What’s Not Going to Change In Ten Years?

Posted by Jeff Carter
on December 2nd, 2012

Phil Pearlman turned me on to this video of Jeff Bezos. There is so much in this it’s impossible to talk about it in one blog post. Putting a great use of social media to promote your business aside, let’s think about the core concept driving Amazon ($AMZN) and any other great business.

Image representing Jeff Bezos as depicted in C...

Image via CrunchBase

Bezos articulates it in the first few minutes of the interview, “We only win when our customers win.”. He also says, “If we can arrange things in such a way our interests are aligned with our customers in the long term it will work out for customers, and it will work out for Amazon.”. The first recognition that every business person must make is that all demand curves slope down.

Then Amazon’s strategy is a combination of Coase and Game Theory.

That combintation has been a sustainable business strategy since the beginning of time. Sustainability is hot and always on the mind of businesspeople. Fred Wilson wrote a compelling blog post about sustainability. Marshall Field ($M) used to say, “Give the lady what she wants.” Nordstrom‘s ($JWM) has a maniacal focus on their customer. Every successful business asks, “How do we stay in business forever?”

It’s easy to say these things, but much harder to ingrain in company culture.

A lot of firms say they are intensely customer focused. But instead of actually aligning with the customer they use that focus as a hammer. It’s possible to bully a market for a while, but eventually people get sick of a bully. Even if you have a quasi-monopoly, customers will try to figure out a way around you if they think their interests aren’t aligned with yours. Both Coase and Game Theory say that to maximize efficiency and outcomes, you need to do as well as you can do, while your counterpart needs to do as well as they can do.

Timing is critical. What are your customers worried about when it comes to timing? Being a business and thinking long term changes the frame in which you view the world. So often, we look to the next quarter or next week. Shorter term thinking can skew the business model. In your own business, examine how long you are thinking. Many businesses say they are thinking long term, but unless they put the processes and operations into it, they are only paying lip service to that idea. Conversely, in many cases because of the type of business you are in, you have to think short term because that’s what your target customer wants. Only you can decide on timing, and sometimes it becomes the make or break factor in your business.

So what will never change about business? Servicing customers. No one can stay in business without them. It’s a Captain Obvious point-but missed by many because they don’t internalize it correctly. So often, engineers become enthralled with the technology in their company. They forget they have to sell it. Marketers find the right target market, but then discount the operational aspects necessary to efficiently service that market. The buzz word today is “go to market strategy”, but does a business really understand what that means and how that affects each and every aspect of how they set up their business?

Phil is right. How does this only have 1500 views on YouTube? Perhaps because it’s a blatant tool to sell Amazon web services and cynics discount the information in it. But, there is a lot here. Think hard about how you are doing business today and engaging with your customers. If you listen closely, you can learn a lot.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.