Is Amazon an agile company?

Is Amazon an agile company?

Amazon is one of the pioneers of Agility. Since 1999, has used Agile methods for the management of its teams. Between 2004 and 2009, Scrum was widely adopted in the organization in a decentralized and unplanned way. Even if Amazon does not claim, it is one of the most agile companies on the planet. Let’s look at Amazon’s corporate culture from the 3 angles of our Agile Maturity Model which are Self-Organization, Value Generation and Adaptability.

Self-Organization

Two Pizza Teams

Even though the company currently has 12 levels of hierarchy, the organization is very flat compared to other companies of this size. Great autonomy is left to the teams to solve customer problems. From the early hours of Amazon, Jeff Bezos insisted, “If a team can’t be fed by two Pizzas, it’s too big.” Why is a team of more than 8 people less efficient? Quite simply because the larger the team, the more complex the communication within the team and the slower decision-making. Employees are involved when they perceive the impact of their work. The focus is primarily on results, as it is observed in the startup culture “do-or-die” .

“Forcing functions”

How does Amazon align so many teams towards the same goals? Amazon defines the guidelines of its strategy in the form of “Forcing Functions”. They obtain the results obtained in a functional and quantitative way by leading to a great freedom on the way to achieve them. Features are described as if announced in a press release. In the case of opening the platform to sellers, the future press release stated that “a seller would be able to register, list an item, fulfill an order and serve a customer as if Amazon had received the detailed order. “. The formulation is quite close to an “Epic” in the Agile language. The teams then designed all the tools, processes and measures to enable sellers to launch their store. Through data tracking, the entire organization has assessed the capabilities and processes to achieve this goal.

Collaboration between teams

The sharing of information between the teams did not work from the start. It was not uncommon for two or more teams to work on the same idea. To address these issues, functional experts are available in the form of senior engineers, senior product managers, and others. The organization ensures that when multiple teams work on the same idea, they lead to mistakes from others and also take different paths to avoid duplicate work. Jeff Bezos defined the rules of collaboration in teams and asked that they work in a defined way: “If a team needs information from another team, this information must be available in a dashboard”. The goal was to reduce the number of meetings and the coordination effort.

Value generation

Obsession for the customer

The CEO announced in his 1997 letter to shareholders to be “Customer Obsessed”: “It’s everyone’s job to know and have empathy and passion for the customer. Make sure everyone knows the details of the customer experience and what causes friction for customers. Until a few years ago, Jeff Bezos got into the habit of personally reading customer complaint messages. The managers then received these messages transmitted by Bezos himself with a succinct question mark “?”. Another practice at Amazon is to symbolize the presence of the customer with an empty chair in each meeting, and thus remind that everything that is done serves to satisfy the customer.

Simplicity

In 1999, Amazon was a public company and Jeff Bezos was a billionaire. Yet the company used makeshift desks with second-hand doors. “We were in front of a Home Depot. [Bezos] looked at the desks for sale and the doors for sale, and the doors were a lot cheaper, so he decided to buy a door and put his feet in it. Explains Nico Lovejoy, Amazon’s fifth employee in an Amazon blog post. It is a symbol of spending money on things that matter to customers’. Bezos explanation to a CBS reporter.

A challenging company

According to an article from the Seattle Times in 2020, Amazon has an impressive turn-over of 100%, more than twice the industry average. Amazon is known as a challenging and demanding place to work. Challenging in getting results, meaning the right results. Challenging for people to produce and master their domain. Challenging for teams and leaders to achieve the impossible: perfection in the customer experience. This potentially conflicts with a sustainable pace and employee satisfaction.

Adaptability

DevOps: A deployment every second

Migrating services to its own cloud has allowed Amazon to deliver several thousand software changes per day. As recommended in the Agile Manifesto, a short delivery cycle helps deliver value faster and reduces the risk of service disruption. All of this was only possible by investing heavily in technical excellence for continuous deployment, another agile principle.

Day 1: First Day Culture

Day One is the name of Amazon’s first building and sums up its philosophy: to always think of itself as a startup on its first day, when it has everything to build ahead of it. Customer obsession and quick decision-making are essential to avoid organizational stagnation. These two factors have allowed Amazon to quickly enter the market for innovative products and services. It encourages risk taking, creativity and agile working methods.

Failing and Creating

In the early 2000s, Amazon made a huge bet on Pets.com that turned out to be a total failure. It failed in creating a phone, a high-end market, and countless other projects. However, among these risks, many have borne fruit, such as the launch of AWS, which represents 10% of its turnover today. At the heart of the organization’s dynamism is the explicit embrace of experimentation, valuing of mistakes, and rapid learning.

Feedback culture

To help sharing feedback Amazon HR introduced “Connections” [5], a tool which is asking every employee a question each day when they log in to their computer. The questions cover topics like team dynamics, manager effectiveness or impediments. The answers provide aggregated feedback to the managers about areas to improve and give them recommendations about trainings and learning assets related to the topics.

Conclusion

While Amazon does not claim to be “Agile”, its culture incorporates several principles from the Agile Manifesto. Rather than the agile terms ‘Self-Organization’, ‘Customer Focus’ and ‘Embrace Change’ she uses her own vocabulary like ‘2 Pizza Teams’, ‘Customer Obsession’ and ‘Day One’. However, because of the very competitive context in which it operates, the company had to adopt a very demanding attitude towards its employees and partners. This aspect of Amazon’s culture was in conflict with sustainable paces for employees and partners which is promoted by the agile manifesto. This is why Amazon is rarely cited in the Agile litterature, even though it implements Agility at a very high level.

If you want also to develop a learning culture in your organization, take a look at our product TeamMeter. It will help you to get aggregated feedback about team dynamics and value generation with smart retrospectives.  

The references

  1. Think Like Amazon: 50 1/2 Ideas for Becoming a Digital Leader (McGrawHill Education, April 2019)
  2. https://www.theguardian.com/technology/2018/apr/24/the-two-pizza-rule-and-the-secret-of-amazons-success
  3. https://www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html
  4. https://www.seattletimes.com/business/amazon/amazons-turnover-rate-amid-pandemic-is-at-least-double-the-average-for-retail-and-warehousing-industries
  5. https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/fasttimes/interviews/beth-galetti

Photo credits: vohoaiduy / Pixabay

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