10 Lessons in Innovation from Amazon’s Kindle

Innovation. It’s a tricky thing.kindle.jpg

Do it right, and you can make billions. Do it wrong, and you’ll end up in bankruptcy court. Either way, you’ll be called both a fool and a genius, and no one will know which is true, least of all you.

Amazon’s new Kindle is a classic example. Everyone is talking about it, and I did my best to avoid chiming in, but it’s just too good of a topic for me to resist.

Rather than telling you whether I like it or hate it though, why don’t we talk about what it can teach us about innovation? Because I think there’s a lot to learn.

Here are my top 10 lessons that we can learn from the Kindle. Feel free to chime in with your own in the comments.

1. Innovation Doesn’t Mean Evolution

Too many times, a company will develop a “next generation” product and stop selling the old one. They expect their customers to evolve, failing to realize that not all customers want to change. They like things the way they were, and they get upset when you take it away.

Amazon didn’t make this mistake. A portion of their customers will never be happy with anything but holding a book in their hands. And that’s fine. They can ignore the Kindle and keep buying books the way they always did. Either way, Amazon keeps their business and continues making money.

2. Skepticism Is Still Press

When the media, industry analysts, and your existing customers are all calling your product stupid, it’s easy to start believing no one will buy it. But don’t be so sure. The buzz leading up to the launch of Kindle was highly skeptical, if not downright negative, but they still sold out during the first few days.

The saying, “All press is good press” is usually true, but it goes beyond that. If you try to develop a product that pleases everyone, then you’re probably going to end up with something mediocre. It’s better to polarize people, building a product that some people love and some people hate. The bickering between them will catch everyone else’s attention.

3. A Powerful Brand Can Help a Risky Idea

It’s clear: the Kindle is a risky idea. Amazon is trying to popularize an idea (the e-book) that never quite made it. You could argue that the only reason anyone is paying attention to it is because a huge company like Amazon is the one pushing it. If a college student tried to launch the exact same product with venture capital, would we pay attention?

Probably not. Sometimes, the best incubator for innovation is not a hot new startup but an established company that can afford to take a calculated risk. If you have a similar idea and are thinking of starting a company to bring the product to market, you might stop consider if you would be better off selling it to the dominant player for a cut of the profits. You could end up better off.

4. Don’t Be Afraid to Sacrifice Your Cash Cow

Once a company gets to a certain size, it has the tendency to stop innovating. To get the green light, cutting-edge ideas have to go through too many levels of approval. It’s also easier to just keep improving your product line and raking in the cash from your existing customer base.

Amazon proves it doesn’t have to be this way. Instead of pushing yet another incremental improvement on us, they attack one of the foundations of their own company. If it grows in popularity like the iPod, the Kindle could redefine the way we think about distributing information, solidifying Amazon’s market dominance for another decade or so.

5. Make Old Ideas New Again

E-books are nothing new. They’ve been around for a decade or longer, and almost everyone knows what they are. But Amazon is making us look at them in a new way. By taking the book off of the computer and putting it on a mobile device, they remind us of what attracted us to e-books in the first place: convenience.

This is a tried and true business strategy. Take an old idea or product, figure out what attracted people to it, and then recapture the benefits in a powerful way. Apple did it with music. EBay did it with auctions. Amazon is doing it with books. If you’re creative enough, you can do it in your industry too.

6. You Can Be Pretty Later

The Kindle is ugly. It’s nothing like the iPhone, where people bought it just to show off the slick interface to their friends. Instead, Amazon focused on creating a product that does exactly what it’s supposed to do: give you nationwide access to over 80,000 books in the palm of your hand. They can make it pretty later.

When you’re inventing a new product category, you should follow Amazon’s lead. Aesthetics only become a differentiating factor when there are lots of competitors that offer the same basic functionality. That’s not to say you should intentionally make an ugly product. Just put your attention where it belongs: bringing value to the customer.

7. Know What Your Business Is about

Amazon isn’t in the business of selling books. It’s in the business of selling access. Their goal is to make millions of products available to you with one click of your mouse. The Kindle isn’t just another new gizmo; it’s about giving you instant access to the world’s information from wherever you are, and doing it better than everything else, including laptops and PDAs.

Regardless of whether you’re an engineer, manager, or salesperson, never make the mistake of believing that you are developing or selling products. “Customers don’t buy products. They buy solutions,” is a cliché, but only because it’s true. Sometimes, that means abandoning development of your existing product lines and offering your customers a whole new approach to solving their problems.

8. Take Baby Steps

Amazon isn’t trying to revolutionize the publishing industry overnight. They are taking baby steps. As people start using the Kindle and getting comfortable with it, rumor has it that they’ll dramatically increase the available titles and even rollout interactive books, where authors update the book and you immediately see the changes, rather than having to buy a new edition.

It’s not sexy, but it works. If you’re trying something different, give people a chance to get used to it before turning their world upside down. Otherwise, they’ll resist you, and your good idea could flop either because no one “gets it” or key players refuse to cooperate. The best businesses understand exactly how far they can push an industry and how fast.

9. Launch at the Right Time

The Kindle makes a perfect Christmas gift. If I was a parent with a kid in school, I would have one of these bad boys under the Christmas tree right now. The easier you can make it for them to learn, the better. Plus, it’s a new toy that no one has yet, making it a great gift for people who seem to have everything.

It seems obvious, but not all businesses consider the timing of their launch You should always factor in when your customers will be in the right frame of mind to buy. Granted, you can’t always launch when you want to, but if you’re doing something innovative, timing can have a huge influence over the success of your product.

10. It’s Still One Big Crapshoot

Will the Kindle make it? Nobody knows for sure, but in the end, it doesn’t matter.

Sure, Amazon is putting a lot of support behind the Kindle, but they’re nowhere close to betting the farm. If it fails, a lot of people will say, “I told you so,” and their stock might take a dip, but they’ll still be one of the most influential companies in the world. And they’ll have lots more chances to get it right.

You should approach innovation the same way. Realize that the odds are against you and plan for it. It’s not cynicism; it’s smart business. If you know that you have a 20% chance of success, then you’ll set aside enough money to survive five dud ideas until you hit the one that works.

Entrepreneurs that risk everything and win are great stories, but most of the time, innovation isn’t nearly so glorious. It’s more about survival than victory. You do something, see how it works, and then do something else. The key is having the persistence and resources to keep trying until you get it right.

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