this is the kind of stuff you learn in business school, but bezos has the resources and the wherewithal to execute on it. verticalization is tantalizing for th

this is the kind of stuff you learn in business school, but bezos has the resources and the wherewithal to execute on it. verticalization is tantalizing for the promise that you can (1) capture existing value surplus (profit) and (2) consolidate services to reduce costs further. this gives you more operational margin to work with. but as the author says, often stagnation and complacency swallow those savings over time. so then, rather than a value chain service being locked into a single customer, amazon makes internal services compete externally, and prove their value financially as well as operationally. not only that, but those services must keep pace with industry innovations to remain competitive over time. this reminds me of the case of the chinese refrigerator company haier remaking itself into a global consumer electronics brand in part by implementing an internal market value chain mechanism to ensure a similar competitive instinct. each step in the value chain (down to the person) was evaluated for the value they produced and rewarded accordingly. people derive more satisfaction and work harder in a more competitive environment, although you can go overboard and end up creating a cut-throat one instead. as always, balance is key.