HOW JEFF BEZOS MANAGES AT AMAZON.COM
In 1994, Jeffrey Bezos, a computer science and electrical engineering graduate from Princeton University, was growing weary of working for a Wall Street investment bank. His computer science background led him to see an entrepreneurial opportunity in the fact that Internet usage was growing at an accelerating pace. Bezos decided that the online book-selling market offered an opportunity for him to take advantage of his technical skills in the growing virtual marketplace. Determined to make a break, he packed up his belongings and drove to the West Coast, deciding while en route that Seattle, Washington—a new Mecca for high-tech software developers, and the hometown of Starbucks’s coffee shops— would be an ideal place to begin his venture. Bezos’s plan was to develop an online bookstore that would be customer friendly, easy to navigate, and offer the broadest possible selection of books at low prices.54 Bezos realized that, compared to a real “bricks and mortar” bookstore, an online bookstore could offer customers any book in print; his task was to provide online customers with an easy way to search for and learn about any book in print. Working with a handful of employees and operating from his garage in Seattle, Bezos launched his venture online in July 1995 with $7 million in borrowed capital.55 Within weeks, he was forced to relocate to new, larger premises and hire additional employees, as book sales soared. The problem facing him now was how to best motivate and coordinate his employees to best meet his new company’s goals. His solution was to organize employees into small groups and teams based on the work tasks they needed to perform in order to satisfy his customers. First, Bezos created the information technology (IT) team to continue to develop and improve the proprietary software he had initially developed. Then he formed the operations group to handle the day-to-day implementation of these systems and to manage the interface between the customer and the organization. Third, he created the materials management/logistics group to devise the most cost-efficient ways to obtain books from book publishers and distributors and then to ship them quickly to customers. As Amazon.com grew, these groups have helped it to expand into providing many other kinds of products for its customers such as CDs, electronics, and gifts. By 2006, Amazon.com had 24 different storefronts, with operations in eight countries, and it sold its products to hundreds of millions of customers around the globe. To ensure that Amazon.com strived to meet its goals of delivering books speedily with excellent customer service, Bezos paid attention to the way he motivated and controlled his employees. Realizing that providing good customer service is the most vital link between customers and a company, he decentralized authority and empowered employees to search for ways to better meet customer needs. Also, from the beginning, Bezos socialized his employees into his company by encouraging them to adopt his values of excellent customer service; he also established strong norms about how employees’ first task is to satisfy customers. All Amazon.com employees are carefully selected and recruited; they are then socialized by the members of their work groups so that they quickly learn how to provide excellent customer service. Also, to ensure his employees are motivated to provide excellent service, Bezos gives all employees stock in the company—today employees own over 10 percent of Amazon.com’s stock. Finally, as a leader, Bezos is a hands-on manager who works closely with employees to find innovative, cost-saving solutions to problems. Moreover, Bezos acts as a figurehead, and he behaves in a way that personifies Amazon’s desire to increase the well-being of employees and customers. Indeed, he spends a great deal of his time flying around the world to publicize his company and its activities and he has succeeded because Amazon.com is one of the most well-known dot.com companies. At Amazon.com, Jeff Bezos behaves in ways that help to improve employees’ work attitudes and increase their performance, which improves the wellbeing of employees, customers, and his company.
Questions for Discussion
1. In what ways has Jeff Bezos used organizational behavior tools and principles to motivate and coordinate his employees?
2. As Amazon.com continues to grow in size, what challenges do you think Jeff Bezos and his managers will confront as they attempt to increase the company’s performance?
3. Search the Internet to find out how well Amazon.com is currently performing and give examples of how it has used OB to enhance its effectiveness.