Business School Professor argues that Boeing’s 24-yr-long tailspin is emblematic of much of the US economy and the Jack Welch business ethic. CEOs are rewarded for the next quarter’s profit rather than product excellence. He cites Intel and Amazon as the next large scale failures due to the crapification of their products.
I was looking for a storm door on Amazon this afternoon to take advantage of this quarter’s 5% cash back from Discover Card. After wading through pages of sponsored crap in the search results, I abandoned the effort and will likely buy the door at Lowe’s or Home Depot.
I have an Amazon Paperwhite Kindle, an Amazon Fire TV and an Amazon tablet (which I ordered because I like the TV and want to bring a similar interface to the hospital). I’m puzzled because I don’t see this level of brand loyalty and product satisfaction as a Boeing-style failure.
Wendy
I think pinning Boeing’s problems on Jack Welch is misguided.
All investors watch quarterly earnings numbers closely and the market responds immediately. Jack Welch merely strives aggressively for good numbers. Investors think short term numbers and quick profits are more important than anything. Isn’t that what business schools teach their MBA candidates.
At Boeing profits over quality is an issue. Loss of engineering emphasis. Little interest in maintaining brand image. Almost taken for granted.
But how does that relate to Amazon. They are leaders in cloud computing. Have a powerful innovation initiative and make quality products and services. Complaints from investors are mostly once again about short term profits and growth rates.
You have to admire the Chinese for their strategic planning and long term strategy. Amazon seems to be ahead if the competition in that respect.
They also operate the largest package delivery service in the US
Just like any tool, you have to know how to use it. If you search for a product and the sponsored ads don’t have what you want just click on the “sort by” in the upper right and see other choices. Note, I’m describing the PC user interface, I rarely use on my phone, but it has about the same optional arranged differently
Yeah, that’s how Google started. Then they added a few sponsored links at the top. Then a few more at the bottom. Now some of their pages have maybe 4 or 5 real links on a page filled with 20. And they’re not so clearly defined as they used to be. Amazon is trudging down that path, and as their “advertising” revenue increases they have more and more incentive to crap up their interface, and without a real competitor there is little to stop them.
It is a story that goes back 2,500 years: Killing the golden goose. Welch and his acolytes juiced current profits at the expense of future earnings.
Under Bezos Amazon took a substantially different approach. Bezos didn’t care about profits for years. He just kept reinvesting in the company. The result was Amazon’s moat is enormous. No company, even giants like Wal-Mart, can replicate it because it is simply too big.
A quick example, Amazon was the first company that allowed customer reviews. When I saw that, I thought it was crazy. Any slob could leave a bad review and you couldn’t sell the product (which was only books back then). But it was actually genius because while bad reviews might tank a specific product, customers grew to trust the website. Again, this was Bezos prioritizing future profits over current earnings. At one point (and this still might be true) most product searches started on Amazon, not Google.
However, under Jassy–who is all about quarterly growth–Amazon’s website sucks. Jassy has been pumping up the ad revenue to the point where it is mostly ads and few actual products.
Now the ad revenue is maxed, how do you grow profits?
Keep squeezing the employees, cut customer service and quality, and slow pay vendors. By the time the roof really caves in, and they start missing their “expectations”, in a big way, the current CEO will have made his loot and retired. The collapse will be the next CEO’s problem.
Here is an example. I searched on “snow ski jacket for men.”
Almost the first two rows are ads. The “Overall Pick” which is the only second non-sponsored result. But coincidently it is also a sponsored result. Is it the overall pick because it is sponsored?
The third row isn’t even a full row before the ads start up again. Then more video ads, and then some sponsored results for non-ski jackets! Stuff I’m not even looking for.
I have scroll almost to the bottom of the page before I find a brand I’ve even heard of.
Similarly, if you look at people who work on ski hills, like the instructors, ski patrol, and lifties, they almost all use one of two brands of gloves, Kinco or Hestra. I would think those brands would pop right up when searching for ski gloves.
Again, the results are dominated by Chinese brands I’ve never heard of (although Carhart appeared early). I also had ads for jackets–which I’m not searching for. Hestra didn’t appear until page 2.
Interesting - I did the same search but added “Columbia” to the front and the first 16 choices had 14 Columbia and two items of a brand I hadn’t heard of. And none of them said ‘sponsored’ of ‘ad’. But I don’t do much shopping, online or otherwise.
