Amazon and its CEO are known for making data-based decisions and standing furiously firm on them. I worked with them for many years in a supplier-type capacity and can tell you firsthand that they ... are ... tough. They're even tougher on their competition.
No company is more studied right now, no retailer more scrutinized in hopes of picking up on secrets to its success. Having worked with Amazon for so long, I knew a lot of it had to do with the amount of data the company has and how effectively it wields it to make consistently smart decisions.
But I didn't know that along the way Amazon was building a superweapon, a fact recently revealed by CNN Business.
It turns out that Amazon is making increasingly smart decisions because it's been hiring a squadron of economists.
In recent years, Amazon has hired more than 150 PhD economists, more than any other U.S. company has and second only to the Federal Reserve, according to CNN Business. As of this writing, Amazon had 57 such job openings as posted on its hiring website.
The company is redefining the role economists can play in the corporate world. Gone are the days when the only use for an economist in any company was to forecast broad macroeconomic trends and identify new markets to get into. The macro has gone micro, with Amazon leveraging economists for such important and diverse tasks as
- Mapping out the most efficient trucking routes
- Forecasting server capacity needs for Amazon's website
- Forecasting business demand in a wide range of categories to an astonishing degree of accuracy
- Better targeting customers for Amazon's cloud service business
- Determining the best leadership characteristics to look for in new hires
- Informing Alexa product design
The breakthrough comes from combining the tools of software engineers with the mindset of economists who use data to spot patterns and trends but, more important, to apply "what causes what" thinking. And Amazon is becoming the go-to place for corporate-minded economists, because the company solves a big problem for them (according to its job website)--access to the highest-quality data for their analytical work.
News flash. Many of you out there running microbreweries and linen supply companies and corner bakeries or that work in any company other than the one that's currently dominating how we sell things on the internet are thinking, "Gee, I don't have an on-staff economist, so what do I do?"
Of course, very few do, nor have access to the kind of data and data dreamweavers that Amazon does. But all is not lost.
What any business can learn from Amazon's "economist approach"
Every business can benefit from evolving its predictive ability to help it make better decisions. This means learning to anticipate issues and events by identifying patterns and taking time to scenario plan. And it means taking time to get out of the weeds of the day to day to get close to customers and consumers.
I worked for more than two decades in marketing, in a variety of roles that included many ever-changing general management responsibilities. But one thing remained constant. My work centered on getting the consumer to buy my brand over some other brand. That necessitates spending substantive time with and deeply understanding the consumer. What are their habits, unmet needs, unarticulated needs, frustrations, dreams? A brand's sales went as consumer understanding went.
And, yet, I can't count the number of times that I'd see some of my marketing brethren spending time on anything but consumer understanding, on anything but building their predictive ability to estimate what the consumer really wanted. I'm not saying it's always easy to do or that I didn't drift myself from time to time.
But I think the tendency to unintentionally distance ourselves from the end user or buyer of our product or service, or to drift from understanding what's really driving our business, haunts us all.
So, even if you can't invest in a PhD economist, invest in upping your predictive ability. If so, I predict better business results are ahead.