The Age of Amazon
Marc Onetto Says Customer-Centricity is the Business Plan
Customer-centricity—it’s more than a slogan for the world’s largest online retailer that a Gartner analyst has called a “new type of media company . . . a new species almost.”
“It’s the way we succeed,” Marc Onetto, senior vice president of worldwide operations and customer service at Amazon.com, said in 2013 as the Dean’s Distinguished Speaker at the Peer-to-Pier event in San Francisco. “We believe, and I think we have demonstrated, that if you’re good with your customers, if you drive every decision you make in business from the customer backwards, then it will work also with your CEO and with your shareholders.”
By nearly every measure, Amazon’s strategies have been a success. The company has grown from an online bookseller to the virtual place to get everything from everywhere almost instantly. In the past five years alone, Amazon’s annual sales have quadrupled. During Onetto’s tenure, which began in 2006, Amazon morphed from a $9 billion company to a $70 billion megaretailer and digital media powerhouse.
While Amazon has been a hit with customers, investors have often been lukewarm. The company’s initial business plan drew immediate criticism because founder and CEO Jeff Bezos did not intend for the company to become profitable for several years. Bezos made other unorthodox decisions, for example, opening Amazon to direct competitors as well as small merchants, a move Onetto admits with a chuckle that Wall Street thought was crazy.
“The result of this was an absolutely genius decision because yes, we have competitors on the website, but now when you look for things, you don’t even Google it any more, you Amazon it,” he said.
But all of Amazon’s moves, from a low price guarantee to its “1-Click Ordering” system, to cloud computing and the Kindle, are based on the concept of customer-centricity, Onetto said.
With operations in eight countries and millions of orders placed every day, mistakes are going to be made. To minimize mistake and correct them as soon as possible, Onetto said Amazon relies on three key “drivers of excellence”: technology, people leadership and methods of management.
“You can’t be perfect, but you can trend toward perfection. A defect is acceptable if it is the first time it happens. A defect is not acceptable if it happens again. And that’s how you have to drive toward excellence in operations.”
Amazon has always invested heavily in technology, from the original development of its website to its recent purchase of Kiva Systems warehouse robots. But it is still primarily people who fill the orders at Amazon and answer the customer service calls. Amazon depends on its employees to report and address problems such as issues with shipping or customer complaints about products. One of the company’s tenets is to encourage employees at even the lowest levels to participate in the continuous improvement process.
“There is no way you can do it from the top down,” Onetto said, adding that this important concept is missing in most of the Western World.
And Onetto’s expertise is renowned. While at GE, he helped pioneer the Six Sigma concept, which seeks to measure the number of defects in a process and then systematically eliminate as many as possible with the goal of zero. His contributions in that process earned him recognition by Jack Welch in his best-selling autobiography, “Jack: Straight from the Gut.” He also uses lean practices at Amazon. The emphasis on eliminating anything that doesn’t create value for the customer fits well with Amazon’s customer-centric philosophy, he said.
by Crystal Ross O’Hara