How Amazon drives innovation (and should inspire the travel industry)

Amazon is often held up in travel circles as what to aim for when it comes to knowing customers and inspiring them to buy.

Many an airline and tour operator aspires to become the “Amazon of travel” (hello, Ryanair) establishing the sort of marketplace the online retailer is famous for.

But how does Amazon manage to push into new areas but still drive innovation as it grows?

Amazon Web Services head of innovation, David de Santiago, provided some insight into the online giant’s thinking at this week’s SITA Summit in Brussels.

To set the scene, he gave a pitch on the how the world has changed, the importance of the cloud and how disruptors are using it.

“The world has changed dramatically. The most difficult challenge I have when I talk to customers is how you cope with change, how you cope with brutal change.

“Nowadays the world is dominated by digital wizards. When you think about what was competition to you just 10 years ago, you could clearly identify who your competitors were. I can guarantee you that in the next five years the competitors you will have are competitors that still don’t exist.

“It will be a bunch of kids out of a flat in San Francisco that will be able to go global and go viral, within minutes and all this thanks to the cloud.”

The challenge for existing players, he says, is moving from their established world of “strict, defined, rigid process” to the world of “disruptors who are using unstable business processes which enable them to react quickly and shorten the value chain”.

His advice is that travel companies need to behave and think like software companies – pointing to the Boeing Dreamliner, which runs on seven million lines of code or the new Ford GT on ten million lines of its own.

In short, that means digital at the heart and the ability to innovate.

“The Amazon strategy is to test as many ideas as it can. How companies are being valued today, more than assets, more than capital, their value is being based on their ability to innovate.”

De Santiago adds that the idea of creating products without asking customers is gone.

“Think about disruptors, they create minimum products and then they iterate and create roadmap based on feedback they are getting from customers.”

Inside view

He stresses that Amazon Web Services is “the backbone of how we innovate” and was created to be the infrastructure to cope with the growth of the company.

So here are a few processes that Amazon works through to ensure it’s agile, customer focused and addressing the right issues:

  • The working backwards process. De Santiago says every employee who has an idea “can and should create a press release” that is structured with a title, the value of the idea, benefits for the customer, how it works, and so on…
  • The red chair which sits empty in the corner of every meeting. At the end of the meeting with colleagues to work on an idea, someone needs to turn to the chair for 10 mins and read their meeting notes.

“It’s the customer. In 99% of cases when you read the paper you feel like an idiot but it’s extremely effective. Listening to your own voice and what you’re saying makes you think actually I’m solving a problem for myself here not for my customer.”

  • The 5 why’s for when there is an issue with a service.

“We had a problem with the website. Why? Because this module was frozen. Why? Because the server was running at 100% capacity. Why?

“It’s not punitive, it’s making sure that when you do something, you do it properly.”

There’s lots of other good stuff in how Amazon approaches innovation around its leadership principles and the idea of “invent and simplify” but here’s a bit of final food for thought from de Santiago.

When people sit down to develop something they adopt the ‘two pizza’ teams concept which means the teams are small enough that they could not eat more than two pizzas.

“They keep it small and multi-disciplinary and they must take full ownership, set their own KPIs and decide what tools to work with.”

NB: Main image via Dan Bolshakov for BigStock.

NB2: Reporter’s attendance at the event was supported by SITA.

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