customer-obsession

Customer Obsession As Competitive Moat

Customer obsession goes beyond quantitative and qualitative data about customers, and it moves around customers’ feedback to gather valuable insights. Those insights start by the entrepreneur‘s wandering process, driven by hunch, gut, intuition, curiosity, and a builder mindset. The product discovery moves around a building, reworking, experimenting, and iterating loop.

Jeff Bezos’ definition of customer obsession

Anticipating the antitrust hearing in July 29th, Jeff Bezos highlighted:

In my view, obsessive customer focus is by far the best way to achieve and maintain Day One vitality. Why? Because customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and a constant desire to delight customers drives us to constantly invent on their behalf. As a result, by focusing obsessively on customers, we are internally driven to improve our services, add benefits and features, invent new products, lower prices, and speed up shipping times—before we have to. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it. And I could give you many such examples. Not every business takes this customer-first approach, but we do, and it’s our greatest strength.

To understand what that means, in a letter to shareholders for 2016, Jeff Bezos addressed an important topic. Something he had been thinking quite profoundly in the last two decades: Day 1:

Jeff, what does Day 2 look like?”

That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.

I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?

Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.

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:

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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.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which target is to reach over two million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here