Harvard Business Publishing

When I started using my new Amazon Kindle, it became clear to me that CEO Jeff Bezos is trying to dominate the entire value chain in content, from author to consumption. At a svelte 10.3 ounces, my Kindle, through its free Whispernet connection, can download from 115,000 books, 327 blogs, 18 newspapers, and 15 magazines. It can also play MP3 music, read and send email, browse the internet, look up the meaning of any English word, view Word and HTML files - and it boots up in less than 10 seconds. On the other hand, some of the functions are clunky - the browser is rudimentary and it does not support core file types like PDF. Yet, I find reading on it easier than "using" paper. We need to also remember that this is Kindle version 1.

Will Amazons achieve mass penetration of this device? Who knows, but it is worth noting that the Kindle is not just a reader - like Sony's device - the Kindle is an entirely new form of network computer - and like the BlackBerry, will create whole new sets of user behavior. Amazon charges a hefty price for both the device ($399.00), digital books ($9.99 to $120.00 or more), and even blogs ($0.99 per month for selected titles). I expect prices to come down, and the device to open up more over time, and I did add Hamlet for free to my device by going to Project Gutenberg, and simply transferring it with my USB port. Any print media company or book seller that is not experimenting with this new device is missing out on a vital window into new consumer behavior.

The general lesson for all companies is that Amazon has this breakthrough strategic option because Bezos did not stick to his knitting. Think of the courage it took to enter one of the most crowded and competitive product categories in the world - consumer electronics. Imagine trying to get investment capital within an old line company like The New York Times to create a product like Kindle. My bet is that the executive chorus would universally shout: Stick to our knitting (even if our knitting is predictably shrinking)!

In a recent Business Week interview, Bezos said companies which innovate within their existing competencies are doomed to fail; innovation means building new competencies. As Gary Hamel eloquently stated in Leading the Revolution, most executives in an industry are "blind in the same way," both to what is happening and to what they don't see happening. In order to perceive new things, leaders must be willing to try innovations beyond current competencies. Put another way, if it is comfortable it is probably not profitable. You need to ask yourself:

• Is my firm's dedication to the core killing our ability to innovate?

• How can I, as a leader, help discover new customer needs?

• Do I have the courage to lead the investment in new capabilities to fulfill those needs?