Jeff Bezos is the founder and Chief Executive Officer of Amazon.com. Forbes named him as the 17th most powerful person in 2015, down from 16th in 2014 (The World's Most Powerful People). He is also listed as #4 in Forbes 400, #3 Richest in Tech, #15 Billionaires in the world, and #11 Billionaires in the United States for 2015 (The World’s Most Powerful People). His current net worth is listed as $49.2 billion and changes daily with stock prices (The World's Billionaires). Jeff Bezos founded Amazon in 1994 under the name of Cadabra and the name was changed a year later to Amazon (Amazon). Amazon began as an online bookstore based out of a garage. Bezos would drive orders to the post office for delivery each night after working his normal job. With the leadership of Jeff Bezos, Amazon has grown to the largest online retailer in the United States (Amazon).
Leadership Style
Jeff Bezos has multiple leadership styles. This is important as the leader of a company worth more than $175 billion (The World's Most Innovative Companies). Blanken (2013) explains that “if you’re leading well, you won’t have just one leadership style.”
Jeff Bezos can be described as a “task-oriented transactional leader” (Sinha, 2015). Sinha (2015) defines a transactional leader as “one with rigorous benchmarks who is often uninterested in other people’s opinions.” Bezos is so different that other companies, such as Groupon, who have hired many former Amazon employees, have tried to use Bezos’s techniques with little success (McGinn, 2013).
McGinn (2013) researched Bezos’s leadership style and found two factors. The first one is that Bezos “tries to find the best truth at the time” (McGinn, 2013). He realizes that the truth may change but looks at the current truth. He also “refuses to accept the conventional wisdom about the way things are typically done” (McGinn, 2013). This was modeled with the introduction of the Kindle Fire. Bezos did not hold a large press conference as is customary. Instead, he invited reporters in small groups to see him. He personally conducted the product demonstrations. This one small change granted Amazon with “great press coverage” (McGinn, 2013). McGinn (2013) further states that “it’s a small example of how he tries to reinvent how things are done.”
Anders (2012) references Bezos as “the corporate chief that others most want to meet, emulate and deify.”
Vision
Jeff Bezos has one main vision – to make customers happy. This is reflected in the empty chair that Bezos leaves at the table during meetings. This empty chair “informs all attendees that they should consider that seat occupied by their customer, the most important person in the room” (Anders, 2012). Anders (2012) further explains that “if the empty chair is the ultimate boss at Amazon, then Bezos is its billionaire enforcer.” Amazon tracks its performance in many ways, with as many as 500 goals. Approximately 80% of those goals relate directly to customers (Anders, 2012). Bezos’s vision on customer service is based on what customers do and don’t want. For example, it has been shown that “a 0.1 second delay in page rendering can translate into a 1% drop in customer activity” (Anders, 2012). Customers want a page to load quickly or they will go elsewhere. Bezos is very strict when it comes to customer dissatisfaction such as “delays, defects and out-of-stock products” (Anders, 2012). Unlike most current companies and CEOs, Jeff Bezos’s focus is long term. He know that some investments will not become apparent for many years. In an interview with Charlie Rose, Bezos states “most companies wanna see a return in investment in, you know, one, two, three years” (Rose, 2013). He further responds “I’m willing for it to be five, six, seven years” (Rose, 2013).
Bezos realizes that not all projects can be completed in a couple of years. One example is the Kindle, Amazon Web Services, and Prime. In an interview with Adi Ignatius, Bezos states “if we needed to see meaningful financial results in two to three years, some of the most meaningful things we’ve done we would never have even started” (Ignatius, 2013).
Opportunities and Risk
Jeff Bezos is in innovator and is always looking for new ideas. Soper (2013) noted two innovation types from Bezos “incremental innovation and clean sheet, big innovation.” Approximately 70% of Amazon’s innovations fall under incremental innovation which can be defined as “making every process a little bit better, like finding defects and eliminating them” (Soper, 2013). Soper also discusses that in big innovation there is a high failure risk and one must be willing to fail in order to eventually succeed. Think of any new invention. Now think about the number of failed prototypes went into that one invention.
Bezos is not afraid to fail. “Bezos encourages Amazon employees to experiment constantly, and test promising ideas with the knowledge that they might fail (John, 2013).
As an innovator, Bezos has learned to think outside of the box. Actually, Bezos tells staff to throw away the box. The reason is simple, if there is a box, you are still referencing it (Rainer, 2013). Simply put “Amazon is Amazon because they refused to use current paradigms as their starting point” (Rainer, 2013).
Bezos’s mission to serve customers has led him to the discussion of the possibility of 30-minute delivery of items through the use of drones. Amazon is researching the use of drones to provide very fast delivery of items ordered online (Rose, 2013). Bezos admits that at the time of the interview, 2013, that it was years away from being a reality. This leader is always pushing the envelope to provide better services to the customer.
Empowerment
Bezos has empowered the customer. He started the company in a garage and personally drove the packages to the post office for delivery. To this day, he still checks customer feedback and rating. He even has a public email address available to any customer.
Bezos has enabled customers so much that corporate studies have shown to increase prices. In an interview with Charlie Rose, Bezos says they won’t raise prices “because doing so would erode trust. And that erosion of trust would cost us much more in the long term” (Rose, 2013). In an interview with Adi Ignatius, Bezos states “When things get complicated, we simplify by saying what’s best for the customer” (Ignatius, 2013). He further states that “then we take it as an article of faith if we do that, it’ll work out the long term” (Ignatius, 2013).
Amazon uses customer feedback to measure “the success of website features, products, and even packaging” (John, 2013). Bezos believes you should embrace changes based on customer feedback. These are some of the ways Bezos empowers the customer.
Contributions
As an innovator, Bezos allows his staff to create and invent. When creating the Kindle, Bezos knew that customers wanted a “crisp e-book reader that could download any book in 60 seconds or less” (Anders, 2012). He gave that target to his engineers and they were “free to solve technical challenges as they saw fit” (Anders, 2012). He did not start by boxing in everyone with the technical problems to the situation. It took years to perfect the hardware. In fact, one executive asked Bezos about the budget and his response was “how much do we have” (Anders, 2012).
Bezos believes in and implements the “two-pizza” rule (Chris, 2015). The rule states that “if food served on a meeting exceeds two boxes of pizza, this means there are too many people in the team” (Chris, 2015). This rule has worked well for Amazon. Many of the new innovations come from teams following the two-pizza rule. These teams have many resources available to them, including the support of Bezos.
Community
McGinn (2013) explains that Bezos is “always pushing people to rise to his level” because “he’s always the smartest guy in the room.” He wants to make people better and demands excellence. A phrase often heard at Amazon is “think big” (McGinn, 2013). Bezos is a tough leader but also fair.
Reflection
Bezos’s leadership style has been quoted as “infectious” (McGinn, 2013). The company is highly-turned into Bezos’s leadership style and vision. McGinn (2013) shares that “the people who do the best at Amazon are the people who absorb his [Bezos’s] principles.” One such example is Andy Jassy who “was the first official shadow at Amazon” (McGinn, 2013). Jassy’s job was to follow Bezos for two years and shadow him. Andy “now runs Amazon Web Services” and has become “an accomplished executive” (McGinn, 2013).
Bezos was questioned about what he has learned about leadership from running Amazon. His response was “one thing I learned within the first couple of years of starting the company is that in inventing and pioneering requires a willingness to be misunderstood for long periods of time” (Ignatius, 2013). He also talks about “persistence and patience, long term thinking, staying heads down, focused on the customer even while being criticized” (Ignatius, 2013).
Evaluation
Jeff Bezos is an effective leader. He supports his employees and focuses on the customer. If he weren’t an effective leader, Amazon would not currently have more than 150,000 employees, be listed as Forbes #8 Innovative Companies, #13 World’s Most Valuable Brands, #458 Global 2000, #80 Sales, #435 Assets, #34 Market Value, or #329 America’s Best Employers (The World's Most Innovative Companies). Statista shows Amazon’s net revenue for 2015 is $74.45 billion (Amazon annual net revenue 2015). References
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Blanken, R. (n.d.). 8 Common Leadership Styles. Retrieved February 24, 2016, from https://www.asaecenter.org/resources/articles/an_magazine/2013/january/8-common-leadership-styles
Chris, J. (2015, August 17). 8 Jeff Bezos Leadership Style Secrets - Joseph Chris Partners. Retrieved February 24, 2016, from http://www.josephchris.com/8-jeff-bezos-leadership-style-secrets
Ignatius, A. (2013, January 03). Jeff Bezos on Leading for the Long-Term at Amazon. Retrieved February 24, 2016, from https://hbr.org/ideacast/2013/01/jeff-bezos-on-leading-for-the
John, J. (2013, July 16). Leadership Lessons from Jeff Bezos. Retrieved February 24, 2016, from https://onlinemba.unc.edu/blog/leadership-lessons-from-jeff-bezos/
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Rose, C. (2013, December 01). Amazon's Jeff Bezos looks to the future. Retrieved February 24, 2016, from http://www.cbsnews.com/news/amazons-jeff-bezos-looks-to-the-future/
Soper, T. (2013, October 12). Amazon founder Jeff Bezos on the most important traits of innovators - GeekWire. Retrieved February 24, 2016, from http://www.geekwire.com/2013/bezos-amazon-hires/
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