Free Food Isn’t Enough — How Amazon Beats Google In Innovation

11 May, 2018 / Articles
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When it comes to innovation, on-line retailer Amazon beats Alphabet, the parent company of search engine Google, by a mile.

That’s according to a recent Drucker Institute survey, which assigns Amazon an innovation score of 166.3, almost twice Alphabet’s score of 95, helping Amazon occupy the top rank in the 2017 list of the most effective companies—see table 1

Wall Street has taken notice. Amazon’s shares have gained 52.70% YTD and 379.14% over the last five years, compared to 50.73% and 140.30% for Apple, and 34.20% and 205.10% for Alphabet—see table 2.

The findings of the Drucker Institute become more interested when the two companies are compared in another metric: Employee Engagement and Development. Specifically, the survey assigns Amazon an Employee Engagement and Development score of 57.3, almost half Google’s score of 82—see table.

That may come as a surprise to organizational behavior experts who argue that employee development and engagement, which includes among other things free food, is the most important factor in keeping employees happy, creative, and innovative.

Apparently, Google’s high employee engagement isn’t sufficient to help the company beat Amazon.

Something else must be in play. What is it? George Baroudi, VP for Information Technology at Long Island University, thinks it is Amazon’s customer focus.

“Google has been more innovative than many companies but most of these innovations end up staying as just a good idea,” says Baroudi.  “Let’s face it – every developer would love to have their own incubator.  Amazon is more focused on consumer needs,and therefore developers do not have an opportunity to work on ideas that may never manifest themselves. The difference between Google and Amazon – Amazon is a pragmatic innovator and Google is a blue ocean innovator.”

Then there’s a difference in the culture of the two companies. Amazon offers software developers a job opportunity, trying to squeeze the most out of them in a short time, before they are dismissed or move on to another technology company cashing the “Amazon chip.”

That’s why employee performance rather than employee engagement is at the core of Amazon’s organization culture.

Google, by contrast, offers software developers a career, trying to get the most out of them over a longer period of time. That’s why employee engagement comes ahead of employee performance.

While as a rule Google’s model is superior to Amazon when it comes to most talented employees, that’s not the case when it comes to software developers. For an obvious reason: software developers usually get burnt out very quickly, due to the nature of the work they do. This means their performance is expected to follow a declining pattern over time.

That’s why it makes more sense to squeeze the most out of them in a short period of time, as Amazon has been doing.

The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.

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