There's A Huge Difference Between How Apple Deals With Failure And How Amazon Deals With Failure

This is a post from Above Avalon, a new site from Neil Cybart, an analyst who previously commented on our site under the name Sammy The Walrus IV. You can sign up for his Apple newsletter here.
Amazon CEO Jeff Bezos was the keynote speaker at the Business Insider Ignition conference a few days ago. A few of his comments about failure jumped out to me.

“It’s incredibly hard to get people to take bold bets. You need to encourage that and if you are going to take bold bets, there are going to be experiments, and if there are experiments, you don’t know ahead of time whether they are going to work. Experiments are by their very nature prone to failure, but big successes, a few big successes compensate for dozens and dozens of things that didn’t work.”

Companies that don’t embrace failure, they eventually get in the desperate position where the only thing they can do is make a Hail Mary bet at the very end of their corporate existence‚ĶI don’t believe in bet the company bets. That’s when you are desperate.”

Last month, Apple SVP Design Jony Ive gave a talk on Design Museum and the topic of failure was discussed.

“I would say the priority is that we learn how to care and we learn how to fail and that we’re prepared to screw up the work that we’ve done and throw it away even if we don’t know what we’re going to do instead. When I’ve explained to people before and said ‘well we screwed this up, we parked this,’ normally I can say ‘and look what we went on to do’.

If it’s not very good we should just stop it, even if we’ve spent a lot of money trying to develop it. It’s scary, and we’ve been there on many occasions where you’ve spent this much money and I’m talking too loud to try and convince myself that it’s OK and it’s not. It’s one of the fantastic things that I feel so fortunate to work with a group of people who are very comfortable with that ‘yeah it’s not good enough we should stop doing this’ and we don’t talk about all the money we’ve just spent. Well, they might do behind my back.”

Both men accept failure and I suspect nearly every human needs to accept failure in some capacity. What is interesting is where Bezos and Jony are willing to accept those failures. For Jony and Apple, the goal is to fail behind closed doors.

For Amazon, failure out in the public marketplace is thought to have little consequence and is even encouraged. For Apple, failure is actually minimized by taking bigger risks. Amazon does the exact opposite, by not taking big risks, failure is more acceptable and manageable.

I’m intrigued by Amazon’s hardware strategy. While the Kindle found its niche, subsequent versions that were more akin to iPad never saw the same level of success, while every other Amazon consumer tech hardware product hasn’t lived up to the hype (Amazon has never released sales numbers, but share/sales data and surveys all point to the same conclusions).

For Amazon, public failure with the Fire Phone is acceptable, and even applauded, as the thought process is that things can be learned about a failure, and then future versions may have a better chance of success. Do consumer habits support such a stance? Will consumers forget about past product shortcomings, and give subsequent reiterations a fair chance? I’m not so sure.

Over the past 10 years, Apple has had very few hardware failures, with the iPod Hi-Fi speaker system standing out as maybe the biggest flop. While Apple has its fair share of hardware blemishes or minor flaws that are rectified in subsequent versions, the public has come to expect Apple’s best when it comes to hardware, as most of the company’s failures have been kept hidden in Jony’s labs, with the public seeing only the big hardware bets.

Brand equity is built in consumers’ minds, while public perception and anticipation remain elevated. I suspect consumer tech hardware failures take a much bigger long-term toll on a company than Jeff Bezos would like the world to believe.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

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