Taylor Swift is an outlier. To learn from her, we need to consider which phase of her career she was … More
One is the biggest pop star on the planet. The other is one of the world’s most valuable companies. But Taylor Swift and Amazon have two things in common. First, they are both are outliers in terms of success. Swift’s Eras tour was the highest-grossing music tour ever, generating more than $2 billion. Amazon has a market cap of more than $2 trillion and is the global leader in several industries. Second, they are both used to explain why particular strategies lead to success. Amazon is cited in no less than 700 Harvard Business Review articles for exactly this purpose.
The problem for strategists is that, as outliers, Swift and Amazon are able to do things others can’t. Drawing strategy lessons requires a chronological approach.
I spoke to Kevin Evers, the author of There’s Nothing Like This. The Strategic Genius Of Taylor Swift and a keen observer of business strategy, to understand which insights from their extraordinary success are transferrable, at which stage of a corporation’s lifecycle.
Phase 1: At the beginning, find a new niche
Entrepreneurs have three options. They can enter an established market doing the same thing that everyone else does, come up with a new twist, or target an entirely new niche market. The last option—often called a Blue Ocean strategy—is hard to pull off. However, it also offers entrepreneurs an opportunity to carve out a dominating position that lasts. That’s what both Swift and Amazon did.
“Swift wanted to write songs for an audience of her peers—teenage girls,” Evers points out. Country music did not see this as a market. Even more unusual, she wanted to write her own songs.
To pull it off, Swift needed a partner that was fully aligned with her vision. Even though she had a development contract with RCA, a big player, she decided to go with Scott Borchetta who was starting his own label. Evers explains what that means: “He didn’t have funding. He didn’t have headquarters. He didn’t have much of anything, really. But it ended up working out because Brochetta had a lot of skin in the game.” He needed this to work as much as Swift.
For new entrepreneurs the takeaway is obvious: developing a new niche market is tough and you need a fully committed partner with complementary skills. For Amazon that partner was Ingram, a wholesaler for books. Amazon’s relationship with Ingram meant it could list over a million titles right from the outset, even though its own warehouse only had a capacity of 2,000. In essence Jeff Bezos’ technology became the web frontend for Ingram.
Phase 2: Develop a second growth engine once you have succeeded
Swift’s first album was a major success. She had carved out a new audience in country music. But what would she do next? Should she double down or venture into something new? “The answer was a bit of both,” Evers explains. “Swift and her team were very careful not to alienate people in country music. But they also gradually started to move more into pop music.”
They did this carefully and deliberately as “they reconfigured some of her songs so they would play better on pop radio.” One reason Swift was able to make the move so successfully was that she had built a strong fan base, using emerging social media—at that time MySpace—to connect with them directly. Most of her fans were not concerned about the genre of music that Swift made, they only saw the artist. However, to complete the transition, new partnerships were needed. This meant working with new producers and leveraging the networks of her distributor, Universal Music Group.
Infiltrating pop without losing the country connection meant that Swift created a second growth engine. Amazon did the same thing when it moved into selling music and videos, gradually building a full-fledged online store. It did not stop there. In 2000 Amazon Marketplace became a third growth engine, two years later followed by a fourth, Amazon Web Services.
Importantly both Amazon and Swift did so after they touched the ceiling of their niche market. For companies who still have space to grow within their initial market, it makes sense to stick to what they know—and are known for—rather than getting distracted by new opportunities.
Phase 3: Do things no-one else can, once you built a big platform
At a 2016 technology conference Jeff Bezos made a somewhat puzzling statement: “When we win a Golden Globe, it helps us sell more shoes.” What he meant is that a Golden Globe nomination brings more customers to Amazon’s website but they end up buying something different. The big platform thrives on customer interaction. To oil this customer engagement machine, Amazon introduced Prime. For $12.99 you get access to binge-worth programming but also free shipping. A tactic that would not work without a big platform.
This is not the only unusual move that is unique to Amazon. The company is also known for building backwards. It starts with what would be a great product for customers, then gradually begins to build the required skills to deliver it. A good example is the Kindle. The plan was to do it with six people in 18 months. But as Steve Kessel, who lead the original Kindle team, later conceded, “It took us three-and-a-half years and a lot more than a couple of handfuls of folks.” That approach is only possible with very deep pockets. For most companies the more appropriate strategy starts with the competences it has rather than going for moon shots.
Today Amazon and Swift are outliers who can do things few others should try to copy. In Swift’s case this became obvious when she decides to eventually move fully into pop. Her label was worried about dropping the sizable country market and less successful artists would have no choice than listen to this advice. Swift did not and because of her powerful platform it worked. “It was potentially leaving a big segment of her market, yet she came up with one of the best-selling albums of the 2010s—1989,” says Evers.
For the latest she did not even release singles but instead created a TikTok series called “Midnights Mayhem with Me”, where she picked a numbered ball and then announces the corresponding name of an album track. This would not work for most artists, but in Swift’s case it created a social media buzz that propelled her to even greater success.
To learn from Swift and Amazon, consider which phase you are in
Articles often use examples from outliers to substantiate and idea the authors want to propose. That’s an easy trap to fall into. While outliers can offer great strategy lesson, this only works if you if you consider the phase you are in and match it with a moment in time when they were in a similar position. For most companies this will be phase one. For some it will be phase two. For very few, it will be phase three.
While you work towards that third and final phase, I can recommend the excellent book by Evers which draws many parallels between corporate strategy and Swift.
