In 2016, Amazon.com made more money from AWS, Amazon Web Services than from retail sales. Jeff Bezos approved the idea of experimenting with Amazon infrastructure in 2004, but AWS only became commercially available in 2006. In many ways, AWS is a refinement of the infrastructure that Amazon built for its own operations. Principle 6 – Universality
This gives Amazon a tremendous advantage, since it can run its retail business at a razor thin margin compared to its competitors.
What can we learn?
There is a tendency to view a core competency as a competitive advantage to hold close to the vest. If a car company, for example, has a popular, well-engineered engine, it is unlikely to license that engine to a competitor, for fear that the advantage would be lost.
Toyota has sometimes taken a contrarian view, licensing its hybrid technology to competitors like Ford, Nissan and Mazda. This licensing serves to provide funds with which Toyota can refine its technology, securing its lead on its competitors.
Does your company have a core competency that could be used for revenue generation? Will that strengthen or diminish your competitive position?
