by Brandon Pemberton -- September 29, 2017
It has been only a few weeks since Amazon closed on its acquisition of Whole Foods. While the ten weeks leading up to August 24 were very likely to have been a whirlwind of activity for the army of lawyers, bankers and operators at both companies, results since the acquisition have appeared to be positive and consumers have been able to witness what looks to be a very rapid and successful integration. Overnight, a new Whole Foods was reborn: signage changed; Amazon devices were suddenly available on Whole Foods shelves; Whole Foods self-branded 365 product was available through Amazon Fresh; prices on key items were slashed; and Amazon lockers were installed in Whole Foods stores.
Without doubt, the potential rewards for Amazon are great, including access to a bounty of valuable data, the opportunity for vertical integration and an instant national brick-and-mortar footprint. Perhaps this prize is sufficient incentive for Amazon to do what most companies fail to do: execute rapidly on innovation.
So what did Amazon do right?
- Focus on a few of the right things: Amazon has great ambitions for integrating Whole Foods into its business (and vice versa). However, for launch, it focused on just a few key modifications to the Whole Foods model. It could have sought to “go big”, but instead it merely changed what it needed to change to get noticed on Day One. Consumers saw and felt these changes immediately, and the few things Amazon chose to launch during this period appeared to work.
- Lead with simplicity and allow complexities (technology) to follow: The Day One activities worked because Amazon kept it simple. Very few, if any, of the changes made required updating existing technology or other new consumer-facing technologies. Signs were hung; new items were added to inventory; prices were changed - the kind of activity that happens every day at both Amazon and Whole Foods. While there were certainly some heroics performed by employees tasked with enacting these changes, the changes that were made were relatively simple. Although these activities felt new to the consumer, they required very little new investment from the two companies. One thing is certain - the future partnership between these two companies will likely feature plenty of innovative opportunities to use consumer-facing technology.
- Keep the consumer at the forefront: Amazon focused Day One activities on the consumer, focusing on actions that were immediate and impactful, and which would generate customer action. Lower prices, as well as a healthy boost of PR, led to a 25% increase in foot traffic at Whole Foods stores. Many of the 2,000 Whole Foods 365 items put on Amazon sold out very quickly. While Amazon clearly benefits from increased sales, its initial efforts were focused on the consumer as a means to solidify and build loyalty. Today’s focus on the consumer will pay dividends down the road, especially if the more complex aspects of the execution of this new venture generate any pain.
In this recent example, Amazon has successfully showcased some important lessons for companies looking to execute rapidly on innovation. Focus, simplicity and customer-centricity can be guiding principles for the phased execution of new initiatives. To achieve these principles, organizations require leadership that believes in their people, and who can drive priorities and accountability accordingly. Organizations also require that their execution teams possess sufficient infrastructure and processes to support these principles. Finally, successful organizations must possess the resources and fortitude necessary to sustain high levels of execution throughout the subsequent stages of activity, when company focus inevitably broadens and complexity increases.