By Laura Stevens
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 16, 2017).
In planning Amazon.com Inc.'s second headquarters, Chief
Executive Jeff Bezos faces a new challenge: how to maintain the
online retail giant's carefully cultivated culture when he can't be
in two places at once.
The answer to his riddle may lie in one defining element of
Amazon's business practices. Its highly decentralized structure,
with small, siloed teams, is the equivalent of "1,000 independent
businesses, all marching in the same direction," says former Amazon
senior manager Eric Heller, who now helps brands sell on the
site.
Mr. Bezos has been fundamental in defining the Seattle-based
company's culture, setting the tone on everything from innovation
to how many pizzas teams should need to order in for lunch. Amazon
emphasizes 14 leadership principles that guide employee behavior,
focus and goals.
Former executives say that while they saw Mr. Bezos infrequently
-- in part because the 33-building Seattle campus is so large -- he
still has an outsize presence at the company he founded in his
garage in 1994. Mr. Bezos is known for encouraging employees to
reach out via email directly for his guidance. That's even as the
number of Amazon's employees surpasses 450,000 globally, including
the recent acquisition of Austin, Texas-based Whole Foods Market
Inc.
But Amazon, having outgrown Seattle, is now planning to split
its headquarters in half, an unusual step that presents the risk of
reduced collaboration, decreased face time and an off-kilter
leadership structure if executives don't split their time evenly
between the two sites, management experts say.
Amazon said the new location, which could house as many as
50,000 employees, will be equal in stature to Seattle. Amazon is
soliciting proposals for the $5 billion project from metro areas
that meet criteria including access to an international airport,
mass transit and more than a million people.
An Amazon spokesman declined to comment on the company's
plans.
Multinational corporations like Lenovo Group Ltd. and
advertising giant WPP maintain several large business centers, but
most are the result of mergers or cross-border shareholding
structures, such as Airbus SE.
Amazon already has more than a dozen tech hubs across the U.S.
as well as international offices, with about a quarter of its
corporate staff operating outside Seattle. But Amazon's power
center has always remained in and around the place where Mr. Bezos
founded the company.
Mr. Bezos, 53 years old, still works to preserve the remnants of
startup culture at Amazon, including a mandate to make quick
decisions.
"I've been reminding people that it's Day 1 for a couple of
decades," he wrote in his annual shareholder letter this year. "Day
2 is stasis. Followed by irrelevance. Followed by excruciating,
painful decline. Followed by death. And that is why it is always
Day 1."
Mr. Bezos constantly emphasizes Amazon's leadership principles,
such as customer obsession, ownership and frugality. Managers know
that the optimal size of a team is one that can be fed on two
pizzas.
He frequently forwards customer emails to teams with the message
"??," to jog them to respond.
Through "feedback mechanisms like that, we got clarity of what
he was looking for," said Jennifer Arthur, who worked at Amazon for
16 years and is now a general manager at online home-improvement
marketplace BuildDirect. "He also delivered a lot of the messages
and a lot of that consistency" via his senior leadership team.
Indeed, Mr. Bezos is likely to lean heavily on his team of
senior executives in opening the second headquarters. Veterans,
including senior executives who have shadowed Mr. Bezos, are often
chosen to open new remote offices to help ensure cultural
cohesion.
A similar tactic is likely to be used at the new headquarters.
Amazon has said team leaders will be allowed to choose whether to
keep their reports in Seattle, move them, or work out of both
locations.
Mr. Bezos will "probably send over some of his leaders who he
thinks are some of his strongest culture carriers," says Adam
Grant, an organizational psychologist and professor at the
University of Pennsylvania's Wharton School. "The people make the
place."
One trait that might prove helpful for a dual-headquartered
company is the decentralization of teams at Amazon. A former lead
engineer recalls being kept in the dark about other projects under
way just a floor or two above him in the same office building.
Other former employees say teams were at times purposefully kept
unaware of similar projects.
"Every team functions like an independent company," says Elaine
Kwon, founder of e-commerce management and software firm Kwontified
and a former Amazon manager. "They're all moving as quickly as they
can because they're given a lot of autonomy."
That can lead to confusion or duplication at times, some former
employees say -- something that could worsen with two
headquarters.
"One team rarely knows what another team is doing," says Chris
McCabe, a former Amazon performance evaluation and policy
enforcement investigator who now works with sellers on the
retailer's marketplace.
Still, Mr. Bezos expects employees to act like owners, even if
that pits teams against each other.
While launching the sports and outdoors marketplace platform
about a decade ago, former Amazon senior manager Mr. Heller was
given only a few weeks to get it up and running. He later even
competed directly against Amazon's internal retail team, something
he said demonstrated the leadership principle of putting the
customer first.
"You really had to almost represent it as your own business,"
says Mr. Heller, who has since founded consultation firm
Marketplace Ignition.
Write to Laura Stevens at laura.stevens@wsj.com
(END) Dow Jones Newswires
September 16, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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