Jeff Bezos Leadership

Jeffrey Preston “Jeff” Bezos, Founder, Chairman and CEO of Amazon.com once stated “I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.”1,3 These simple life principles of hard work, tenacity, and taking chances were heavily influenced by his supportive maternal grandparents. In truth, he credits his childhood summers working on their Texas ranch for instilling these valuable life lessons and allowing him to use his own ingenuity. He graciously describes these experiences as “incredible.”

Introduction

Bezos was born on January 12, 1964, in Albuquerque, New Mexico, to young parents, Jacklyn and Ted Jorgensen.1 After a year of marriage, his parents divorced and his mother later remarried his stepfather, Mike Bezos, a Cuban immigrant. At a young age, Bezos exhibited mechanical inclinations—from dismantling his crib with a screwdriver, to rigging an electric alarm to keep his younger siblings out of his room, to converting his parents’ garage into a laboratory for his science projects—which fueled his scientific curiosities.1 It was not until early into high school, that he was introduced to the school computer and quickly gained a fascination for it.1 After graduating as class valedictorian from Miami Palmetto Sr. High School, Bezos attended Princeton University and graduated with a degree in computer science and electrical engineering.1

Out of Princeton, he began his career on Wall Street studying market trends with Fitel, a start-up company.1 His move to D. E. Shaw, a stock market computer-science firm, where he met his wife, Mackenzie, quickly led to him becoming senior vice president (SVP). 1 It was during this time, that he noticed an alarming increase in internet usage, and questioned the opportunities available to a potentially new global market. 1 With a seemingly intriguing career ahead of him, Bezos opted to leave D. E. Shaw.

A year later, on July 16, 1995, Amazon.com launched online as a digital bookstore.1 Immediately, Amazon is an overnight success, and Bezos rivals Barnes & Nobles, Borders, and other brick-and-mortar big retail booksellers.1 Discussion Today, Amazon.com is arguably the world’s most customer centric company and Bezos is credited with having single-handily invented the gold standard by which the world measures online shopping. 1,15 In light of the tech giant’s success, Bezos has achieved billionaire status and has received a number of accolades for his business efforts. 1 In 1999, four-years after the inception of Amazon.com, he was named Time magazine’s Person of the Year.1 In 2008, he was recognized by U.S. News & World Report as one of America’s best leaders.1 In 2012, he was recognized by Fortune as Businessperson of the Year.22 And, as of November 2014, he was ranked the best-performing CEO in the World by Harvard Business Review (HBR). 18

Bezos is an outstanding business leader in terms of value creation and profitability with a twist of relentless idiosyncratic14 manner. Soon to be marked by its 20th anniversary, Amazon has seen resilient and remarkable growth under Bezos’s leadership. A thumb through Forbes, Fortune, The Wall Street Journal, or Time magazine, and his leadership style is a conversation of sorts among many in business. 2,7,9,10,14,16,17,18 A critique of Bezos’s leadership style under the theories of leadership, have him coined transformational and transactional. In fact, an analysis presented by Human Capital Growth asserts “Bezos embodies many of the characteristics of transformational and transactional leaders.”7 Not to mention, Forbes touting the leader as charismatic.17 Yes, there are good reasons to believe that Bezos could be considered transformational and transactional, since he displays some overlapping character traits.

However, neither strategy truly exemplifies the unique picture of the captivating success amassed by the tech giant under his leadership. Rather, Bezos, a self-described nerd, has masterfully crafted himself into a modern-day Rockefeller—a pacesetting visionary who has skillfully used his extraordinary financial and technical skills, while banishing, with a shrewd kid-like disposition, the competition— to transform the online retail space.16 Transformational Leadership Style Transformational leadership, also referred to as empathic or charisma leadership, is a people-oriented style focused on developing the employee. 4,5 Generally a leader, under this theory, functions as a role model to inspire and motivate, to show concern for the needs and feelings of others, and to challenge others to be innovative and creative.4

A study published by the Journal of Occupational and Environmental Medicine, suggest that a “transformational leadership style, promotes a sense of trust and meaningfulness, individually challenges and develops employees, and has a positive effect on employee well-being.”4 The study further claims that the leadership style is especially important because of the communication skills employed, such as recognizing the needs of others and resolving conflicts as “essential components of workplace health promotion and prevention efforts” concluded by the authors. 4

Transformational or Intimidation Leader Indeed, Bezos displays character traits of a transformational leader—inspiring, energetic, passionate, and enthusiastic—yet this approach is not the style of leadership which he leads by. Undoubtedly, he is highly recognized, but not all of his awards are for outstanding business performance. In fact, during the 2014 3 rd Annual ITUC World Congress in Berlin, he was crowned the World’s Worst Boss citing complaints of difficult working conditions. 12 Independently, a 2013 Payscale.com report cited by International Business Times, ranked Amazon 2nd among fortune 500 firms for highest employee turnover behind Massachusetts Mutual Life. 13 Not to mention, a critique posted by a former contract worker, Steve Barker, criticizing the chief for the company’s insensitive work practices—adding insult to injury. 23

Again, to reiterate the study’s conclusions, this leadership style suggests that if an organization focuses on employee wellbeing “empowering the employee” the implied results are improved corporate performance. On the contrary, Bezos’s approach entails intimidating his employees with an empty chair representing the customer as the ultimate boss in the room during a meeting. 14 Rather, this is Bezos’s way of influencing and empowering his employees to improve on performance.14 Thus, Bezos’s underlying leadership framework is not transformative. A transformative leader would not lose employees, or intimidate employees with an inanimate object, or ignore their complaints of harsh working conditions, or use them as a means to an end for Amazon’s disposal.

Transactional Leadership Style

Synonymously coined “managerial leadership,” transactional leadership involves leading with literally an “iron fist.”8 This leadership style is based on the idea that the person in charge measures, trains, and changes employee performance by rewarding or punishing employees to influence expectations.8 Unlike transformative leaders who share their vision, transactional leaders are instructional and prefer the status quo.8 Furthermore, leaders who employs this approach are by and large: micromanagers, uncreative, passive, in-the-box thinkers, and practical.8 Micromanager with an Obsessive Customer Focus Admittedly, Bezos is known to micromanage with an eye for detail. 7,20

However, he unequivocally states “determine what your customers need, and work backwards,” and “if customers don’t want something, it’s gone, even if that means breaking apart a once powerful department.”14 To this end, Bezos believes that pleasing the tech giant’s 164 million customers over its 56,000 employees’ is Amazon’s greatest asset.14 In essence, Bezos takes embracing the customer to an extreme level. For example, Amazon tracks its performance against roughly 500 measurable goals with nearly 80% related to customer objectives.14 Not to mention, employees engage in intense weekly debates over which metrics to watch.14

Likewise, Bezos’s obsessive customer focus reached a new standard when he set an impossible delivery target of 60 seconds for the Kindle e-book downloadable speed without considering any technical issues.14 Rather, he allowed engineers to freely solve the technical aspects as they saw fit, with their only constraint, according to Bezos, to get it right for consumers.14 When questioned about how much money he wanted to spend on the project, Bezos shot back “How much do we have.”14 Sure, Bezos could be considered a micromanager, but if Bezos were a true transactional leader he would not allow radical acts such as employees working independently to freely innovate, setting high performance standards tailored to customer expectations, intense debates among employees to measure their performance, or untamed spending habits.

Leadership Drives Company Performance

Rather, a leadership style should be analyzed in light of a CEO’s company performance. Bezos exhibits a leadership style encompassing both that of a visionary and a pacesetter. A visionary leadership style embodies the leader articulating their vision for the direction of the firm but not necessarily detailing how the firm will reach its intended target.11 Bezos has shown exceptional visionary leadership style from the outset, his skills were most significant during the dot.com period. During the peak of the 1999 – 2001 internet collapse, many online companies failed to recovery for lack of planning, while Bezos anticipated the dot.com bust ahead of the curve and steered Amazon clear.1

In fact, Amazon’s stock would lose over 93% of its value. 19 But, due to his quick thinking, Amazon avoided disaster and Bezos strategically moved the firm towards growth.1 Over the years, he continued to heavily invest in tangibles, thus moving Amazon from simply being an online store to a firm holding real assets. Bezos financial savviness from his days working on Wall Street are paying dividends for company. 1 Today, the company’s share price is over $450, up nearly 290% over the five-year period.19 Moreover, its revenues has increased nearly 275% in the same period, and with a market capitalization over $200 billon it rivals its mature competitors.19 Notwithstanding, Bezos has generated astronomical shareholder returns of 15,189% over his tenure.

With Amazon’s financial performance, Bezos is beating the market by leaps and bounds. Bezos has proven to Wall Street that under his direction Amazon can be a powerhouse well into its future. Pacesetter Leadership Style Unlike visionary leaders who articulate the vision, pacesetter leaders focus on setting the standards of performance for carrying out the vision. Bezos is a rare breed in that he’s able to clearly state a vision for the company and in the same instance set the expectations for superb performance for obtaining the target.

For example, Bezos took what started out as an online bookstore and evolved Amazon into an anything store carrying over 20 million items for its customers.20,21 Bezos set extremely high operational standards around achieving 100% prevention of eliminating delays, product defects, and out-of-stock products.14 In fact, Amazon tracks such metrics closely making them as rare as possible.14 As a result, he has expanded the boundaries and reach of Amazon, and curved out its place by ‘out-muscling’ other firms in the retail, technology, and business services spaces on customer focused performance alone. 17

Adaptive Leadership Stance

Additionally, central to Bezos vision is his ability to decode and quickly adapt to customer trends.10,20 His insight is near unparalleled in his ability to frame Amazon around its customers, its liken to operating Amazon like “mastering a chest game in his mine.”14,20 With Bezos’s bold stance, to focus on the customer he has cornered the online space and continues to improve to this end.18 Bezos’s demand for high performance has translated into an “obsessive about doing things cheaper, better, and faster” for the customer.14 Bezos insistence is also seen in his move to acquire a new $750 million Kiva14 technology system to improve faster package delivery, and his use of drones for “same day service.” 14

Not to mention, his meticulous attention to details, a data-driven Bezos has shown that a delay of 0.1 second in webpage upload speed translates into a 1% drop in customer activity.14 Notwithstanding, Bezos has been highly criticized for Amazon’s rapid expansion efforts and operating losses, he maintains “Amazon continues to execute well toward becoming the world’s largest ‘store.’”23,24 As such, true to Bezos’s core is his ability to be employ both visionary and pacesetter leadership skills—this adaptive style has accounted for much of Amazon’s present success.

Conclusion

Marked by humble beginnings, this simple father of four turned corporate chief is an innovative genius. Hence, what began as an online bookstore operated out of a rundown 2- bedroom house garage in Seattle, Washington, has become one of the most recognizable brands in the world. Jeff Bezos’s style of leadership is very important to the corporate culture because it challenges conventional styles of leadership ideologies and advocates for innovation. Granted, Bezos style is unique to Amazon but its disruptive nature may be utilized by other firms to stimulate growth and competitiveness. The visionary leadership style provides opportunities, while the pacesetter leadership style sets high performance expectations which execute against the opportunities.

This type of adaptive leadership style is rarely found in any one individual, with the exception of a few liken to Bezos. As such, Bezos is a shareholder’s dream CEO and the lessons that is he has created should be captured by anyone looking to aspire to such heights. Completing this report has given me new found admiration for Bezos, and I truly look forward to surpassing his success in the future. In summary, Bezos has fallible character traits, but such traits should not over shallow Amazon’s remarkable achievements and its global influence sustained under his leadership. Thus, Bezos is a role model deserving the highest distinction as Harvard Business Review’s best performing CEO.

References

1. Academy of Achievement. “Jeffrey P. Bezos Biography—Academy of Achievement,” last modified September 30, 2013, accessed July 1, 2015, http://www.achievement.org/autodoc/page/bez0bio-1.
2. Adam Hartung, “Why Jeff Bezos is Our Greatest Living CEO,” Forbes, January 8, 2013, http://www.forbes.com/sites/adamhartung/2013/01/08/why-jeff-bezos-is-our-greatestliving-ceo/.
3. Ajaero T. Martins, “Jeff Bezos Quotes,” MyTopBusinessideas.com, http://www.mytopbusinessideas.com/jeff-bezos-quotes/.
4. Kendra Cherry, “Transformational Leadership Linked to Positive Effects on WellBeing,” About.com, http://psychology.about.com/od/leadership/fl/Transformational-LeadershipLinked-to-Positive-Effects-on-Well-Being.htm.
5. Wikipedia. “Transformational Leadership,” last modified July 11, 2015, accessed July 12, 2015, https://en.wikipedia.org/wiki/Transformational_leadership.
6. C. Jacobs, H. Pfaff, B. Lehner et al, “The influence of transformational leadership on employee well-being: results from a survey of companies in the information and communication technology sector in Germany,” J Occup Environ Med. 2013; 55(7):772-8, http://www.acoem.org/TransformLead.aspx#sthash.COdSA7fL.dpuf.
7. J. Djumalieva, I. Widlak, and S. Sarkar-Barney, “Leader of Tomorrow: Secret Ingredients,” Human Capital Growth What MattersTM, September 2013, http://www.humancapitalgrowth.com/resources/newsletter/September2013.
8. Kendra Cherry, “What is Transactional Leadership,” About.com, http://psychology.about.com/od/leadership/f/transactional-leadership.htm.
9. George Anders, “Jeff Bezos’s Top 10 Leadership Lessons,” Forbes, April 4, 2012, http://www.forbes.com/sites/georgeanders/2012/04/04/bezos-tips/.
10. George Anders, “Inside Amazon’s Idea Machine: How Bezos Decodes Customers,” Forbes, April 4, 2012, http://www.forbes.com/sites/georgeanders/2012/04/04/inside-amazon/.
11. The Wall Street Journal, “Leadership Styles,” accessed July 1, 2015, http://guides.wsj.com/management/developing-a-leadership-style/how-to-develop-a-leadershipstyle/.
12. ITUC CSI IGB, “Amazon’s Jeff Bezos Wins ITUC’s World’s Worst Boss Poll,” May 22, 1014, http://www.ituc-csi.org/amazon-s-jeff-bezos-wins-ituc-s.
13. Lisa Mahapatra, “Amazon.com Has Second Highest Employee Turnover of All Fortune 500 Companies,” International Business Times, July 26, 2013, http://www.ibtimes.com/amazoncom-has-second-highest-employee-turnover-all-fortune-500-companies-1361257, also see http://www.payscale.com/data-packages/employee-loyalty/full-list.
14. George Anders, “Jeff Bezos Reveals His No. 1 Leadership Secret,” Forbes, April 4, 2012, http://www.forbes.com/forbes/2012/0423/ceo-compensation-12-amazon-technology-jeffbezos-gets-it.html.
15. TED, “Jeff Bezos Online Commerce Pioneer,” https://www.ted.com/speakers/jeff_bezos.
16. Venkatesh Rao, “Great CEOs Must Be Either Technical or Financial,” Forbes, March 9, 2013, http://www.forbes.com/sites/venkateshrao/2012/03/09/great-ceos-must-be-eithertechnical-or-financial/.
17. Steven Rosenbaum, “Leading from Behind—The Secret to Jeff Bezos’s Success,” Forbes, February 20, 2014, http://www.forbes.com/sites/stevenrosenbaum/2014/02/10/leadingfrom-behind/.
18. Harvard Business Review Staff, “The Best-Performing CEOs in the World,” Harvard Business Review, November 2014, https://hbr.org/2014/11/the-best-performing-ceos-in-theworld.
19. Morningstar, “Growth, Profitability, and Financial Ratios for Amazon.com Inc.” http://financials.morningstar.com/ratios/r.html?t=AMZN.
20. Dan McGinn, “How Jeff Bezos Makes Decisions,” Harvard Business Review, October 18, 2013, https://hbr.org/2013/10/how-jeff-bezos-makes-decisions.
21. David Streitfeld, “Examining the Amazon Way,” The New York Times, September 26, 2014, http://bits.blogs.nytimes.com//2014/09/26/examining-the-amazon-way/.
22. Fortune Editors, “2012 Businessperson of the Year,” Fortune, November 16, 2012, http://fortune.com/2012/11/16/2012-businessperson-of-the-year/.
23. 23. Steve Barker, “An Open Letter to Jeff Bezos: A Contract Worker’s take on Amazon.com, July 25, 2013, http://www.geekwire.com/2013/open-letter-jeff-bezos-contractworkers-amazoncom/.
24. Meagan Clark and Angelo Young, “Amazon: Nearly 20 years In Business and It Still Doesn’t Make Money, But Investors Don’t Seem To Care,” December 18, 2013, http://www.ibtimes.com/amazon-nearly-20-years-business-it-still-doesnt-make-money-investorsdont-seem-care-1513368.

Cite this page