The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
Understanding the Amazon organizational structure
Amazon is the largest eCommerce company in the world, employing over a million people spread across many different countries.
The Amazon organizational structure favors a vertical hierarchical approach with global, function-based groups and geographic divisions. This gives the company extensive top-down control over global operations, allowing it to increase market share and maintain market leadership status.
At the top of this chain is a senior management team reporting directly to CEO Jeff Bezos. Dubbed the S Team, this small team of Amazon senior executives works with Bezos to disseminate his ideas, solve problems, set high-level goals, and shape company culture.
The S Team has senior executives in charge of several function-based groups, including:
Finance.
Human resources.
Corporate affairs.
Amazon Web Services (AWS).
Worldwide consumers.
Amazon devices and digital management.
Worldwide operations.
Legal and secretariat.
Members of Amazon’s S Team
Amazon’s S Team (sometimes dubbed Amazon Steam) is comprised of 28 individuals:
CEO Andy Jassy.
CEO Doug Herrington – Worldwide Amazon Stores.
CEO Adam Selipsky – Amazon Web Services.
Chief Security Officer Steve Schmidt.
SVP and Distinguished Engineer James Hamilton – AWS.
SVP Amit Agarwal – Country Manager of Amazon India.
SVP Colleen Aubrey – Performance Advertising.
SVP Christine Beauchamp – North American Stores.
SVP Jeff Blackburn – Global Media & Entertainment.
SVP John Felton – Worldwide Operations.
SVP Beth Galetti – People, Experience, and Technology.
SVP Matt Garman – AWS Sales and Marketing.
SVP Russell Grandinetti – International Consumer.
SVP Drew Hardener – Worldwide Communications.
SVP Mike Hopkins – Prime Video and Amazon Studios.
SVP Paul Kotas – Advertising, Music & IMDb.
SVP Dave Limp – Devices & Services.
SVP Neil Lindsay – Prime and Marketing.
SVP Brian Olsavsky – Chief Financial Officer.
SVP and head scientist Rohit Prasad – Alexa Artificial Intelligence.
SVP Dave Treadwell – E-commerce Services.
SVP and general counsel David Zapolsky.
VP Peter DeSantis – Global Infrastructure and Customer Support.
VP Peter Krawiec – Worldwide Corporate Development
VP Steve Boom – Audio, Twitch & Games.
VP Candi Castleberry – Global Diversity, Equity, and Inclusion.
VP Udit Madan – Amazon Transportation.
VP Rob Williams – Device Software and Services.
Recent additions to the S Team
In December 2022, CEO Andy Jassy released a short note to explain that the S Team would be expanding with four additional members. These include:
Steve Boom – a Harvard Law School-educated employee with a Bachelor of Science in Electric Engineering from Stanford University. Boom served as the VP of Amazon Music for a decade between 2012 and 2022.
Candi Castleberry – the former VP of Intersectionality, Culture, and Diversity (ICD) at Twitter who was responsible for related initiatives both internally and on the social media platform. Castleberry has also worked at Xerox, Sun Microsystems, and Motorola.
Udit Madan – a 15-year Amazon veteran who now heads the rapidly growing Last Mile team at the company’s Bellevue, Washington campus. Madan is primarily tasked with connecting processes, people, and technology to develop innovative solutions.
Rob Williams – like Madan, Williams has been with Amazon for over a decade. He started as a financial analyst but then moved into the company’s global pricing, supply chain, and vendor management processes. Before becoming VP of Device Software and Services, he worked as a Senior Manager of Fintech Product Management.
Jassy noted that these new additions exemplified Amazon’s leadership principles and were also customer obsessed, inventive, curious, and had “a propensity to be right a lot”.
The additions of Castleberry and Madan were also seen as a way for the company to increase diversity among senior executives – a facet Amazon has tended to struggle with in the past.
Geographic divisions
Despite the vast geographical reach of Amazon, the company only has two geographic divisions: North America and International.
The company also utilizes groups according to physical location and related business goals. For instance, Amazon.com Inc. is the eCommerce arm of the company. It uses groups to manage eCommerce operations according to geographic regions and their associated regulatory frameworks and logistical challenges. Ultimately, this allows Amazon to address country or region-specific issues proactively and efficiently.
How has Amazon used organizational structure to its advantage?
Many would assume that a large, hierarchical organization would be rigid and resistant to change.
However, this is not the case at Amazon. The company is a flexible and adaptive market leader in eCommerce. Indeed, Amazon has caused disruptive innovation in online marketplaces and also in global logistics.
How is this status maintained in the face of centralized decision-making and top-down control?
One key contributing factor is the Two Pizza Rule. Instituted by Bezos, the Two Pizza Rule states that no meeting should be so large that two pizzas cannot feed the entire group.
The goal here is efficiency and scalability. Smaller teams spend less time managing timetables or keeping others in the loop and more time doing what needs to be done. In turn, each team has access to company resources to meet short and long-term goals. A product team, for example, can add new product lines without having to meet with the project, process, or logistics teams.
In purely theoretical terms, these teams are given more autonomy than say a worker in an Amazon warehouse. But they are very much marching to the beat of Bezos’ drum.
Stability
Stability is also a notable feature of the Amazon organizational structure – particularly in senior management.
Although there are frequent new additions to the S Team, many members have been in the same position for years or in some cases, decades. The long-term success of the hierarchical model has resulted in a highly experienced senior management team.
Ultimately, this has allowed Amazon to grow and expand into new markets without sacrificing competitiveness.
Key takeaways:
Amazon is a predominantly hierarchical organization incorporating function-based groups and geographic divisions.
Reportable to CEO Jeff Bezos is a group of senior executives called the S Team. Each member of the S Team is responsible for leading a functional or business unit. Many of these units are in fact large organizations in themselves.
Amazon has maintained its position as a flexible and adaptable market leader despite a rigid hierarchical structure. To some extent, this has been facilitated by small product teams having autonomous access to company resources and stable, experienced leadership.
In 2022, Amazon closed its divide in terms of total revenue, as it generated over $513 billion in revenue, compared to over $572 billion in revenue from Walmart.
In 2021, Amazon generated almost $470 billion in revenue, vs. eBay’s over $10.4 billion. In comparison, looking at revenues, Amazon was 45x times larger than eBay.
Amazon was not profitable once AWS was removed in 2022. In fact, Amazon, without AWS generated $10.6 billion in operating losses. While Amazon, without AWS, generated $12.2. billion operating income.
Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services, Amazon AWS, Subscription Services, Advertising revenues, and Physical Stores.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
In the Amazon Shareholders’ Letter for 2018, Jeff Bezos analyzed the Amazon business model, and it also focused on a few key lessons that Amazon as a company has learned over the years. These lessons are fundamental for any entrepreneur, of small or large organization to understand the pitfalls to avoid to run a successful company!
Amazon has a business model with many moving parts. With the e-commerce platform which generated over $222 billion in 2021, followed by third-party stores services which generated over $103 billion, Amazon AWS, which generated over $62 billion, Amazon advertising which generated over $31 billion and Amazon Prime which also generated over $31 billion, and physical stores which generated over $17 billion.
The Amazon Working Backwards Method is a product development methodology that advocates building a product based on customer needs. The Amazon Working Backwards Method gained traction after notable Amazon employee Ian McAllister shared the company’s product development approach on Quora. McAllister noted that the method seeks “to work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.”
The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.
In the letter to shareholders in 2016, Jeff Bezos addressed a topic he had been thinking quite profoundly in the last decades as he led Amazon: Day 1. As Jeff Bezos put it “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costco’s geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the company’s stores and divisions to more flexibly respond to local market conditions.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
