Not having checked on Amazon Technologies, Inc., in some time, let’s focus today’s report on it. Today it received 14 awards, one of which was intriguing in that, once again, the only named person on the patent was Jeff Bezos, Amazon’s CEO. When the CEO is the only person referenced on the patent, you can bet its significance to the company is high.
Before we explore that one, here’s another that caught my attention. Consistent with Amazon’s efforts to master its value chain, Patent 8,788,199 (“Transport Using Geolocation”) describes a way to determine not only the location of an address that is hard to find, but to also check to see if the recipient of the delivery is at that location. The courier or delivery person can type in an address into a smart device to get geo-coordinates that will, in conjunction with a map app, help them navigate to that location more effectively.
I threw the term “value chain” at you just now, the meaning of which you may not know. I am more certain that you have heard of the term “supply chain.” So what is common between the two and what are the differences?
The common point is that both strive to reduce the cost to make and distribute products through a process — the “chain” — that starts with customers wanting something, continues on from getting raw materials, transforming them into products, and then moving the products to a place where the customers can buy them. Another way to think about this is that at each step in the chain, finding ways to become more efficient at doing that step can result in higher profits for the producers and lower prices to the customers.
What makes the two different is the orientation to the end user, the customer. Supply chains are created by producers to “push” products to customers. It is an adversarial process. Customers get what is pushed to them by the producers, which reduces trust between the producer and the customer.
A value chain focuses on the customer, whose interests pull the chain, producing and delivering products and an experience for the customer that engenders trust.
For a delightful explanation of the differences between the two, view this video created by Professor Andrew Fearne of Kent Business School. The cartoon illustrations and his charming way of presenting the two will keep you hooked until the end.
Think, then, about the improvement to the customer experience – and the cost reduction opportunity – that Amazon’s patented technologies offer. Customers that live in hard to find places are found on the first delivery attempt, making these customers happy and appreciative of Amazon’s effort to improve the value of their shopping experience. Amazon wins by not having to repeat the delivery effort, a definite cost savings.
Let’s circle back to the patent with only Mr. Bezos’ name on it. Patent 8,788,977 (“Movement Recognition as Input Mechanism”) describes how the movement of either the user’s device or the user (a change in the orientation relationship between the two) can be used to act as an input mechanism. Amazon calls this “dynamic perspective.” Motion tracking to execute changes in the application you are using is the fundamental function.
Keep in mind that Amazon is a producer of smart devices, such as the Kindle and now its new smartphone with a 3D camera, the Fire Phone. Preloaded on that phone is Amazon’s own mobile wallet capability.
Regarding the Fire Phone, rare is the occasion when the award of a patent coincides with mainstream media’s coverage of the technology described in a patent, but this is such an event; the Wednesday, July 23 edition of the Wall Street Journal has a major product review about the phone including an assessment of the functionality of the “dynamic perspective” technology covered in the patent.
I have gone down this rabbit hole to make the point that everything Amazon does to engage customers is done with the value chain in mind. It is creating an ecosystem that embraces customer convenience and satisfaction. And with its preeminence in logistics technology and its deployment, the strength of its value chain in relationship to competitors’ value chains is dominant.
Here’s a recent perspective on Amazon’s strategy that I think captures its essence.
Amazon never fails to amaze. We’ll keep an eye on it for sure.