Scaling the Edge: How Amazon Grew Amazon Web Services (AWS) to be a Major Player
Tech Sheets - The High Tech Blog
Posted by John Hagel on September 11, 2012
When Amazon Web Services (AWS) was launched in 2002, many thought it was simply a way for Amazon to sell off excess storage and computing capacity. However, within 2 months of its inception, Amazon had burned through all of its extra capacity. By 2007 AWS had grown to offer 9 different services. Today, that number has grown to 82 and the number of objects stored in Amazon’s cloud continues to grow rapidly.
The rise of cloud services is just one of the market opportunities created by the advancement of digital technology and our globally connected world. What’s more impressive, however, is how Amazon was able to go about capturing this opportunity: with little upfront investment, short lead times and high returns. According to many studies, up to 75 percent of change efforts within big firms fail to achieve their objectives. This is because traditional change efforts are staged as ‘Big Bang’ approaches, directly competing with a company’s core activities for resources and market share. Often, this approach will lead to political and financial resistance by entrenched interests in the core that can impede change efforts – or squash them completely.
A more promising approach is to scale the edge in an organization, as Amazon has managed to do. This approach begins by identifying promising high growth new business initiatives, or edges, that have the potential to transform the core of the business in the long run. In the short run, the edge benefits by avoiding direct conflict with the core of the business finding new sources of revenue, rather than cannibalizing existing sources of revenue. This increases the likelihood that the edge can become an established, demonstrated concept before encountering significant political resistance from the core. Edges can scale quickly by leveraging resources external to the company rather than seeking significant resources from the core. (Many of AWS’s services, for example, are designed to easily integrate with and build on other software and web services.)
The acceleration of change in market and industries in recent decades makes scaling edges approaches much more feasible than in more stable environments. New generations of technology – especially cloud computing, social software and big data – also make these approaches far more feasible because they enhance the opportunity for third party leverage. Now, more than ever, small moves, smartly made, can set very big things in motion.
To learn more about Scaling Edges, please visit our site.
|John Hagel III is a principal in Deloitte Consulting and has nearly 30 years experience as a management consultant, author, speaker and entrepreneur. He has helped companies improve their performance by effectively applying information technology to reshape business strategies. John currently serves as co-chairman of the Silicon Valley-based Deloitte Center for the Edge, which conducts original research and develops substantive points of view for new corporate growth.|
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