What are Amazon’s management tactics? In what way does Bezos run Amazon differently than any other company?
Some of Amazon’s management tactics have become well known, and for a good reason. Jeff Bezos has a unique way of running Amazon and some of his practices include writing presentations in prose, the two-pizza teams, a door-desk prize for embodying values, and more.
Keep reading to learn about Amazon’s strange management practices.
Amazon’s Management Tactics
A number of Amazon’s management practices have become well known. Here is a profile of the ones mentioned in the book The Everything Store.
Bezos dislikes Powerpoint for allowing people to “hide between bullet points” and avoiding complete expression of thoughts. Instead, he requires people to write presentations in prose. New product releases require a mock press release, to start with what the customer would see and work backward. Meetings start with everyone reading the document for 15 minutes.
High Hiring Bars
“Each hire should raise the bar for the next hire, so that the overall talent pool is always improving.”
All participants in the hiring process give one of four ratings: strong no hire, inclined not to hire, inclined to hire, strong hire. A senior interviewer, called a “bar raiser” talks to the candidate last and makes a final judgment on the hire. These are employees who have proven themselves to be intuitive recruiters of talent.
Amazon’s 1994 hiring ad: “You must have experience designing and building large and complex systems, and you should be able to do so in about one-third the time that most competent people think possible.”
Employees should be organized into autonomous groups of fewer than ten people, such that they could be fed with two pizzas. Amazon believes larger groups have stifled communication and slow down decision-making.
Stretching the limits of autonomy, Bezos challenged teams to propose its own “fitness function,” a linear combination of metrics that showed its value generation. (like rate of marketing email opens * average order size generated). After some backlash in the awkwardness of setting one’s own metrics, Bezos backpedaled on this.
Communication is a Sign of Dysfunction
Bezos likes decentralization, autonomous working units, and independent decision making. He knew that top-down management as in Microsoft slowed decisions and stifled innovation.
Bezos believes teams should figure out how to communicate less, not more. Coordination among people wastes time, and the people closest to a problem should be solving them without discussing them.
Bezos hated seeing TVs mounted in a conference room as signs of clumsy communication. He had them removed and left the mounts hanging for years, “like a warlord leaving the decapitated heads of his enemies as a symbol.”
Around 2003 Bezos stopped having 1-on-1 meetings with his reports, thinking these are more often filled with trivial updates and politics rather than brainstorming and problem solving.
Operating reviews are done twice a year, over the summer and after the holiday season. Teams draw up 6-page documents spelling out their plans for the year ahead. Every doc contains a few tenets at the top, principles that guide the hard decisions.
Once a week on Tuesday, departments meet with managers to review data. The executive team questions every number and asks why things happened.
Once a week on Wednesday, the weekly business review happens run by Wilke. Sixty managers gather to review their departments, talk defects and forecasts.
Bezos doesn’t attend these meetings and doesn’t have 1-on-1s.
Prizes for Embodying Values
Amazon gives physical prizes when employees embody Amazon’s values. These include:
- Bias for action: Just Do It award
- During a 2000 earthquake, as Bezos and execs were huddling under a conference table, someone poked his head out, retrieved his laptop, and checked to see if Amazon.com is still live. Bezos liked this tendency to action.
- People taking action to lower prices for customers: Door-desk prize
Despite his frugality and insistence on work ethic, Bezos recognizes people when they perform.
He has thrown parties for long-lasting lieutenants, like flying friends and family of Shel Kaphan and Rick Dalzell to Hawaii.
When recruiting, he loops in the families of executives, like writing a CFO candidate and his wife a 2-page letter about the impact they could make at this juncture for the Internet.
Bezos repeats stories and principles endlessly, leading his staff to call these “Jeffisms.”
This repetition is a calculated strategy. It pounds the drum around the principles that everyone in the company needs to embody.
He often tells stories of Amazon’s early days, everyone shipping books on the floor late at night and barely running the servers off the house’s power.