Amazon CEO Andy Jassy is implementing changes to improve the company's culture, focusing on two key areas: remote work and bureaucracy. He believes that in-person collaboration is crucial for innovation and problem-solving, noting that remote work hinders the spontaneous idea exchange and organic problem-solving that often leads to breakthroughs. The return to a more in-office model is intended to foster a stronger sense of shared culture.
Jassy also aims to streamline decision-making processes by reducing layers of management and bureaucracy. The current system, he argues, leads to excessive pre-meetings and delays, hindering efficiency and employee ownership of decisions. To address this, Amazon plans to increase the ratio of individual contributors to managers, encourage managers to take on more direct reports, slow down senior-level hiring, and potentially enact pay cuts for some employees. The goal is to flatten the organizational structure and empower employees to make quicker, more autonomous decisions.
Andy Jassy said he thinks Amazon has a strong company culture, but staying that way isn't a given as the company expands and parts of the business evolve.
"You have to keep working on strengthening the parts of your culture that you see being stretched if you want to keep being successful culturally," Jassy said on Tuesday during a speaking event at the Harvard Business Review Leadership Summit.
In an effort to restore Amazon's strong sense of culture, the company rolled out several changes, including a 5-day return to office. The CEO said the company pinpointed two problem areas it needed to tackle: remote work and bureaucracy.
Jassy said many of the company's inventions have emerged from "messy, wandering meetings," where things may not initially click, but employees stick around to work it out on a whiteboard or revisit the problem and solve it later on.
Since bringing employees back to the office three days a week, Jassy said the company observed an improvement in collaboration and creative problem-solving.
"What you find is people riff on top of each other's ideas better if they're together," Jassy said. "Turns out, sometimes it's actually useful to interrupt each other, because you get to a faster spot, more quickly, you feel that energy."
Jassy said when employees work remotely, they tend to move on to the next task after their meeting ends, and "you just don't find that type of invention together."
As Amazon works to overhaul its organizational structure, Jassy said that culture isn't something that can be instilled from a distance.
"When you're in a meeting together, and you're watching the body language and you're watching people's expressions, you internalize the culture much better," Jassy said.
Jassy added that teaching is much more effective if you can walk over to someone after a meeting and add context or reassurance about what took place. For example, if it was a challenging topic, Jassy said he might tell a colleague, "Don't be surprised that that was a hard meeting. This is a really difficult topic." Or, he might say, for the next meeting, "think about these three things."
Amazon has a concept of one-way and two-way door decisions. Jassy said the "overwhelming majority of decisions" Amazon makes are two-way door decisions, which the company has said should require minimal executive oversight. However, Jassy said it wants those decisions to be made by the people who are doing the work.
Jassy said as the company has gotten larger, it's ended up with increasing layers of management. While many added processes were meant to bring organization, they've led to a place where there's "a pre-meeting for the pre-meeting for the decision," Jassy said. When it comes to actually making those decisions, employees may also feel like they lack ownership of them, Jassy said.
"That's what we'd like to try and limit," Jassy said. "We really want our owners doing the real work, to own the two-way door decisions and to be able to move quickly and autonomously."
The decision to increase the ratio of individual contributors to managers by 15% is part of that effort, Jassy said. The plan also includes directives for managers to take on more direct reports, slow down on senior-level hiring, and enact pay cuts for some employees.
"We want to flatten our organizations, to move faster and to drive more ownership," Jassy said.
Amazon did not respond to a request for comment from Business Insider.
Skip the extension — just come straight here.
We’ve built a fast, permanent tool you can bookmark and use anytime.
Go To Paywall Unblock Tool