MBA 300 DeVry University Week 11 Amazon Project
Project Plan: Include:
- Your approach for doing the necessary research
- What tools you are using to do your analysis
- Using a Gantt chart or any other project tracking tool, indicate what the steps are to finishing the project, how long each step takes and start and end dates for each step
Deliverable 4: Analysis of?Amazon’s?Leadership Style, Culture,? Decision Making, and Management Golden Gate University? MBA/LEAD 300-C: Management and Leadership? Dr. Bruce M. Wasserman? August 15, 2020? Executive Summary While Jeff Bezos may not embody all of the traits of a ‘Transformational Leader’, he certainly has most of the characteristics. “Mr. Bezos trumpets a philosophy that ‘it’s always Day 1 at Amazon,’ urging employees to never stop innovating or become complacent” (Mattioli, 2019). His mindset and leadership qualities has allowed Bezos to become one of the richest persons in the world, he is also the CEO of the most successful online retail business along with other ventures. As Robyn Hatfield (2017) describes: The underlying concept of transformational leadership is charisma. The need for charisma originates from the belief that employees are “overmanaged but underled”. It is an old concept that takes new meaning when applied to this leadership style. At its core is the belief that leaders should act as role models exhibiting a charisma that would influence others to want to be like the leader. This idealized leader is a risk-taker who leads by a set of values and ethical convictions. Through this idealized influence the leader builds trust with his followers. The followers develop confidence in the leader. Bezos continues to drive his organization around several key areas: customer-centric, long term planning, and empowering his employees. Bezos also leads the way as a visionary and strategic thinker amongst several other leadership qualities. The way Bezos has organized his company, regardless of the critique of Amazon’s culture and treatment of employees, has allowed them to sustain continued growth over the last decade. Figure 1 Amazon’s Impressive Long-Term Growth Note: Source is Amazon; retrieved from https://www.statista.com/chart/4298/amazons-long-term-growth/. The sustained growth and business results leads us to conclude that Jeff Bezos is the most effective leader when compared to Google’s, Sendar Pinchai. While Pinchai has been known for his leadership style and skills, and is no doubt highly effective at his job, it is difficult to compare an entrepreneur like Bezos to someone like Pinchai. When comparing the two CEOs, the reason Pinchai slides to second place may also be attributed to his outlook, “You always think there is someone in the Valley, working on something in a garage – something that will be better” (Kiss, 2017). This mentality sets these great leaders apart; Bezos does not focus on competitors but instead puts customers at the center of everything. Analysis Leadership When we first looked at Jeff Bezos’s leadership style compared to Google’s eight behaviors for great managers, it seemed obvious to assess his approach as subpar. As Google describes attributes of a great manager with qualities such as being a good coach, one who empowers without micromanaging, has concern for employee’s well-being, is a good communicator by listening and sharing information, and one who promotes career development, it appeared that Bezos was almost the exact opposite. Our research into Amazon uncovered a severe, ruthless culture with Bezos leading the way, “Jeff Bezos leadership style has been characterized as harsh, cutthroat and demanding” (Dudovskiy, 2020). As the New York Times described in 2015, “At Amazon, workers are encouraged to tear apart one another’s ideas in meetings, toil long and late (emails arrive past midnight, followed by text messages asking why they were not answered), and held to standards that the company boasts are unreasonably high. The internal phone directory instructs colleagues on how to send secret feedback to one another’s bosses” (Kantor, Streitfeld, 2015). Yet, if we vilify Bezos to be an incredibly poor manager, does that automatically assume that he is ineffective as a leader? One could argue that Bezos is productive and results oriented, has a clear vision and strategy, and has the technical skills to advise his teams, all traits on Google’s great manager list. Additionally, we found supporting articles that described Bezos as agile, innovative and purposeful – promoting long hours, but rewarding inventive employees (Denning, 2019). We even discovered that a hard-hearted culture does not equate to being non-productive. “Amazon has a very intensive corporate culture with an extensive emotional and even physical pressure to some employees.? Nevertheless, the technology giant has replaced Google as the best place to work in US, according to LinkedIn. This can be explained in a way that Amazon has a unique organizational culture that is not for everyone. Only employees who can thrive under immense pressure and fast-paced environment can survive in this company” (Dudovskiy, 2020). As for SCARF threats, we can predict that status may be a main threat and reward for Amazonians. Bezos has the power to threaten someone’s sense of status by giving harsh feedback or criticizing for mistakes. “It’s been alleged Bezos has barked out questions like ‘Are you lazy or just incompetent?’” (Cain, 2017). Yet, Bezos has the power to ease a status threat by rewarding employees, as some employees have acknowledged to be “bar raisers” or “star employees” (Kantor, Streitfeld, 2015). Certainty may also be an issue for Amazon if employees feel threatened about their future. Amazon is infamous for promoting a customer-first, agile culture, which causes predictability to be unclear. Bezos could reinforce certainty if he offers “music that has simple repeating patterns” or creates “the ability for employees to predict the flow of information” (Rock, 2008). Additionally, we would be amiss to not mention autonomy as a threat for employees. Bezos has control over many things at Amazon, so if employees feel micromanaged or lack of control, they will feel threatened. If Bezos wants to decrease the threat for autonomy, he could allow “people to set up their own desks” or “manage their working hours” (Rock, 2008). That would be one step in the right direction for improving his leadership style. Organizational Design Figure 2 Amazon Organizational Design Note: Amazon organizational chart. Retrieved from: https://research-methodology.net/amazon-organizational-structure-2-2/. The organizational structure of Amazon can be classified as hierarchical in nature. The senior management team structure consists of three CEOs and six senior vice presidents. They are responsible for various essential elements of the business and report directly to the head CEO of the company that is Jeff Bezos. The structure has three key features that are detailed below. Hierarchical corporate structure: This has been developed at Amazon due to its immense size of the business. Amazon is the largest retailer in the world in terms of revenue and employs more than “1 million employees and seasonal workers” all over the world (Nickelsburg, 2020). Flexibility of the business: Unlike many other similar companies like Amazon, who have widespread business, Amazon is quite flexible in nature. It adapts to frequent changes in the external marketplace (Aiken & Hage, 1968). It leads the market in the external environment and has caused disruptive innovation in e-commerce industry. This is all efficiently possible only due to the strong leadership and vision of the CEO of the company, Jeff Bezos. Stability at the top management: Stability is known to be one of the key attributes at Amazon. Being one of the largest online retailer companies in terms of revenue, it has been quite stable compared to its competitors in the e-commerce industry. The hierarchical structure of Amazon is quite efficient because the firm is organized into several small teams under separate management. This structure allows the managers to work more closely with the team members and helps to facilitate control over their unit. Hence, the current organizational structure of the firm works well and in the favor of the firm bringing in profits, productivity and success. Critical Thinking/Decision Making Jeff Bezos says all the decisions that he has made for himself and the company are always based on instinct and not on analysis. A decision was made by Jeff to switch from presentations to memo-writing. The narrative structure of a good memo forces better thought and brings about better understanding of the topic (Child, 1972). He ensured that people knew it was about the way one communicates information out in the public and not about the application of the information. Full sentences are harder to write and require full attention of the person writing it. This decision turned out to be effective since productivity has improved since this change. The decision was not subjected to any bias because this decision sits well for all the employees working at Amazon. Hence, it not only helps to bring about extensive critical thinking within the employees but also helps them think creatively and differently. “Disagree and Commit” (Bezos, 2016)?- with a goal of finalizing a decision, Bezos’ approach to disagreement is to allow those with a “conviction on a particular direction” to disagree with the decision being made but commit to it anyways. This way, the person’s opposition is noted but a decision can be made, and teams can quickly move to the next item. “By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes…If you’re the boss, you should do this too. I disagree and commit all the time” said Bezos (Murphy, Jr., 2020). “If you wait for 90%, in most cases, you’re probably being slow” he wrote in his 2016 letter to shareholders (Larson, 2018). Bezos believes that waiting for more data to make decisions is a common desire, but it?slows innovation. Having enough information to start and adjust accordingly while new data is found, relies on best-effort data analysis and continuous improvement. “You have to somehow make high-quality, high-velocity decisions,” Bezos wrote. “It’s easy for startups and very challenging for large organizations. The senior team at Amazon is determined to keep our decision-making velocity high.? Speed matters in business – plus a high-velocity decision-making environment is more fun too” (Larson, 2018).???? Situation Analysis Situation analysis can be defined as an evaluation of the internal and external parameters of a business. The models help to clearly identify the customer, the abilities of the business, its business environment, its potential customers and their impact on the company (Weihrich, 1982). Amazon opened its doors as one of the largest e-commerce retailers in the world. The strength of the firm is that it follows the low-cost leadership strategy that leads to lower priced products sold by Amazon. This not only attracts heaps of customers, but also helps to drive a better customer experience. Satisfied customers often return to firms that provide better customer experiences at lower rates. One of the biggest threats to the firm, since it operates in the cloud, is the theft of consumer data captured online. Rolling out its own online payment system has scaled up the business and its profits to a considerable extent. The firm can think of adding products under its own brand rather than producing itself to be a third-party brand. PESTLE Analysis A PESTLE analysis provides insight into the parameters that impact the business operations of the firm. Political stability can impact the business of Amazon since the firm operates on a global level. For example, the political stability of Australia has given the firm a good opportunity to expand to that region. Economic parameters are key elements that impact a business. Economic recessions in a country often reduce the profits of a firm. For instance, the Chinese economy is slowing down now and this recession could pose a threat to the business of Amazon. Social parameters are the trends, demographics and behavior of the consumers that affect the performance of the firm. The home delivery system and the online Prime shows have also added to the positive lifestyle of people who do not have time to step out. Technological factors are some of the main elements that add to the profits of the firm. Amazon is focused on technology in terms of cloud computing to satisfy its customers (Clarke, 2007). Regarding environmental factors, the firm has resisted pressures from investors and other shareholders to disclose information and data that is related to the impact the firm is having on the environment. The emissions from e-commerce businesses are difficult to estimate. Ordering online has been working in favor of both the customers and the firm since it saves fuel for customers to drive to the store and make a purchase. Legal factors are important for the firm to comply with laws passed by various governments the firm operates with. The laws that can impact the operations of Amazon are, anti-trust laws, discrimination laws, consumer protection laws, etc.; the firm should comply with these laws to avoid any legal issue with the government. Bezos’ initiatives have been quite responsive to the external environment and the parameters that have been affecting the operations of the firm. With its online shopping and doorstep delivery it has become convenient for all aged people to shop for anything they like online and get it delivered to their doorstep. Resource and Capabilities In Amazon’s 2019 Annual Report, it outlined a sharp vision of Amazon’s resource planning process; this is how Bezos’ brain works: Long-term investment decisions: “They think long term and don’t sacrifice long-term value for short-term results” (Bariso, 2020). Amazon manufactures and sells its primary branded electronic devices, from Kindle E-readers, Fire Tablets and Kindle Store to Fire TVs, and Echo; it also provides Kindle direct publishing that supplies independent authors and publishers to make their books available in the Kindle Store. This complete ‘self-produced-sell-support’ processing model is the most effective combination overall. Effectiveness of investment: “We will continue to measure our programs and the effectiveness of our investments analytically, to jettison those that do not provide acceptable returns, and to step up our investment in those that work best” (Bezos,1997, p. 2). In 2014, Amazon announced its first ‘test-the-waters’ product, the Fire Phone, but after a lack of sales, this product quickly upset Bezos after twenty days of its release. A year later Amazon finally gave up and stopped selling the Fire Phone and concentrated on its most successful device, Kindle Fire. They cut the loose end of their products promptly and saved the resources for the next project, a very agile and strategic move. Six-Page Rule: The six-page memo “contains an imagined future press release describing the benefits customers are getting and answers to ‘frequently asked questions’ about how the activity was developed. There is also a set of metrics by which customer benefits of the activity will be measured in real time” (Denning, 2019). This process ensures high-quality and thoughtful decisions made for future projects. Business Rhythm When considering Amazon’s business rhythm, our research supports that Bezos has a set rhythm that leans towards a more formal, yet effective approach. Bezos is not known for having small-talk conversations with employees or even asking about weekend plans, as he built a structure and policy that expects employees to put in overtime (Bhatnagar, Jaiswal, 2016). So, it would seem far-fetched to argue that he strives to hold informal communication. His tactics are more formal, with meetings, reviews and building more structure along the way. Bezos continues to “effectively force employees to work harder and faster” and by doing so, Amazon “climbed the ladder of achievements and accomplishments in an unrelenting, expeditious manner” (Bhatnagar, Jaiswal, 2016). Another clue to Amazon’s business rhythm is Bezos’ two pizza rule. To hold effective meetings, Bezos believes in the power of small groups. He calls it a “two pizza rule” which means that teams should be small enough to feed the entire group with only two pizzas; this means about five to seven people. As Bezos insists, “When teams grow larger, they have a tendency to become less efficient. This inefficiency reduces the output of the team and leads to waste” (Patel, n.d.). Bezos is also a stickler during employee presentations. He tends to be a tough critic and is firmly set on not using PowerPoint presentations (Cain, 2017). Although that may seem like a more informal behavior, the rule has created a structure for employees to be prepared, thus not holding an ineffective meeting. Note to Amazon employees – do not waste Bezos’ time. Alignment and Performance Over the past decade, Jeff Bezos has been unconventional, dreaming big and constantly working on his strategy, however he has stuck with three main characteristics as noted below. Restlessly focus on customers: “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online” (Farfan, 2019). It is one of the fourteen (14) leadership principles of Amazon and more importantly this is Bezos’ obsession that is presented in his first letter to Amazon shareholders. How satisfied are Amazon customers? Here are the numbers: according to Amazon’s 2019 Annual Report, since the end of 1997, they have experienced 838% revenue growth, from $147.8 million in 1997 to $280.52 billion in 2019. Working on the long term: “More than the $2 billion he’s pledged to nonprofits working on homelessness and education for low-income Americans, Bezos calls Blue Origin his “most important work” (Foer, 2019). Thinking ahead of the game, in areas such as energy demands and limited supply, Bezos considers how to solve resource scarcity, “we have to go to space to save Earth” (Bezos, 2018). His philanthropic strategy, this incredible civilization plan, has cost $1billion a year of Amazon stock since 2017. Amazon’s annual report proves Amazon and Bezos both have solid financial support to achieve this goal; shareholders should not worry about their equity. Metrics and Effectiveness Amazon has built its success through customers because it has always been a priority for the firm. They are constantly striving to provide the highest level of customer satisfaction. Hence, the success of the company can be measured by customer metrics (Allen & Allen, 2004). The customer metrics of Amazon depicts how well the firm is performing as sellers. The metrics have been put into place by the firm to ensure that the sellers, selling via Amazon’s website, meet the high expectations and demands of the consumers from all over the world. In this regard, metrics are used as quality control for sellers. The consumer metrics of Amazon contributes to the overall seller rating. The seller rating is measured using customer metrics along with seller feedback and is scored out of 100. There are five customer metrics which Amazon uses to measure seller’s performance on the portal: Order defect rate Cancellation rate Late dispatch rate Policy violations Contact response time The performance tab on the ‘Seller Central’ webpage gives an overview of their performance. The more customers that are satisfied, the higher the success level of the firm. These metrics are often effective because it gives numerical data points that are highly reliable and the performance of the seller can easily be measured (Gupta & Zeithaml, 2006). Change Management Jeff Bezos is one of the most amazing leaders, heading up the biggest online retailer company in the world. The communication ability of Bezos is one of the most important and effective leadership tools that has helped him manage and bring about change in the company (By, 2005). Jeff has always insisted on storytelling rather than presentations whenever meetings are conducted at Amazon. Creative thinking is the powerful energy behind successful organizational change. Bezos has been efficient enough in managing change at Amazon, by implementing three principles: One should not expect full support from every member at the firm, because some people will resist the change. As a change practitioner, one cannot be the decision maker all the time, but the leader can greatly influence the decision makers. Always operate with a beginner’s mindset, as change practitioners it is always a new learning experience with every change that is brought into the company (Gill, 2002). Hence, regardless of the experience, certifications, and positions, one cannot think they have mastered it all. Change is always a new learning experience within the company both to the employees and the management team. Hold yourself and everyone around you to higher standards; it is often tempting for many people to lower down to the client’s level that the firm is serving. True success always requires high standards. It is particularly important to properly lead the company and see how successful the change is and if it is effective enough. Amazon, being the largest online retailer, has navigated through the changes that take place in the market to successfully stay on top. Summary There are several reasons why Jeff Bezos has become of the most effective and revered leaders in the world. By identifying key areas early on, and pursuing those areas with unrelenting focus, Jeff and his company have come out on top and it appears they will be there for some time. Driving a customer-centric business, always thinking about the long-term market share versus short-term profits and continuing to innovate are just a handful of areas that Bezos continuously drives forward. Over the last few decades, he has grown as a leader and regardless of some bad press and his unconventional style, Jeff proves he is a visionary and leader that inspires and pushes people to commit to the broader goals of the company. Bezos’ leadership success requires a constant pulse on its customers, employees, and long-term vision. Warrick’s (2017) article identifies several areas that leaders “need to know about organizational culture” and Bezos has the majority of these covered. While Amazon’s culture may not hit on all the ‘High Performance Culture’ characteristics (Table 1), they embody most of them. Bezos as a leader has recognized how crucial vision, culture, remaining committed, and communication is to be successful. Per his various shareholder letters, he has shared his vision and continues to drive that vision by often communicating it to his internal and external stakeholders. Over the last decade, he has remained committed to the vision, and built a culture that is beyond high performing. Team Summary Topic Responsible Research, analysis and write-up by assigned?topic : Leadership; Business Rhythm Alignment and Performance Metrics; Resource and Capabilities: Organizational Design; Critical Thinking/Decision Making; Metrics and Effectiveness, Change Management; Situation Analysis: Executive Summary; Summary, Team Summary Working on this team assignment was mostly filled with highlights. Everyone was open to work on any of the assigned topics and as a group, in less than 10 minutes, we had all topics assigned. Everyone was very communicative and hit all the deadlines we had planned. Finalizing the paper went well with everyone contributing and providing feedback when required. Team 2 works very well together, and everyone is very appreciative of each other, the collaboration and the contributions. Andre stepped up when we announced Aki was unable to contribute to the final project, that was a major highlight; with little hesitation, Andre took over Aki’s two assigned topics. Of course, our project low was losing Aki and while we understand he had to make his own decision, we were all sad to see our teammate drop off in the end. It just goes to show, one never knows what may happen and we must always have a contingency plan ready. The padding that we built into our plan helped with this, and rather than scrambling in the end, we were able to quickly recover. 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Retrieved from?https://www.greyb.com/amazon-business-strategy/ Waddell, D., & Sohal, A. S. (1998). Resistance: a constructive tool for change management. Management decision.? Warrick, D.D. (2017) What leaders need to know about organizational culture. Kelly School of Business. BH816-PDF-ENG Weihrich, H. (1982). The TOWS matrix—A tool for situational analysis. Long Range Planning, 15(2), 54-66.? What We Can Learn?from?Amazon’s Planning Process. (2020). Nobl Academy. Retrieved from?https://academy.nobl.io/10x-thinking-and-cross-functional-goals-what-we-can-learn-from-amazons-planning-process/ ?Yohn, D. (2018). Company culture doesn’t need to be ‘warm and fuzzy’ to be effective. Quartz At Work. Retrieved from: https://qz.com/work/1227352/amazon-proves-company-culture-doesnt-need-to-be-warm-and-fuzzy-to-be-effective/ You can use this old project. But what is needed is one to two pages. It like a summary of it. This is a kind of Harvard publication is not a book.