2008 – Bold Ideas come from customer needs

I have always been intrigued by the letters sent to shareholders by both Warren Buffet and Jeff Bezos. They are inspiring and, for wannabes like yours truly, a source of motivation and hope. So I am creating a series of articles on what learnings I took away from the letters of Jeff Bezos. This is the twelfth letter in the series.

You can check out the complete series here: https://alphonserajdavid.com/category/book-reviews/non-fiction/jeff-bezos-stakeholder-letters/

2008, the year the world turned upside down. It’s incredible how the entire letter is about hope and the long term. Also, it’s interesting to note the change in tonality of the letter compared to the dot com crash.

The dot com crash letter was all about reassurance through sharing financial metrics and future cashflows now; it’s all about bold about and market dominance. Also, it’s interesting how Jeff moves away from numbers to bold bets as the year’s progress.

Learning #1: The “skills forward” approach is suitable for incremental improvements

Ask yourself, “We are good at X. What else can we do with X?” That’s an excellent question to ask. Also, this question will allow you to create incremental business plans which can consistently add 10-20% extra to the bottom line. For example, I am good at selling toothpaste; next, I should sell lemon-infused toothpaste. Ideas like those.

Creating new business lines based on our skills is suitable for business growth consistency but not bold bets.

Learning #2: Focus on working backward from customer needs for bold and new ideas

Asking what the customer needs can make us highly uncomfortable. Whenever I actually uncover a customer’s real need, 90% of the time, it entails ripping out carefully laid out product development plans and committed engineering resources.

That being said, don’t just focus on skills you are good at. To create new skills.

Learning #3: Focus on trends that don’t change

It’s easy to identify marketplaces that change. But enduring businesses are built on trends that don’t change. For example, Jeff says, “Customers value low prices, vast selection, and fast, convenient delivery and that these needs will remain stable over time.”

Create businesses for trends that don’t change over time

Learning #4: Create ideas by searching for “muda” (waste)

Every inefficient solution has waste. Focus on identifying solutions in the market which create a lot of garbage, then iterate and remove the waste from the solution. You have the new product.

Learning #5: While going wide, don’t miss going deep

Jeff always comes back to share how within the existing categories, they are offering more and more choices. This is actually quite incredible; he just doesn’t go behind the latest thing. He entrenches himself within the existing place as well.