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Little more than a decade ago, some wondered if Amazon.com might be a Ponzi scheme.
Today, the company has a market cap just under $85bn and has established a firm position as the 800 pound gorilla of online retail. But it has even bigger ambitions.
But its most ambitious initiative by far may be Amazon Web Services, which has made Amazon one of the most prominent players in the cloud computing market. It's so prominent, in fact, that when part of AWS experienced a meltdown recently, a number of popular and high-valued online services melted down with it.
To many, however, Amazon may not be headed in the right path. "What's the company's strategy?" they ask? "Is Amazon an online retailer, or...?"
According to Amazon founder and CEO Jeff Bezos, it all comes with the territory. At the company's shareholder meeting yesterday, he told the audience:
Any time you do something big, that’s disruptive — Kindle, AWS — there will be critics. And there will be at least two kinds of critics. There will be well-meaning critics who genuinely misunderstand what you are doing or genuinely have a different opinion.
And there will be the self-interested critics that have a vested interest in not liking what you are doing and they will have reason to misunderstand. And you have to be willing to ignore both types of critics. You listen to them, because you want to see, always testing, is it possible they are right?
At the end of the day, however, if you believe in your vision, you have to pursue it, Bezos believes. And so "we are willing to be misunderstood for long periods of time".
That statement may draw scorn from some Amazon shareholders, but is Bezos right? Should companies continue down a path, even when their motives and goals are misunderstood? Or is misunderstanding a red flag that a company is going in the wrong direction?
The answer, of course, depends on the facts.
On one hand, a company shouldn't expect that stakeholders and observers will always understand all facets of its strategy, or be amenable to change and expansion. It's simply not that easy, and questions and disagreement isn't necessarily an indication that a company is making a mistake.
On the other hand, being misunderstood can indeed be an indication that a company's strategy is starting to become discombobulated.
So how can companies spot the difference between healthy and unhealthy misunderstanding?
It all comes down to the customer. Decisions that are driven by customer demand and customer expectation are almost always better than decisions made with the hope that customers can be led down a new path.
In other words, when your customers (and not just shareholders, analysts, etc.) can't figure out what you're doing and why you're doing it, you may have a problem. When your customers understand and like what you're doing, however, the other stakeholders will eventually catch on.
From this perspective, the best question to ask when facing misunderstanding is: who misunderstands us? At the end of the day, shareholders, analysts and armchair critics matter a whole lot less than customers and employees, and companies should never let a little misunderstanding with the former prevent them from delivering value to the latter.