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:

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.“