Amazon.com's Jeff Bezos, Culture Eats Strategy

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AuctionBytes Blog
News and insight focusing on
ecommerce and the online auction industry
by Ina Steiner, Editor of AuctionBytes.com

March 27, 2009

Amazon.com's Jeff Bezos, Culture Eats Strategy

By: Ina Steiner

Fri Mar 27 2009 23:52:56

People are talking about Amazon.com CEO Jeff Bezos, who spent the week working at one of his company's fulfillment centers in Lexington, Kentucky. (Just search Twitter for Jeff Bezos and you'll see the buzz.) What many people don't know is that every new Amazon.com employee has to spend time in the company's fulfillment centers within the first year of employment. In addition, every two years, they must do two days of customer service. Even Jeff Bezos must fulfill this requirement, he revealed in an interview published in the October 2007 issue of Harvard Business Review. (You can purchase the article here.)

It's clear from reading the HBR interview that Amazon's focus on customers comes straight from the top. (Note that the company now considers as customers three constituents: consumers, sellers and developers.)

In the interview, Jeff talks about the evolution of third-party selling on Amazon.com, from auctions, to zShops, to the move to a single-detail-page model where a seller has the opportunity to appear on the Buy box, which was a controversial decision at the time. Jeff said that whenever they are confronted with a decision that could be classified as "too hard," they convert it into a straightforward problem by asking, "Well, what's better for the consumer?"

In answering a question about culture, Jeff Bezos says Amazon is willing to plant seeds and wait a long time for them to turn into trees. "We're not always asking ourselves what's going to happen in the next quarter, and focusing on optics, and doing those other things that make it very difficult for some publicly traded companies to have the right strategy."

Whenever I think about leadership at the various online marketplaces, I think of a quote I read in Sramana Mitra's book, Entrepreneur Journeys, in an interview with Jerry Rawls of Finisar: "Culture eats strategy for breakfast."

Note: As I was finishing up this blog post, I came across this BusinessWeek article published today in which former eBay CEO Meg Whitman talks about how corporate culture gets imprinted.

Comments (17) | Permalink

Readers Comments

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: bite me

Sat Mar 28 00:55:10 2009

amazon has the right mindset

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: bezo unforgiving

Sat Mar 28 08:08:54 2009

s.o.b. amazon threw us off like 5 years ago when i had blood cancer lymphoma and had to delay in sending a few items out in a timely fashion. All buyers got their items and/or refunds long ago. FIVE years in trying to get back on amazon. The ratfinks will not give us a break.
jsicolts

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Patricia

Sat Mar 28 13:38:46 2009

How refreshing to hear the CEO actually KNOWS what makes the company tick because he gets down in the ranks with his employees!

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Hillary

Sat Mar 28 14:42:05 2009

I call "BS" on "Unforgiving". As a seller on Amazon, I can definitely say that you have to really suck to get kicked off. they even give a 30 day notice for the seller to improve. While I understand this seller was sick, buyers want their product when they pay for it. The fact someone was ill, is irrelevant in the business world. However, unlike Ebay, you rarely get a second chance with Amazon. On ebay, just create another ID, and it becomes a vicious circle of bad buyers and sellers.

another thought: It would be GREAT to see Donahoe do the same thing on Ebay, but he's to much of an elitist, completely clueless and out of touch...and it shows!

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: bizbabe

Sat Mar 28 14:53:59 2009

This is the big difference between Ebay and Amazon. Amazon respects and encourages its culture, while Ebay dismisses their and does what they can to reshape it to their own specifications. You can guide culture, but you can't command it. Ebay management despises the culture rather than embracing it. They would have benefited greatly from some gentle guidance rather than sledgehammer attempts to reshape the environment. Amazon has handled things quite well, especially in taking the long view and giving things a chance to evolve past the fist awkward stages.

I also agree with @Hillary. Being ill or having other personal issues are not relevant in the business world. People expect to receive their goods in a timely fashion once they've paid for them. They don't care that you're ill or that your car broke down. They just want their stuff. That's how online commerce works.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: On Lies and Secrets

Sat Mar 28 19:11:48 2009

I think there are many critical elements to Bezos' corporate philosophy that have served Amazon well over the years. The one I most admire is how they take calculated risks and allow new ideas or ways of doing things to mature before making a pronouncement about their value or efficacy. I have purchased from Amazon for ten years now; I am still buying the types of products that I bought from them originally (books). I am also buying things from them now that I could not have imagined ten years ago (drm free music downloads). Looking back over the years, I think Amazon has made many blunders, yet none of them have proven fatal and that says a lot about a company. I think companies that are built on a sound and substantive foundation and are managed in a sound and ethical fashion can do well. I think corporate culture and corporate ethics matter. I also think strategy matters, but strategy is a tool - it is not a system of values and not a corporate philosophy. IMO 'strategy' is not a business model. IMO, strategy alone is insufficient to run a company.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Ina

Sun Mar 29 10:41:44 2009

"I also think strategy matters, but strategy is a tool - it is not a system of values and not a corporate philosophy."

Interesting.

At Analyst Day, CTO Mark Carges said technology drives strategy at eBay. I was very surprised to hear this. I thought you set strategy (in keeping with your culture and values) and used technology to get there. I hope at some point eBay will elaborate.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: TekGems

Sun Mar 29 13:41:00 2009

So, when is John Donahue gonna come work for me so he knows what its like to be a seller? So many decisions eBay makes do not come from a place of doing what is best for its eBay users.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Ming the Merciless

Sun Mar 29 21:21:43 2009

IMO, corporate culture evolves from core ethics. And from within that culture strategies are created.

I read a revealing incestuous interview of NEG MEG Whitman in 2010 last week in which seemingly her entire take on ethics was the decision making process that determined early on what types of products ebay decided to ban.

Such a narrowly defined ethical framework and lack of ethical clarity explains why a corporate culture evolved in which it's acceptable if not encouraged to develop growth and/or survival strategies to achieve goals by any means necessary. This explains

--why ebay has stolen other companies' proprietary software

--why ebay refuses to deal with sellers in an honest, straightforward, unambiguous manner

--why ebay operates in a highly authoritarian and often fascist manner
--why ebay often issues misleading statements

--why ebay usually values profits more than fraud or customer service
--why ebay creates adversarial relationships with customers (sellers and buyers)

--why ebay often creates adversarial relationships with developers

--why ebay has developed a sales venue which promotes adversarial relationships between buyers and sellers

--why ebay can't develop a sustainable business plan to transform ebay into a mature and responsible corporation

--why ebay prefers to bank its cash reserves in non taxable offshore accounts rather than pay its fair share of US taxes, pay stockholders dividends, or improve both its infrastructure and customer service

This list could be much longer, but I think the point has been made. If not, then in addition to Amazon look at Google whose core value is Do No Harm and then consider the Google corporate culture that arose from its core values and the strategies that flowed from the core values and culture.

Ebay. The Big Sleazy.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: bite me

Sun Mar 29 23:02:32 2009

@ming

If you put half the effort you put into these inane rants into your other selling venues, maybe you could make a buck. Or you can just continue blaming ebay and cursing packing peanuts.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Ina

Sun Mar 29 23:16:00 2009

**A message from David and Ina:**

Please keep your comments on track and relevant to the original blog post, and be respectful of others' opinions. Once you see this message appear on a post, consider it a warning that we will delete any posts that follow if they continue to go off track or bully other commentors. We respect all opinions, but we are moderating the blog to keep it a useful vehicle for all AuctionBytes readers. Thank you.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Ina

Sun Mar 29 23:23:58 2009

I read the Meg Whitman interview (the link is at the bottom of the original post, above). It will be interesting if the issue of fraud on eBay becomes a campaign issue.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Kristoffer

Mon Mar 30 08:59:52 2009

I love hearing that Bezos actually works in different areas of Amazon. That's how every business should do it. Can you imagine if ebay had the same mindset? I would imagine that some things would change quickly if the dumbas* higher ups at ebay actually sold things for a few weeks, or answered the customer no-service phones.

If Amazon continues to do things right they will keep taking a chunk out of ebays business year after year without even trying to hard.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Ebay No More

Mon Mar 30 10:30:39 2009

I like that Bezos is out working in his warehouse. That's a refreshing change from most management practices today.

Interesting also to see that Amazon has finally acknowledged sellers as a customer. Amazon has been slow in the past to admit 3P sellers are indeed a prong in their own customer base. In Amazon's defense this is a concept that Ebay management has yet to fully grasp.

In the past Amazon has been quick to refund to appease ''their'' buyers but at the expense of 3P sellers. So the cost is not coming from Amazon's profits. Until I see Amazon share in more of the cost I have to remain skeptical. It's easy to have lofty customer service goals when you aren't footing the bill. What will be interesting to see is how Bezos maintains Amazon's stellar customer service standards when it comes from his own profits.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Bah !

Mon Mar 30 13:18:42 2009

We were not treated fairly by amazon, and no longer do business with that outfit whether buying or selling. Yes, i know it's a lot better than ebay but it left a bad taste.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Cowbell

Mon Mar 30 23:05:38 2009

Amazon has a leg up on eBay by acknowledging that sellers are indeed their customers. However, this relationship has serious issues.

Like eBay, Amazon does not believe in the existence of the "bad buyer."

Amazon allows sellers to receive negative feedback for their own policies which 3P sellers have no control over, such as shipping rates, and will not remove it.

The have contradictory rules, such as sellers must refund a buyer for any reason within 30 days, but will hold that refund against the seller. (They say they don't, but they do.)

No matter what they say about their appeals process, it's definitely "one strike, you're out."

That's no way to treat your paying customers.

Amazon.com's Jeff Bezos, Culture Eats Strategy

by: Ina

Mon Mar 30 23:31:25 2009

Amazon now says its customers are composed of consumers, sellers and developers.

I wonder if their consumer-focused culture is so ingrained that the words really don't translate into sellers actually being equal to consumers?

It seems like this would be a good area for Amazon.com to study. And if sellers really are meant to be as important, maybe Jeff and some execs from Alliance (what's it called now?) should go to work for some 3P sellers for a few days.

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