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Amazon's 5 secrets of innovation: first, don't call it 'innovation'

At the recent Amazon shareholders' meeting, founder and CEO Jeff Bezos revealed some of the secret sauce regarding how his company is able to invent at such a prolific pace.

Amazon has been reshaping the world for more than a decade now. Amazon founder and CEO Jeff Bezos may be a visionary who has driven a lot of his company's success, but he credits his company's corporate culture and the ability to surface and act on a lot of employee ideas.

Jeff Bezos, Amazon CEO. Photo: CNET

Braden Kelly of Blogging Innovation recently described an exchange between Amazon founder and CEO Jeff Bezos and a shareholder, which unveiled Bezos' philosophy to innovation:

1. Focus on invention, not "innovation." The semantics are important here, and this is what separates amazon from the rest of the pack, Kelly observes. He notes that Bezos prefers to use the term "invent" to "innovate," and for good reason: "Inventions typically cross the bridge from invention to innovation because the solution is not only useful but it is valuable, and the customer makes this determination, not you."

2. “We are willing to be misunderstood for long periods of time:” The innovator's (or inventor's) dilemma since time immemorial. I think about how Amazon launched Amazon Web Services back in 2005 -- and had many observers scratching their heads. Amazon, an online retailer mainly of books, selling IT services to developers? Now, cloud computing is the hottest thing since the PC, and industry insiders estimate that annual revenue for AWS at about $500 million in 2010, growing to $750 million this year, and soon become a $1 billion business. Kindle was also a big question mark when it was first introduced.

3. “We are stubborn on vision. We are flexible on details.” Amazon, as is the case with other successful companies, are willing to scrap projects that aren't working -- no executive egos get tied up with specific product lines.

4. “We are planting more seeds right now, and it is too early to talk about them.” This may seem counter-intuitive to the emerging concept of lean, agile or open innovation, in which innovators are urged to work closely and incrementally with customers. Yet, it's important to keep new developments closely aligned with the overall strategy. Braden interprets Bezos' approach thusly: "Keep things quiet until you have a good grasp on exactly how you plan to explain your invention or educate people on its potential value before you go public – or the road from invention to innovation will only get harder."

5. Bake innovation/invention into the culture, allowing for a lot of lower-risk bets verses a few grandiose schemes. At the shareholder meeting, Bezos made the observation that innovation should be such a big part of day-to-day business -- not a risky one-off bet. "If you invent frequently and are willing to fail, then you never get to that point where you really need to bet the whole company....  If you place enough of those bets, and if you place them early enough, none of them are ever betting the company. By the time you are betting the company, it means you haven’t invented for too long."

Braden also provides a transcript of Bezos' invention remarks from the shareholders meeting.

This post was originally published on Smartplanet.com