Amazon has been the focus of several of my blogs and quotes. Why? Amazon is a business organization that is a leader to leverage technology so tightly into their business strategy. Maybe more than any other
business in the US history. So many successes, new business models and achievements.
In Fall 2013, while teaching an Introduction to Business course to first-year students, one team submitted their business plan to place RFID tags on every shelf item. The team defined their operational model would eliminate the check-out process for items purchased in a grocery store. While an interesting (notice I am not using the word innovative!) strategy, there were several challenges and unknowns with their model. During their presentation, I noted these challenges relating to their strategy.
- What was the labor and product cost to place RFID chips on every item?
- How could they identify the shopper? And receive payment?
- How could they identify a shopper to product(s) purchased? Basically the proximity issue while passing through some type of scanner.
The irony? Last December, Amazon announced the Amazon Go. Interesting concept. Innovative use of technology in a retail store environment. Their strategy would gain operational efficiency to:
- Eliminating labor costs for eliminating cashiers,
- Reducing equipment (POS terminals, cashier furniture) costs, and
- Reducing queuing lines for check-out.
There are always challenges with implementing any new technology integration initiative. Will it work when you turn it on? More importantly, how will it work when you “flick the switch”?
When approached by these same students … I asked: Will Amazon’s technology accurately …
- Identify the product selected by the consumer?
- Determine whether the customer has opted to purchase the product as opposed to just looking at the product?
- Identify (profile) the customer that is the shopper for the passive check-out?
These questions are important. Any variance between collecting an accurate data point and the actual data point is key. In Amazon’s case, the more significant the variance … in either direction … will create customer service issues and loss of credibility in their operation or loss of revenue/profit. Neither outcome is positive for Amazon.
So what happened? In a recent WSJ article, “An Amazon spokeswoman declined to comment.” So what does that mean? Speculation I guess. But what conclusions (or speculation) can be considered?
- Amazon is an innovative organization with highly talented technology experts.
- Amazon probably does not “give in” easily to setbacks or failure.
- It is reasonable that whatever issues have been encountered, attempts were considered and/or implemented to mitigate the obstacle.
- Any “fixes” either a) did not work or b) did not meet Amazon’s objectives or branding thresholds.
So what are the takeaways?
Even the most successful business organizations can fail. Amazon has revolutionized retail. At the same time, disrupted the retail “brick and mortar” sales channel model. But failure can happen. Even the best experts and strategy sometimes fails. Very often technology integration bring paralyzing fear to business organizations. As Jeff Boss says, “Failure is only where you decide to stop.”
Strategic planning and thinking. There is no replacement for old-fashioned strategic thinking. We all realize that the speed of business has moved from 10MPH to 200MPH in the last few years. In large part with technology advancements and adoption. However, cutting corners on solid, thoughtful strategy and implementation will probably engage the parking brake while trying to drive at high speeds (like that speed and driving metaphor?)
Technology planning and thinking. The most innovative and strategic initiative can be brought to its knees by cutting corners on technology planning. Like wine, implementing new and untested technology components before their time can achieve an organizational belly ache. It’s exciting to deploy new technology, but there is no antacid strong enough to reverse shaky technology.