Customer Obsession As Competitive Moat

As Jeff Bezos also highlighted in the Shareholder letter in 2016:

There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.

Indeed, that is at the core of the Amazon flywheel:

The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.

We’re all customer-centered

We all talk about customers and believe, that as business people we are customer-centered.

Entrepreneurs praise themselves for talking, understanding and serving customers. Managers praise themselves for having all the data to understand customers.

Rather than customer obsession, this is an obsession with customers.

Indeed, customer obsession means much more than just listening, serving or analyzing data about customers.

Customers know better

Building a viable business model starts by identifying a problem, talking to people who experienced that problem and evaluate whether you can build something more valuable than existing alternatives.

That is the baseline. However, there is much more to it.

Do customers know it all?

If you’re building a business just by listening or following what customers say, or believe they want, you might be easily derailed. Providing 10-100x more value than the existing solution in the marketplace implies vision, instinct and a lot of trial and error.

This is on the basis of customer obsession, so let’s break it down.

The bottom line is the side effect of how well you understand your customers’ problems, better than they do

Customer obsession starts from the fact, that as a business, you can unlock valuable insights, by testing what customers want. As you push new products in the market, the failures you get from those launches also give you valuable feedback to bust assumptions and bridge the gap between what customers say they want and what they really want.

Customer obsession: starts by listening to what customers want and beyond

As Jeff Bezos highlighted in Amazon’s 2018 Shareholders’ Letter:

Much of what we build at AWS is based on listening to customers. It’s critical to ask customers what they want, listen carefully to their answers, and figure out a plan to provide it thoughtfully and quickly (speed matters in business!). No business could thrive without that kind of customer obsession. But it’s also not enough. The biggest needle movers will be things that customers don’t know to ask for. We must invent on their behalf. We have to tap into our own inner imagination about what’s possible.

Therefore, customer obsession starts with a superpower: wandering.

Wandering driven by hunch, gut, intuition, curiosity

Amazon’s early-stage growth was primarily driven by what Jeff Bezos defined a “culture of builders” made of people who were curious and explorers, and with the courage to invent.

The loop of building valuable product goes through a loop of “invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again.“

As Jeff Bezos highlighted back in 2018, wandering is not efficient, quite the opposite. It’s also not random, as it is driven and guided by “hunch, gut, intuition, curiosity, and powered by a deep conviction that the prize for customers is big enough that it’s worth being a little messy and tangential to find our way there.“

In short, wandering works as a counter-balance and unlock non-linear, breakthrough discoveries.

Jeff Bezos mention as an example AWS, for which “No one asked for AWS. No one. Turns out the world was in fact ready and hungry for an offering like AWS but didn’t know it. We had a hunch, followed our curiosity, took the necessary financial risks, and began building – reworking, experimenting, and iterating countless times as we proceeded.“

Related Business Concepts

Ansoff Matrix

You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

Blitzscaling Canvas

The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Blue Ocean Strategy

A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Business Analysis Framework

Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

Gap Analysis

A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.

Business Model Canvas

The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Lean Startup Canvas

The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

Digital Marketing Circle

A digital channel is a marketing channel, part of a distribution strategy, helping an organization to reach its potential customers via electronic means. There are several digital marketing channels, usually divided into organic and paid channels. Some organic channels are SEO, SMO, email marketing. And some paid channels comprise SEM, SMM, and display advertising.

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About The Author

Gennaro Cuofano

Jeff Bezos’ definition of customer obsession