hiring contractors is one option, but typically doesn't offer the leverage, economic advantage, or scalability that technology offers to equip a flexible workforce that provides the right incentives to do the job. Don't forget that you are still responsible for quality and results. Among other things, your technology must create excellent measurement data and follow-up to ensure quality.
One of Bezos' most popular techniques to accomplish this is the enforcement feature – a set of guidelines, restrictions, or commitments that enforce a desirable outcome without having to manage all the details to accomplish that.
Questions to consider
1. Which manual activities in your company could benefit from an OPW strategy?
2. Could you create the right tools to create and manage small, well-defined jobs? Would this lead to improvements even if the work were done externally?
3. How do you create flexibility for the top managers in your company? Which digital strategy could help?
Contribution to the Branding Strategy Insider by: John Rossman. Excerpt from his book Think Like Amazon, 50 1/2 ideas to become a digital market leader (McGraw-Hill)
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