Principles of Leadership and Organizational Culture at Amazon

Kantor and Streitfeld offered a captivating and often dramatic picture of elements of the organizational culture and climate at Amazon in an August 2015 article that appeared in the New York Times.  According to the article, new employees are immersed in the following “leadership principles” which are “inscribed on handy laminated cards” and posted on the company’s website and which serve as guides for them to break the “poor habits” they learned at their previous jobs and on how they are expected to interact with customers, co-exist with their colleagues and assess their own performance:

(1)        Customer Obsession: Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.

(2)        Ownership: Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say “that’s not my job.”

(3)        Invent and Simplify: Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here.” As we do new things, we accept that we may be misunderstood for long periods of time.

(4)        Are Right, A Lot: Leaders are right a lot. They have strong business judgment and good instincts.

(5)        Hire and Develop the Best: Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization. Leaders develop leaders and take seriously their role in coaching others.

(6)        Insist on the Highest Standards: Leaders have relentlessly high standards – many people may think these standards are unreasonably high. Leaders are continually raising the bar and driving their teams to deliver high quality products, services and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed.

(7)        Think Big: Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.

(8)        Bias for Action: Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.

(9)        Frugality: We try not to spend money on things that don’t matter to customers. Frugality breeds resourcefulness, self-sufficiency, and invention. There are no extra points for headcount, budget size, or fixed expense.

(10)      Vocally Self Critical: Leaders do not believe their or their team’s body odor smells of perfume. Leaders come forward with problems or information, even when doing so is awkward or embarrassing. Leaders benchmark themselves and their teams against the best.

(11)      Earn Trust of Others: Leaders are sincerely open-minded, genuinely listen, and are willing to examine their strongest convictions with humility.

(12)      Dive Deep: Leaders operate at all levels, stay connected to the details, and audit frequently. No task is beneath them.

(13)      Have Backbone; Disagree and Commit: Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

(14)      Deliver Results: Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.

New employees are given quizzes after a few days on the job and those able to achieve a perfect score on their recollection and understanding of the principles are given a virtual award that allows them to proclaim “I’m Peculiar”, an important indicator of the company’s intent to develop and maintain a unique workplace in which employees are held to standards described by the company itself as “unreasonably high”.

Parts of the article suggested that Amazon was an extremely difficult place to work, a place where “workers are encouraged to tear apart one another’s ideas in meetings … [and] … toil long and late (emails arrive past midnight, followed by text messages asking why they were not answered)” and an internal phone directory provides instructions to employees on how to send secret feedback to colleagues’ supervisors that employees complained was often used to sabotage their work.  The article included stories of complaints about 80-hour work weeks, interrupted vacations and little tolerance from managers and co-workers when employees struggled with life-threatening illnesses and family tragedies.

Jeff Bezos, the company’s founder who had successfully built Amazon to become the most valuable retailer in the US and had himself become the fifth wealthiest person in the world as of 2015 according to Forbes, encouraged employees to read the article, but commented that “… [t]he article doesn’t describe the Amazon I know or the caring Amazonians I work with every day … [and] … I don’t think any company adopting the approach portrayed could survive, much less thrive, in today’s highly competitive tech hiring environment”.  Needless to say, the article created a high level of controversy and debates among proponents and opponents of the Amazon culture emerged and persisted; however, the article was a useful case study of the development, articulation and application of organizational culture.

The “principles” listed above provide a map to the core characteristics of the company’s organizational culture and were explicitly developed by Bezos himself during the company’s early growth period in the mid-1990s.  The article noted some of the things that Bezos didn’t want to see in his business model—bureaucracy, profligate spending, lack of rigor—and his desire for the principles to serve as a codification of Bezos’ ideas about the workplace that included instructions that were simple enough to be followed by any new worker, applicable to any of the company’s enormous range of businesses and “stringent enough to stave off the mediocrity he feared”.  By all accounts, Bezos’ effort to design the organizational culture to work the way he wanted it to has been very successful and the article noted: “In contrast to companies where declarations about their philosophy amount to vague platitudes, Amazon has rules that are part of its daily language and rituals, used in hiring, cited at meetings and quoted in food-truck lines at lunchtime. Some Amazonians say they teach them to their children.”

Overriding themes come from Bezos and other executives beginning with Bezos’ own caution that “it’s not easy to work here” and employees must be committed to working long, hard and smart, a challenge expressed in the “bias for action” in the principles.  The admonition to employees to “think big” is consistent with the mission of Bezos and his executive team to continuously pursue “big, innovative, groundbreaking things”.  Several of the principles focus on personal goals for each employee such as being “the best”, taking “ownership”, and being able and eager to “dive deep” to find new ideas and solve problems.  Other principles touch on the way things operate in the workplace and how colleagues interact with one another: “frugality”, vocal self-criticism, high standards and regular practice of disagreement in advance of full commitment to decisions.  First and foremost, however, is principle No. 1: “customer obsession”.  Adherence to the principles is clearly a priority within the organization and the article quoted an interview that Bezos gave in 2014 in which he said: “My main job today: I work hard at helping to maintain the culture.”   

Amazonians are expected to “deliver results” (principle No. 14) and their performance against the principles is rigorously and relentlessly measured and critically analyzed, not surprising given Bezos’ long-standing obsession with data and data-driven management.  The article documents ranking of employees followed by departures of those who fall at the bottom of the charts.  Many other employees leave because they simply cannot or will not keep up with the pace and demands of the organizational culture.  The article quoted a former Amazon human resources executive as describing the process as “Purposeful Darwinism” focused on finding the “stars” who are most committed to the mission of the company.  Company officials wave away the complaints by emphasizing that new employees are on notice that they will be driven and pushed and not everyone will survive.  The article cited an Amazon recruiting video in which one of the speakers bluntly counseled: “You either fit here or you don’t. You love it or you don’t. There is no middle ground.”  Amazon also pointed out that many of those that leave the company take away skills and a work ethic that make them highly desirable recruits for other technology businesses such as Facebook and LinkedIn.

Among other things Bezos’ settled on his principles of organizational culture based on his personal enthusiasm for using data and his beliefs regarding how successful companies should be designed and operated.  His values can clearly be seen throughout Amazon’s organizational culture.  Will the culture survive and flourish?  The near-term outlook would appear promising as long as there is a steady stream of new candidates willing to take on the challenge.  Long-term prospects are unclear since configuration models of organizational culture suggest that societal debates regarding work-life balance and the actions of competitors to recruit from the same pool of workers will eventually influence Amazon’s organizational culture.

Sources: J. Kantor and D. Streitfeld, “Amazon’s Bruising, Thrilling Workplace”, The New York Times (August 16, 2015), A1.  The Amazon “leadership principles” included in the article above are published at http://www.amazon.jobs/principles.  Bezos’ response to the original article is chronicled in D. Streitfeld and J. Kantor, “Bezos Says Amazon Has No Room for ‘Callous’ Acts”, New York Times, August 18, 2015, B1.

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