APPLICATION OF LEADERSHIP THEORIES TO AMAZON 1

Application of Leadership Theories to Amazon.com

Mitika Mahajan
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Abstract

Leadership is the key commodity in current dynamic business environment. The organizations

can drive sustainable growth if the leaders possess the skills to transfer the knowledge into

workable solutions, and learn to convert the problems into opportunities. This paper analyzes the

leadership theories and its application in the ecommerce giant, Amazon.com. The leadership

theories and management theories are feasible to implement in practice. Amazon follows the

basic concepts of leadership and management to achieve the results.

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Application of Leadership Theories to Amazon

Introduction

Leadership is a very valuable commodity to survive and maintain a competitive edge in

the current turbulent business environment. The concept of leadership has been evolved over

time, and with the evolution, the definition and focus have been changing. Even today, there is

no common definition of leadership. It is viewed in terms of power relationships, or

transformational process, or even addressed from a skill perspective. From different definitions,

four components of leadership can be identified. (a) Leadership is a dynamic process; (b)

Leadership has influence, (c) Leadership occurs in groups and (d) Leadership works for common

goals (Northouse, 2016).

Leadership theories are generally classified into trait theories, behavioral theories,

contingency theories, and alternative views of leadership (Champoux, 2011). Leadership and

management are distinguished on the basis of the approach. Management is often considered as

controlling instrument whereas leadership is seen as change instrument. Management theories

are classified under the classical approach, behavioral approach, quantitative approach, and

contemporary approach (Champoux, 2011). In this report, the application of leadership theories

and management theories are critically evaluated to Jeff Bezos, Founder, Chairman, CEO and

president of Amazon.com.

Amazon.com is an American Technology company that focuses on e-commerce, cloud

computing, Artificial Intelligence, and digital streaming. It is the world’s largest online retailer

and prominent service provider of cloud services. Amazon has a hierarchical organization

structure that contains 12 levels. Though it has a hierarchical structure, Amazon has a flat

hierarchy (Outlook, 2017). The teams are relatively small, usually 5- 6 members in each team.
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Amazon is famous for its performance-oriented culture, which is considered as pressure culture.

At the same time, Amazon works on employee learning and development.

This report contains contextual discussion of leadership and management theories,

application of critique to the leadership and management practices at Amazon, and evaluation of

the theoretical and practice fit.

Contextual Discussion of theories

Trait theories are based on the concept that leaders are born, not created. This approach

has identified traits of great leaders and considers drive, desire to lead, honesty, self-confidence,

cognitive ability, and knowledge of the business as major traits of great leaders (Champoux,

2011). Jeff Bezos clearly reflects the traits such as drive, desire to lead, self-confidence,

cognitive ability and knowledge of the business. As per Jeff Bezos, customers hate delay, defect

and out-of-stock products. This reflects that Jeff Bezos has knowledge about the business. 0.1

Second delay in webpage loading can translate into 1% drop into customer activity. This metrics

shows hoe the organization is led by cognitive ability of leader (Anders, 2012).

The behavioral approach considers the leader behavior as the basis of classification. The

University of Michigan classified leadership on the basis of the leader’s behavior as production

centered and employee centered. On the other hand, Ohio State University founded two

dimensions, Initiating Structure and Consideration as leadership behavior (Champoux, 2011).

Jeff Bezos is a production centered leader. He continuously run and visits Amazon with the same

intensity as he had earlier to ensure the productivity of the employees (Anders, 2012). Jeff Bezos

has translated his style to the Amazon culture which focuses on being fast, cheap, and efficient.

It is achieved through strict employee discipline (Blanding, 2018).

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Trait theories and behavioral theories did not provide satisfactory orientation, so the new

approach called contingency theory which advocates that the leadership is based on the leader’s

situation. The theories of this approach suggested a different leadership style for a different type

of followers and tasks. New theories of leadership are authentic leadership, Servant leadership,

Charismatic leadership, and Leader-Member Exchange Theory. These theories describe

leadership on the basis of care, authenticity, mutual trust, and charisma of the leader (Champoux,

2011).

Early management theories are based on the production and work-study, so the objective

of these theories was to identify the methods to reduce time and increase productivity. In the

contemporary world, quantitative theories are used, which focuses on quality management.

Quality is achieved through employee empowerment, continuous improvement, and intense

customers focus (Robbins, 2016).

Application of leadership and management practices at Amazon

The leadership style of Jeff Bezos can be viewed as combination of different leadership

theories, but the path-goal theory is the most suitable. Jeff Bezos has created the rule that internal

teams should be small enough that two pizzas can satisfy them. This rule is popularly known as

‘Two Pizza Rule’ (Hern, 2018). This leads to fewer conflicts and fast decision making.

The employees in PIP (Performance Improvement Plan) are given the opportunity to

learn from the in-house trainers who are called Career Ambassadors (Kim, 2017). This shows

that the leader identifies the follower characteristics to lead them. Moreover, the employees are

encouraged to learn new courses for their development (Hess, 2018). At Amazon, the employees

need to write a six page long memo before the meeting. This memo is read in the meeting. This
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practice is followed to make employees realize that to write a great memo, they need time and

through a simple act, one can improve the results (Umoh, 2018).

Evaluation of theoretical and practice fit

From the analysis of various management and leadership theories and practices at

Amazon, it is observed that theories are applicable in real business world. The vision, drive, self-

confidence, knowledge and other skills are reflected in the leader. The leader implements the

production oriented culture in the organization with focus on employee empowerment and

development. This reflects quality management approach of management. The old techniques of

presentation are used to improve results.

Conclusion

From the analysis it can be concluded that it is possible to implement leadership and

management practices, and lead an organization. An organization can be customer centric and

work on employee development simultaneously. There is no trade-off between quality and

employee development. The leadership and management can drive an organization in the way it

needs to be, so the organizations should focus on holistic development of organization.

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References

Anders, G. (2012, April 4). Jeff Bezos Reveals His No. 1 Leadership Secret. Retrieved July 7,

2019, from Forbes Web Site: https://www.forbes.com/forbes/2012/0423/ceo-compensation-12-

amazon-technology-jeff-bezos-gets-it.html#2e2e06255227

Blanding, M. (2018, May 14). Amazon vs. Whole Foods: When Cultures Collide. Retrieved July

07, 2019, from Harvard Business School Working Knowledge:

https://hbswk.hbs.edu/item/amazon-vs-whole-foods-when-cultures-collide

Champoux, J. (2011). Organizational Behavior: Integrating individuals, Groups, and

Organizations. New York: Routledge.

Hern, A. (2018, April 24). The two-pizza rule and the secret of Amazon's success. Retrieved July

7, 2019, from The Guardian: https://www.theguardian.com/technology/2018/apr/24/the-two-

pizza-rule-and-the-secret-of-amazons-success

Hess, A. (2018, April 19). Amazon will pay up to $12,000 for employees to study these 4 fields.

Retrieved July 07, 2019, from CNBC: https://www.cnbc.com/2018/04/19/amazon-will-pay-up-

to-46000-for-employees-to-study-these-4-fields.html

Kim, E. (2017, January 20). Amazon just created a new training program to help employees in

danger of being fired. Retrieved July 07, 2019, from Business Insider:

https://www.businessinsider.in/Amazon-just-launched-a-new-training-program-to-help-

employees-in-danger-of-being-fired/articleshow/56677278.cms

Northouse, P. G. (2016). Leadership Theory and Practice. California: SAGE Publications.

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Outlook, O. (2017, May 5). Amazon works because of its org structure. Retrieved July 07, 2019,

from A Medium Corporation: https://medium.com/@objoutlook/amazon-works-because-of-its-

org-structure-22efc8ed1002

Robbins, S. (2016). Management. Essex: Pearson Education Limited .

Umoh, R. (2018, April 23). Why Jeff Bezos makes Amazon execs read 6-page memos at the start

of each meeting. Retrieved July 07, 2019, from CNBC: https://www.cnbc.com/2018/04/23/what-

jeff-bezos-learned-from-requiring-6-page-memos-at-amazon.html