Start with the customer and work backwards.

—JEFF BEZOS

“I’ve fallen, and I can’t get up!” Any late-night-TV-watching baby boomer knows the reference to Life Alert, the wearable device that allows the elderly to request medical assistance just by pushing a button.

Life Alert wasn’t originally part of the Internet of Things, but it is a button-driven, connected, special-purpose device with many similarities to the IoT products that Amazon and others have launched in the last few years.

Most importantly, Life Alert is a living example of Amazon’s first leadership principle—customer obsession. A necklace fob might seem simple, but it fundamentally reinvents the customer experience—both for the elderly, who gain significant autonomy, and for their family members and caretakers, who can feel confident that their loved ones will be able to call for help in case of a fall or other medical emergency.

Customer obsession is a key driver of Amazon’s success. The Internet of Things has made it possible for Amazon to gather key insights about its customers’ needs and put them to use in real time.

Principle 1: The Internet of Things won’t get you anywhere unless you’re obsessing over your customers and their experiences and how connected devices can solve their problems.

In this principle, we’ll explore the power of customer obsession and how to use the Internet of Things to better understand and serve your customers.

Amazon’s Dash, Dash Buttons, and the always-listening Echo are all experiments in special-purpose IoT devices that fundamentally reinvent customer experience. All three enable Amazon customers to order products, get information, and stay connected on the fly.

CUSTOMER OBSESSION

It’s no accident that customer obsession is the first of Amazon’s official leadership principles. Leaders start with the customer and work backward. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.

There are two specific concepts to take note of here. First, customer trust—not profit—is the most critical asset Amazon expects its leaders to build. And second, leaders must obsess over customers.

There are plenty of companies and teams out there who claim to be “customer focused” or “customer centered.” You may be one of them. But if you don’t understand the difference between customer focus and customer obsession, it’s unlikely your team will tap into the customer uptake and loyalty that have driven Amazon’s incredible growth.

To Amazon, “obsess” means being willing to do really hard things just to make life easier for its customers, frequently in ways that won’t drive short-term profit. Often this means literally making the impossible possible.

“Obsession” has meant trying new things, many of which don’t work out. It means sticking with the things that do work or that might work instead of getting distracted by the lure of a shinier, more-profitable short-term opportunity.

Most of all, “obsession” means not being stuck in the past. The fact that a product or experience is currently considered “good enough” does not mean that it’s good enough going forward. The fact that no one else has put in the effort to create something better is an opportunity, not an excuse to sit back on your laurels. In this never-ending crusade to improve the customer experience, Amazon has innovated, invented, and scaled a long list of historic firsts.

Customer Reviews. When it first launched, Amazon’s customer-review feature was controversial, particularly among vendors and brands, who only wanted shoppers to see the positive reviews of their products. (You have to remember that, until this point, brand-controlled testimonials were the main way customers could share their experience with a product.) But Jeff and Amazon were sure of themselves: it might cost a few customers in the short term, they argued, but including negative reviews alongside the positive was the only way to build long-term customer trust. Jeff was right—the move created an important level of customer trust that increased purchasing and loyalty.

Free Everyday Shipping. In 2000, Amazon began offering free shipping for all orders over $100. The catalog world had been the standard bearer for delivery by mail, and their deliveries consistently took ten to fourteen days and cost $6–$10. By 2002, Amazon dropped the purchase threshold to $25. Customers weren’t expecting free shipping—it was a new, better level of customer service that didn’t seem to have any immediate benefit for Amazon. In fact, the program was called out by analysts, competitors, and the press as unsustainable and irresponsible: Amazon. bomb, they joked. It turned out to be the opposite. For years, the program was Amazon’s only marketing effort.

1-Click Ordering. Entering login, billing, and shipping information every time you buy something online is repetitive and time consuming. Doing it once might not be a big deal, but by the time you’ve done it fifty to a hundred times, you’re talking about five hundred plus minutes of your life you won’t be getting back. By rolling out 1-Click Ordering in 1997, Amazon allowed customers to skip the shopping cart and confirmation experience for the first time in online-shopping history. In 1999, the company patented that advantage.

Look Inside the Book. When Amazon first proposed it’s Look Inside the Book feature, which would allow shoppers to read the first few pages of a book before buying it, publishers and authors were almost universally against it. If customers could tell whether or not they would like a book before buying it, they argued, sales would go down.

But Jeff was bullish: if the book isn’t the right fit for the customer, he argued, they should find out before they buy it. In the end, Jeff’s obsession with building long-term customer trust won out, and Look Inside the Book was launched in 2001, lifting book sales between 5 and 15 percent.

Prime. In 2005, Amazon launched its Prime loyalty program, offering free two-day shipping to members for an annual fee. But the free—and fast—shipping was just the beginning. By building up the appeal of a Prime membership, adding free music, movies, and other benefits, Amazon created a massive moat around its customers.

The free music, videos, and shipping lured Prime members in, but once they had access to all that free shipping, their shopping habits also increased. No need to make extra trips to the store for things like light bulbs and paper towels when you could have them delivered to your door for free in just two days.

Not only had Amazon increased its value per customer—estimates are that a Prime customer spends $1,110 a year, while non-Prime customers spend just $600⁵—but the benefits allowed Amazon to increase its prices. With so many additional benefits delivered to Prime members, Amazon no longer had to be the everyday low-price guy. Its fast, precise delivery had become more valuable.

Autorip. As music migrated online, customers were faced with a dilemma: if they wanted all of their music in one place, they would need to upload every album they’d ever bought on CD, many of which they might have lost or misplaced, to their digital libraries. Amazon couldn’t fix this problem, but it could provide its customers with a surprise bonus, something they didn’t expect.

That bonus was Autorip—a service that provided Amazon customers with free digital versions of any album they’d ever purchased through Amazon. It was just another of Amazon’s moves to build long-term goodwill among its customers rather than focusing on the short-term profits that could have been.

Each innovation on this list was controversial or negatively perceived by industry traditionalists when launched. Naysayers didn’t understand Amazon’s long-term strategy: obsess over a better customer experience to build long-term trust. But because of that strategy, one-click shopping, free shipping, customer reviews, and countless other Amazon innovations are now the standards by which customers measure all online-shopping experiences.

And, also because of that strategy, we’ve also seen Amazon confidently lead the way into the IoT product space.

Kindle. The Kindle wasn’t the first e-book on the market—Sony launched the Reader in 2006—but it was the first “connected device” pioneered by Amazon. And, like Amazon’s entry into online shopping, when Amazon turned its attention to revolutionizing the connected-reading experience, incredible things began to happen. Things that not too long before might have seemed impossible became possible.

Kindle’s Whispernet feature let users download books wirelessly to their devices. The Popular Highlights feature suddenly showed users which passages other Amazon readers had already highlighted. By syncing their reading experience across devices, readers could leave their Kindle behind on their nightstand and pick up where they’d left off on their phone or tablet. And Kindle’s lending club quickly identified and addressed an early e-book dilemma—how to share a digital library with your friends and family.

To casual observers, the effort Amazon put into creating these features might have seemed foolish—a waste of time and money. After all, Amazon sells both the Kindle Paperwhite and Kindle FireHD at below cost.⁶ But by keeping the Kindle price low and obsessing over readers’ needs, Amazon was building an army of voracious readers, game players, and content consumers. This army was buying more and more of their books and other products through the Kindle platform.

Amazon wasn’t making much money on the Kindle, but they were minting money on the products they sold from the Kindle.

Dash and Dash Buttons. A customer-focused Amazon might have been content to sit back and enjoy the spoils of its e-commerce successes, having already revolutionized online shopping. But a customer-obsessed Amazon soon realized that it was missing sales opportunities long before its customers even made it to the website—particularly when it came to household groceries.

Let’s think for a minute about restocking household supplies. It sounds boring, but that’s exactly how Amazon’s Dash program got its start. Let’s say you’re running low on disposable diapers—a product you really don’t want to be caught without. Sometimes you remember to add them to your shopping list, and you pick them up at the store later that day.

But more often you meant to add them to the list but instead got distracted by the dog, which just threw up on the floor, or the ping of a work e-mail. Maybe you accidentally run out of diapers and find yourself in the unenviable position of having to make a late-night run to the store. You drive all the way there, find a parking space, and spend several minutes walking up and down the aisles looking for the diaper section.

When you finally reach the diaper section, you spend a few minutes racking your brain: What size and brand of diapers were you supposed to buy? Is little Betsy still considered a newborn, or is she now a size two? And was it the Pampers or the Luvs that gave her the diaper rash last time? So you buy both sizes just to be safe. Maybe you even buy a few different brands to make sure you won’t need to make a return trip.

Somewhere at Amazon, a customer-obsessed team was thinking through this scenario—or perhaps it was one involving garbage bags—when they hit upon the idea for the Dash.

The original Dash was a physical wand, about the size of a Wii controller, that used Wi-Fi to help you order food and pantry items through Amazon Fresh. All you had to do was scan the item or say its name into the Dash, and it would automatically be added to your Fresh shopping list.

Of course, the wand itself was just part of the overall solution. The wand was connected to cloud infrastructure that stores and processes data—everything from information about the users and how they use the wand right down to the physical items ordered using the wand. From there, machine learning worked to improve the effectiveness of the customer experience, helping to improve photo recognition of items.

The wand itself never made it out of beta. Instead, its proudest accomplishment became the simpler, more direct Dash Button it spawned. Each Dash Button is a small connected device with an adhesive back: simply stick it next to the Pampers in your baby’s room, and push the button when you’re running low. Voilà! Your diapers are automatically ordered and shipped.

The button, which was launched the day before April Fools’ Day, 2015, was mistaken for a joke by many. Others skipped straight to mockery. “The idea of shopping buttons placed just within our reach,” wrote Ian Crouch for the New Yorker, “conjures an uneasy image of our homes as giant Skinner boxes, and of us as rats pressing pleasure levers until we pass out from exhaustion.”

But the Dash Button has been surprisingly successful. So successful that Amazon is now expanding the buttons to hundreds of new brands and products. The next generation of Dash is a set of sensors embedded directly within devices like Brita filters and washing machines. No button pushing necessary. They’ll reorder water filters and laundry soap on their own.

From widespread ridicule to widespread adoption…you’ll remember this pattern from Amazon’s most successful e-commerce innovations. Even the business model is familiar: Each Dash Button is $4.99, but you make that money back with an equivalent discount on your first order.

Drones. Amazon’s drone delivery program is simultaneously its most magical and it’s most predictable IoT innovation to date. I say predictable because, unlike the Dash or the Kindle, drone delivery is not meeting customers in a new place or creating a new purchasing platform. It is simply doing what Amazon has been focused on for a long time—making item delivery faster and faster.

And yet, as building the impossible goes, drone delivery is right up there. Amazon is inventing and building tiny private helicopters to deliver your packages. At the same time, it is fighting extended regulatory and PR battles that have pushed FAA policies to new levels of innovation and fundamentally shifted the public’s perception of drones.

Again, to competitors and stock analysts, this might seem crazy. And by the measure of quarterly earnings growth alone—the primary guidepost for most publicly traded companies—it is. Luckily, Jeff thinks about things differently. He and the rest of the Amazon team understand that Amazon’s true value proposition is to its customers. In one meeting I was a part of, Jeff told an enterprise client that he couldn’t imagine a world where a customer wants a higher price, a slower delivery, or a smaller selection. These were durable customer needs.

By keeping a laser focus on those three durable values and refusing to accept the status quo, Jeff and the Amazon team have made home delivery by drones not only possible but a damn good bet.

That is how innovation and disruption begin—create better customer experiences.

PUTTING IOT TO WORK FOR YOUR CUSTOMERS

“This all sounds nice,” you might be thinking, “but I’m not Jeff Bezos, my customers need very different things, and we have to generate a profit along the way.”

In some ways, you’d be right—nailing the next Kindle or Dash Button for your industry won’t be easy. But that’s exactly why IoT has become a game changer for those willing to obsess over their customers. The technology and solution components are accessible to every team, the cost basis is much improved and continuing to drop, and you can try small experiments without betting the farm. The key technologies of most IoT solutions include sensors, connectivity, cloud storage and processing, analytics, and machine learning.

Finding even one big success will require lots of experimentation. Many of those experiments will likely fail—just look at Amazon’s Fire Phone or its investment in Pets.com, one of the biggest jokes of the dot-com era. There are nearly unlimited opportunities to improve the customer experience by leveraging connected devices. What’s the path?

Start with the Customer. Walk yourself through an entire day in the life of your customer—just as we did earlier with the late-night diaper run. How might connected devices change the way that your product or service fits into that day?

Deep customer obsession is rooted in a company’s culture. One way to start building that is through a “voice of the customer” program. One thing to keep in mind about programs like this: successful customer feedback loops aren’t relegated to any one product or channel. They span the enterprise and include a deliberate, ongoing mechanism for taking in data from and about your customers. (One survey is not enough.) The good news is that, in a world of connected devices, this is getting easier all the time.

The toughest—and most important—part of the program will be empowering it to create change across the organization. This will require buy-in and collaboration across departments.

Remove Friction. Your next move is to identify and remove points of friction. What problems do your customers face? Why do customers contact you? What parts of your product or customer-service apparatus get in the way of solving those problems? And how could a connected device remove those pain points? Is there data you could be collecting that would give you or your customer new insight?

Sometimes the best way to create a great customer experience is to start by imagining a terrible customer experience. Imagine your grandmother trying to use a cell phone for the first time. No matter how intuitive the process, chances are good that something will go wrong. When it does, she’ll spend forty-five minutes on the phone with the nice customer-service agent explaining that “the angry blinkie thingies keep looking at me.” If that fails, she’ll be forced to drive all the way to her service provider’s physical location or, more likely, she’ll put the phone away in a drawer until her teenage grandchildren come to visit.

How could you reinvent this experience for her?

Unsurprisingly, Amazon has already tried its hand at this—the Kindle Fire’s Mayday feature lets customer service agents take over a user’s screen remotely, with their permission, to see and fix problems for them.

As you think about how to reduce friction in your industry, start by recreating a terrible customer experience, and then think about how the Internet of Things or connected devices could improve that experience.

Think Broadly. The next most innovative move in your industry may not directly involve your current product—just think about Amazon’s drones. Amazon is an e-commerce company, but it turned out that the design of online-shopping sites and the products they offer are no longer the biggest pain points for customers. The speed and efficiency of their delivery are.

Lastly, across all of these experiences, think about the power of the Internet of Things to provide a new interface to your customers. Connected devices empower you to learn more about your customers and to build deeper insights into your products and services and the environment in which they are used.

What data would help you understand your customers and their experience better? How can you collect that data? And, most importantly, how can you use that data, once collected, to create value and improve your customer experience?

Integrating this kind of thinking into your current customer planning is the key to transitioning from customer focused to customer obsessed.