Amazon’s organizational culture is characterized by four key ingredients: pride in operational excellence, an obsession with customers, long-term thinking, and an eagerness to invent.
Understanding Amazon’s organizational culture
Amazon’s success as a company has made its organizational culture the subject of much discussion.
In a 2009 interview with Slate.com, former CEO and founder Jeff Bezos was asked how he defined Amazon now that the company had transitioned from a book retailer to one that sold consumer electronics and cloud computing services.
“We start with the customer and we work backward”, Bezos replied. “We learn whatever skills we need to service the customer. We build whatever technology we need to service the customer. The second thing is, we are inventors, so you won’t see us focusing on “me too” areas. We like to go down unexplored alleys and see what’s at the end.. And then the third thing is, we’re willing to be long-term-oriented, which I think is one of the rarest characteristics.”
How is Amazon’s organizational culture supported?
Here are a few of the ways Amazon supports its organizational culture and the four key ingredients on which it is based.
Writing and record-keeping
During meetings, Amazon records opinions and ideas involved in making business decisions.
Employees discuss the contents page by page and evaluate the information before moving forward.
This ensures that individuals can have their queries addressed right away before they forget to mention them at the conclusion of the meeting.
Jeff Bezos’s famous two-pizza rule stipulates that each team must be small enough to be fed by two pizzas.
The rule was initially devised for technical teams to avoid information loss and foster smoother communication.
However, it has now permeated teams across the entire organization.
Every Amazon employee is empowered to be an innovator.
While many companies claim they do the same, few would be able to match Amazon’s level of commitment.
To that end, any employee with an innovative idea can outline their vision in a “PRFAQ” document.
As the name suggests, the document must also include a mock press release and hypothetical FAQ that explains customer benefits.
Once submitted, a team of innovators assesses the idea and decides whether it will receive funding to go to market.
Several of Amazon’s most successful products have been found this way. Examples include Prime Now, Alexa, and Amazon Go.
Despite its title as the largest online marketplace in the world, Amazon maintains the sort of youthful exuberance more commonly seen in start-ups.
While similarly mature companies slow down or rest on their laurels, Amazon maintains a culture that supports the constant pursuit of excellence.
With employees working as if they’re trying to get a new company off the ground, Amazon has been able to silence critics who repeatedly suggest that its energy and innovation potential is not scalable.
Downsides of Amazon’s organizational culture
Despite its customer-centrism, innovation ability, and long-term focus, some former Amazon employees described its culture as one that promoted burnout and stress.
After speaking to over 100 former staff, The New York Times found that Amazon’s culture was characterized by:
- Anonymous evaluations and annual culling of low performers – where employees made informal pacts to intentionally leave negative feedback for certain employees and have them fired.
- Hostile work environments – with individuals encouraged to debate and criticize their co-workers to the point of mortification.
- Poor or non-existent boundaries – some were also required to attend conference calls whilst on vacation or work weekends and nights at home. This also manifested in instances where the company was inconsiderate and demanding toward individuals who had recently experienced personal hardships.
- Amazon’s organizational culture is characterized by four key ingredients: pride in operational excellence, an obsession with customers, long-term thinking, and an eagerness to invent.
- Amazon supports its culture with various strategies. These include extensive writing and record keeping, agility, innovation, and the maintenance of a culture more commonly seen in start-ups.
- Amazon’s constant pursuit of excellence can negatively impact some employees and create a toxic culture with poor or non-existent boundaries.
- Four Key Ingredients: Amazon’s organizational culture is built on four key ingredients: pride in operational excellence, customer obsession, long-term thinking, and a strong desire to invent.
- Writing and Record-Keeping: Amazon emphasizes writing and record-keeping during meetings. Opinions and ideas are documented, and discussions are thorough to address queries and concerns.
- Agility: Amazon’s “two-pizza rule” ensures that teams are small enough to foster efficient communication. This practice originated with technical teams but has extended across the organization.
- Innovation: Every Amazon employee is encouraged to be an innovator. Employees can propose innovative ideas through a structured process that involves creating a “PRFAQ” document with a mock press release and FAQ section.
- Startup Culture: Despite its size, Amazon maintains a startup-like culture that encourages constant pursuit of excellence and innovation, contributing to its ongoing success.
- Challenges: Amazon’s intense focus on operational excellence and innovation has led to some challenges, including reports of burnout, stress, and a toxic work culture. The company’s relentless pursuit of excellence can negatively impact work-life balance and boundaries for some employees.
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