AWS, a culture of innovation and velocity

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The richest man in the world is changing jobs. Amazon CEO Jeff Bezos is to be replaced by Amazon Web Services’ Andy Jassy. What does the culture look like in Jassy’s AWS, and are there any implications for Amazon?

The culture at AWS is one of constant iteration; an organisation where innovation is impelled at an astonishing pace. Andy Jassy, head of AWS at Amazon, describes the culture at Amazon:

 “At Amazon we love innovation. We’re builders here.”

Andy Jassy

The focus of the culture at AWS is about speed and creating new ideas and using those ideas to increase revenue. Innovation starts with examining opportunities 4; it is more than just idea generation but the actual transfer of the idea into a change in revenue. AWS demonstrate a track record of using new ideas to increase revenue. AWS increased quarterly operating income from $98 million in Q3 2014 to $521 million in Q3 2015, an increase of 430%. In Q4 2020, AWS posted $12.74 billion revenue and an operating income of $3.56 billion.

A vital feature of an organisation’s culture is the standards, business values and moral principles that management expound and observe. Managers must walk the talk.3At AWS, Amazon has a manager in Andy Jassy whose actions validate a culture of speed and innovation. Jassy introduced the unique ideas of a public cloud, established the AWS start-up team, and continually propelled the effort forward while ensuring AWS had the resources available for these endeavours to succeed.

Andy Jassy set a vision for AWS from early on, in 2002, he set the vision of ‘sharing Amazon’s know-how and infrastructure’ with other businesses. The key strengths of AWS where its technological prowess, data centre infrastructure and the lessons it had learned from developing its e-commerce platform. In 2002 Jassy recognised these strengths as an opportunity and set a vision of exploiting them by offering to share them with other businesses.  As the cloud business developed and grew, Jassy set a strong vision for the future. He defined a future where few companies owned their data centres and where less powerful mobile computing devices would perform the majority of tasks by accessing the cloud’s power.

 Jassy’s assertion was a compelling and robust vision for AWS. By exploiting their know-how, AWS could take advantage of the changing way people accessed the web. On the purpose of AWS, Jassy set a powerful vocation for the company:

“At Amazon, we love innovation. We’re builders here.”

Andy Jassy

This public statement by Jassy fixed the purpose of AWS as a business of creating things, and that innovation is the actual purpose of AWS.

Best cost and best features

Under Jassy AWS adopted a best-cost provider strategy by offering regular price reductions to customers, reducing prices 42 times between 2012 and 2014 while continually adding new features to their services. AWS have a strategy of being the lowest cost provider and offering superior attributes that would appeal to as many customers as possible. A fusion strategy of low cost and broad differentiation – a best-cost provider with the lowest prices and the best features. To maintain this type of leadership requires an organisation that can execute fast and be highly innovative. AWS has a high-performance culture bursting with a sense of success and positive pressure to get results.

“Under the gun to deliver the learnings were magnified”

Andy Jassy
A bruising place to work

Any discussion on the culture at Amazon cannot fail to mention the 2015 New York Times, (NYT), article on workplace culture at Amazon.6

In the article

“Inside Amazon: Wrestling Big Ideas in a Bruising Workplace”

Kantor and Streitfeld describe Amazon as a business running an experiment in how far it can push employees to get them to accomplish Amazon’s continually growing objectives. The article describes a harsh and unforgiving work environment where conflict is encouraged to foster innovation.

“In interviews, 40-year-old’s were convinced Amazon would replace them with 30-year-olds who could put in more hours, and 30-year-olds were sure that the company preferred to hire 20-somethings who would outwork them.”6

In response to the article Jeff Bezos, urged Amazon employees to report “callous” management practices to human resources or himself. Bezos noted that the NYT article did not portray the Amazon he knew or the considerate Amazonians he worked with.7Avoiding this type of unforgiving culture should be a priority for Jassy.

What next?

AWS is an organisation that places persistent importance on improvement and progress. If Jassy successfully transfers the AWS culture to the Amazon collective, great things await.

Bezos set the tone in the email to Amazon employees announcing his role change

“Keep inventing, and don’t despair when at first, the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1.”

Jeff Bezos

References.

1. Johnson G, Scholes K, Angwin D, Regne’r P, Whittington R. Exploring strategy: Text and cases. Eleventh edition ed. Harlow, England: Pearson; 2017. Accessed 2017-04-24T14:23:35+0000.

2. Chatman JA, Eunyoung Cha S. Leading by leveraging culture. Calif Manage Rev. 2003;45(4):20-34. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=11057040&site=ehost-live.

3. Thompson AA, Peteraf MA, Strickland AJ, Gamble JE. Crafting and executing strategy: Concepts and readings. Twentieth edition. ed. New York: McGraw-Hill/Irwin; 2016. Accessed 2017-04-24T14:44:30+0000.

4. Drucker PF(F. Innovation and entrepreneurship: Practice and principles. Rev. ed. ed. Amsterdam; London: Butterworth-Heinemann; 2007. Accessed 2016-12-09T14:21:45+0000.

5. Krazit T. AWS revenue up 42 percent to $3.66 billion in Q1 2017, operating income reaches $890 million. https://www.geekwire.com/2017/aws-revenue-42-percent-3-66-billion-q1-2017-operating-income-reaches-890-million/. Published 04/27/2017. Accessed 05/04, 2017.

6. Kantor J, Streitfield D. Inside amazon: Wrestling big ideas in a bruising workplace. http://www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html?_r=1. Published 08/15/2015. Accessed 11/24, 2016.

7. Kantor J, Streitfeld D. Jeff bezos says amazon won’t tolerate ‘Callous’ management practices. https://www.nytimes.com/2015/08/18/technology/amazon-bezos-workplace-management-practices.html. Published 08/17/2015. Accessed 04/26, 2017.

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