By Nuno M. Brilha (Lisbon, Portugal)
As a trillion-dollar company that makes the news daily, what has Amazon got to do with Airports? Besides running Amazon Air with 70 cargo aircraft operating out of 20 airports in the United States, and building a $1.5B hub in Cincinnati/Northern Kentucky International Airportin September 2018, and dabbing in airport retail space with Amazon Lockers what can airports learn from one of the most valuable companies in the world?
In 2018, Jeff Bezos shared valuable knowledge about Amazon on Bloomberg’s David Rubenstein Show which has become a case-study on my Strategic Airport Management course since then. The exercise consistently yields 15 to 20 pieces of strategic insight that can be valuable for future airport managers.
By now everyone knows about Jeff Bezos’ DAY 1 letter to shareholders, and everyone has heard that Amazon’s success was has been built on 4 pillars (CX obsession + Managerial Agility + Fresh Ideas + Constant Improvement), but straight from the source these are 7 curated excerpts that consistently make the insight list.
“all of my best decision – in business and in life – have been made with heart, intuition and guts, not analysis”
No, it’s not forget data driven decisions! It’s on top of that, by using one’s own supercomputer, filled with tacit knowledge collated from trillions of data points gathered during life/learning/business experience.
“the #1 thing that makes Amazon successful, by far, it’s the obsessive compulsive customer focus, as opposed to obsessive competitor focus”
No, it’s not forget strategy, forget key strategic groups or even pretend to be the nice-guy in the market. It’s actually deeply understanding strategy at its core. Like Richard Normann and Rafael Ramirez have brilliantly put: “strategy is the art of creating value. it’s the way a company defines its business and links together the only two resources that really matter in today’s economy: knowledge and relationships, or an organization´s competencies and customers”.
“team inventing is my favorite thing. I get to live 2 to 3 years in the future, and all of my senior executives works and live in the future. None of the people who report to me should be focused on the current quarter”
No, it’s not daily sales are unimportant, and quarterly results are just for the non-chosen ones. This is academically called organisational ambidexterity where one balances business model exploration and exploitation. Living in the future simple means “this current quarter was baked 2 or 3 years ago. I am currently working on the quarter you will see in 2020 or 2021″.
“I use curiosity to solve problems. (in the face of a bad customer experience) I ask the teams to do a case-study and find our real root causes, and then real root fixes. This process is a gigantic part of what we do”
It’s called double-loop learning! If an organization is a constant learning/feedback loop, when as error is detected it is corrected in ways that involve the modification of an organization’s underlying norms, policies and objectives. Don’t fix things for one customer, use the experience to fix it for every customer and actually evolve one’s learning organization.
“we built AWS and then a business miracle happened. We faced no like-minded competition for 7 years. This never happens. You usually get 1 to 2 years”
Remember working in the future and currently baking a quarter 2-3 years ahead? Well, Amazon Web Services (AWS) completely reinvented the ways companies buy computation and no one took it seriously at the time. Fighting back against this underestimation is now a burning issue for Microsoft or Google.
“… they need to understand the value of big companies bring. The reason is simple, there are some things that only big companies can do. No one in their garage is gonna build an all carbon fiber, fuel efficient Boeing 787”
Yes to startups, entrepreneurship and open innovation (OI). But actually nothing really beats the skills and resources of ambidextrous large companies! Amazon’s success is built on it and most large companies still don’t understand it. The success trap is called a trap for a reason.
“Amazon started with $1 million in capital because I got to ride on the back of pre-existing transportation, telecommunications and credit card networks. The heavy lifting was already in place”
The infrastructure world is not dead, but infrastructure become commodities on top of which, additional value-added services are built. There is nothing wrong with being an infrastructure, but be ready to be potentially out-monetized by agile OTT-like players. Just ask telcos about their over-the-top (OTT) challenges.
Going back to the original title one may ask what has this got to do with airports? The feedback from the exercise is clear, including the airport-specific comments below.
- Are airports data driven? Well, current data is already proving that digital is a key part of the new business model. Airports just need heart, intuition and guts to embrace it and make the most of it.
- Are airports customer obsessive? Not sure, but airports are definitely benchmark/competitor focused. Should airports go beyond benchmark-management and invest on airport competencies and customers?
- Airports work and live 2-3 years in the future? The 30-year master-plan definitely lives in the future and that gives a strange sense of security. Keep the 30-year master-plan but start living 2-3 years in the future and bake for competencies and customers.
- Are airports double-loop learning organizations or do know problems keep coming up over time? Airports are the visible leader of an ecosystem, and a bad customer experience will always impact their image, like it or not. Airports are actually platform leaders so own the leadership role because no one else will do it for you.
- Seven years without competition? Think again. The airport’s strategic group is not confined to other airports. The industry is being disrupted and some of them disruptors are not traditional industry players.
- Are airports big companies? They can be bigger and smaller than others but they are definitely large complex machines. Remember ambidexterity and the success trap. The success trap is the worst enemy of ambidexterity.
- Are airports infrastructures? Yes they are but just like Amazon, they can be infrastructure and OTT players at the same time – it’s called an airport platform.
So what can airports learn from one of the most valuable companies in the world?