Hire An Assassin

I love getting the inside scoop on innovation origin stories. Here's a great tale of proactive, self-disruption. Just as Steve Jobs saw the disruptive threat that cell phones posed to the iPod, and preemptively built iPhone despite concerns of cannibalization, Jeff Bezos drove Amazon from the same sense of healthy paranoia. Here's the inside scoop:

"In 2004, Apple's dominance in digital music (with the introduction of iPod and iTunes) spawned fresh soul-searching at Amazon. The sales of books, music, and movies accounted for 74% of Amazon's annual revenues that year. If those formats were inevitably transitioning to digital, as Apple's accomplishment seemed to demonstrate, then Amazon had to move quickly to protect itself. 'We were freaking out over what the iPod had done to Amazon's music business,' says director John Doerr. 'We feared that there would be another kind of device from Apple or someone else that would go after the core business: books.'

“Investor Bill Miller from Legg Mason often discussed the digital transition with Bezos when the two got together. 'I think the thing that blindsided Jeff and helped the Kindle was the iPod, which overturned the music business faster than he thought,' says Miller. 'He had always understood this stuff was going digital, but he didn't expect to have his CD business eviscerated like that.'

Bezos ultimately concluded that if Amazon was to continue to thrive as a bookseller in a new digital age, it must own the e-book business the same way that Apple controlled the music business. 'It is far better to cannibalize yourself than have someone else do it,' said Diego Piacentini in a speech at Stanford's Graduate School of Business a few years later. 'We didn't want to be Kodak.'"

What did Bezos tell Steve Kessel, the executive whose responsibility of leading physical book sales Bezos revoked in order to lead to effort?

“‘If you are running both businesses you'll never go after the digital opportunity with tenacity… Your job is to kill your own business. I want you to proceed as if your goal is to put everyone selling physical books out of a job.’ He believed that if Amazon didn't lead the world into the age of digital reading, then Apple or Google would. When Kessel asked Bezos what his deadline was on developing the company’s first piece of hardware, an electronic reading device, Bezos told him, ‘You are basically already late.’”

Remember, books were Amazon’s single greatest source of revenue at the time… And yet what did Bezos do? He pulled a highly-skilled and trusted manager out of the mainline business with the explicit orders to kill the business! In other words, he hired an assassin! Of course, the vast majority of the org continued to capitalize on the core - for a long time, without knowledge of Lab126’s existence or purpose. I wonder how many leaders are willing to deploy some of their best people to develop the inevitable disruption from within, rather than wait for it to hit.

(All quotes above from Brad Stone’s fantastic The Everything Store)

If you're interested in warding off potential disruption, a great exercise to run with your senior team is a "Failure Pre-Mortem."

As an aside, here’s another one of my favorite origin stories — How the Post-It Note Was Born.

Click here to subscribe to Paint & Pipette, the weekly digest of these daily posts.