Recently, Jeff Bezos announced that he would be stepping down as CEO of Amazon, the iconic blitzscaling company that he has led since 1994 – nearly 27 years. Andy Jassy will be taking over as CEO, and Jeff will be Executive Chairman.
For transparency, I want to be clear that I have no inside information on Jeff’s decision to relinquish his CEO role. Jeff and I know each other, but we haven’t spoken about this topic. What I say is only speculative, but hopefully helpful and insightful.
In a recent episode of the Greymatter podcast, I sat down with my Blitzscaling co-author Chris Yeh to discuss what made Jeff Bezos great as a founder, CEO, and business innovator; why he might have decided to step back now (despite being only 57 years old); and offered some advice to Jeff and other Executive Chairpeople based on my own experiences at LinkedIn. You can listen to the entire podcast here.
The Core of Greatness: Focus
Looking back, I believe that Jeff is one of most iconic, successful founders and CEOs of all time. He belongs to that Mount Rushmore of American CEOs, along with names like Carnegie, Ford, and Jobs. (When you’re that great, you only need one name). I also look forward to when the definitive list of the titans of industry includes more women and minorities, and when earlier pioneers like Madame C. J. Walker and Mary Kay Ash receive the respect they richly deserve.)
Jeff’s pole star is intense long-term focus. This can serve as a guiding light to other entrepreneurs and CEOs. He has a remarkable willingness to invest in the future, and to trade current profits for future profits and the ability to expand. Obviously, there are others like this (Elon Musk most naturally comes to mind) but what is unusual about Jeff is the way he applies this focus. Rather than trying to colonize Mars, Jeff applies long-term focus to Warren Buffet-like common sense principles: More selection, lower prices, faster delivery. Jeff is a business innovator who applies innovation to the basics of business, not just space-age technology.
Far too often, people think that innovation is limited to the product, service, and technology. These innovations are impactful, but there are also ample opportunities to innovate purely on the business model. Consider Jeff’s famous saying, “your margin is my opportunity.” That’s a statement of business innovation, not technological innovation.
Of course, he also applies this long-term thinking to technological innovation, and he does so to remarkable effect. Over and over, he has gambled on products and product areas where no current market existed. Products like the Kindle and Amazon Web Services created entirely new markets, which Amazon now dominates or leads.
Another of Bezos’ trademark strengths is his willingness to embrace management innovation. He doesn’t simply accept that because everyone else does things a certain way, and that it’s the optimal strategy. He is willing to do things differently if he believes that doing so can give Amazon an advantage.
For example, one of the management innovations that distinguishes Amazon from all the other major tech companies is its writing culture. Rather than simply letting people call (often unproductive) meetings, Amazon managers are required to compose a written memo in advance. These aren’t a few notes dashed off and entered into a Google Calendar invitation; these memos are typically around six pages long (more if needed) and lay out the details of a proposed strategy or initiative, including the reasoning behind the recommendation, and the individual components of a detailed implementation plan. Then at the beginning of the meeting, rather than having a presenter run through a presentation deck, the attendees sit down and read the memo.
Jeff is also one of the few founders I know of who sets OKRs (Objectives and Key Results) for his board members. Each board member is expected to bring at least one actionable idea to each board meeting. This doesn’t necessarily mean that Amazon will act on those ideas, but it establishes a standard of engagement and forethought for Amazon board members.
Another sign of Jeff’s devotion to rigor is putting data first. As he puts it, if a decision is a matter of opinion, his opinion wins. If there is data, then the data will determine the decision. The classic example of this is Amazon’s customer Q&A feature. The first time the idea came up, Jeff rejected it, because his opinion was that it was a bad idea. Advocates for the feature then ran a simple experiment by emailing a number of customers, asking them if they were interested in asking and answering questions to and from other customers, and directing them to a mockup website. When Jeff saw the positive responses, he endorsed the decision to build the feature, which ended up being one of the many ecommerce innovations that has made Amazon so successful.
One final element of Jeff’s greatness as a leader was his ability to create an environment where intrapreneurs could thrive and build new blitzscalable business lines. Far too often, companies judge intrapreneurs solely on the end result of the project. This discourages employees from trying to innovate, since just as with startups, the vast majority of such efforts fail.
In Jeff’s case, Amazon bet hundreds of millions of dollars on the Fire Phone, which the market utterly rejected. Faced with this kind of failure, most leaders would do one of two things–the first is to double down (the phone was Jeff’s idea) and spend good money after bad. The second is to shut down the project and purge its people from the organization. Jeff did neither of these things. He accepted the data that showed that the Fire Phone was a failure, but he also recognized that the Fire Phone team was incredibly talented and productive. So he simply asked, “What should we try next?” The results were the very successful Alexa, Echo, and Home devices, which have propelled Amazon to a leadership position in smart homes.
Why CEOs Step Down
Again, I want to reiterate that I have no inside information on Jeff’s decision.
In our book The Alliance, Ben Casnocha, Chris Yeh, and I wrote about how everyone in an organization, even founders, are on what we call a tour of duty. Rather than simply taking the passive (and demonstrably false) approach of assuming that every employee will be at the company forever, companies/managers and employees should explicitly define every employee’s mission and what constitutes success. CEOs usually need to make a longer commitment than any other employee – if a CEO isn’t committing to at least 10 years, that organization is likely unstable and in trouble.
In my own case, I stepped back as CEO because I didn’t think it was in the best interests of me or LinkedIn for me to commit to the full tour of duty as CEO. I helped establish product market fit. I helped establish the network. I helped establish the business model. I established some of the baseline for the network as a platform. But I knew that there was a ton of work to be done to scale the business into multiple business lines, and that we would be better off with a CEO who was a grand master of organizational growth and had the product vision to serve as a later-stage co-founder. This led me to partnering with Jeff Weiner, whose abilities were a much better fit with the future growth path of the company, and who capably led LinkedIn from the Village stage of Blitzscaling (we had about 400 employees when Jeff joined) to the Nation stage with over 10,000 employees.
As I prefaced, I don’t know Jeff Bezos’ decisioning or reasoning, but I can imagine that he realized that the dramatic acceleration of Amazon’s businesses due to the pandemic, in both ecommerce and AWS, meant that it was time to re-examine and re-tool the business for its next stage. Add in the additional complexity of the big tech backlash and the rise of tech nationalism, and it certainly looked like Amazon needed a CEO to commit to a new, intense 10 year tour of duty. Jeff is not the kind of leader who would want to step back in the middle of a critical transition, so he may have decided he needed to choose between transitioning now, or waiting until 2030, which would take him well into his 60s and prevent him from pursuing some of his other passions like space travel.
When a CEO realizes that he or she is unlikely to sign up for that next tour of duty, that’s a sign that it’s time to make succession planning a front-burner focus. To create a company that will thrive for decades or even centuries, which I believe is Jeff’s goal for Amazon, the original leader needs to execute a successful changeover to the next leader.
Choosing Successors: Internally or Externally?
In Jeff’s case, he chose an internally when he named Andy Jassy as successor. Andy is someone he knows extremely well, has worked with very successfully for many years, and trusts implicitly. Just as Jeff and Andy have been a great team, Andy and Jeff should continue to be a great team. But keep in mind that choosing an internal candidate is not always the right course of action.
There are many logical reasons for companies – specially ones as successful as Amazon – to prefer internal candidates. They know the culture and are familiar with how things are done. But I think it’s almost never the right thing to look only internally (no matter how amazing those internal candidates) because looking externally is a useful forcing function to make the company explicitly define the role of the CEO. Just as an individual needs to consider what’s the right next tour of duty, the organization should consider what kind of individual is the right fit for the tour of duty it’s offering the next CEO.
One of the ways that I generally model business organizations and executive suites is to consider the matrix of functionality. A company has many different functional areas–sales, marketing, product, engineering, finance, operations, and so on. As a leader or board, you should ask yourself, “if I had to designate just one of these areas as the primary driver of success, which one would it be?” Sometimes, it’s not obvious. Many default to sales (because that’s what drives revenue) or product (because that’s what customers buy). But for some companies the secret sauce might be engineering or finance. And the primary driver might even shift at key times during the life of the business. Most organizations default to the original driver–if you scale a product company like Linkedin, you tend to stay a product culture. If you scale an engineering company like Alphabet, it tends to retain an engineering culture. However, that default may change.
The way to determine this is to ask, “Do we need more of the same? Or do we need to make a change?”
A company that is doing as well as Amazon probably wants more of the same. Jeff may very well have looked around and said, “Look, I really know Andy. Looking at other candidates is a waste of time and an indication of a lack of confidence in Andy, so we’re simply going to make him the CEO. Plus, I’ll still be around as executive chairman to help.”
That’s eminently logical. But it’s still a good idea to ask the question, rather than simply accepting the default. Just because someone exemplifies the current business doesn’t necessarily mean that they’re the right fit for the next set of challenges. I think part of the reason why Satya Nadella has been an amazing later stage co-founder/CEO at Microsoft is because he represented a different functional driver (product rather than sales) that was needed. And as a product leader, Satya was able to earn back Microsoft’s reputation as a product company across many different business lines, positioning the company to be one of the key platforms for the future, and driving spectacular financial results.
Ultimately, if a company only looks inward, it will become like Rome and decay. Even Steve Jobs, who was intensely protective of Apple’s inward focus, was endlessly curious. He met with entrepreneurs all the time to ask questions and learn new things. The number of people I know who Steve Jobs reached out to and said, “Come over to my house, I want to talk to you about this thing that’s doing,” was very large. And Jeff Bezos has that as well. He’s always asking questions, learning, and being externally focused. Even if you choose an internal successor, you have to continue to learn from the external world.
The Role of the Executive Chairperson
While Jeff Bezos is stepping down as CEO of Amazon, he will remain involved as the Executive Chairman–one of those terms that sounds cool, but can be a bit confusing. Having occupied the role myself at LinkedIn (which Jeff Weiner now occupies for his successor, Ryan Roslansky), I thought it would be helpful to share my thoughts on the role and how to make it effective.
Executive chair is a title that can mean many things. The fundamental thing it means is that an executive chair is significantly more operationally active than a typical chairperson. A typical chairperson is already one of the more active board members, helping set the agenda for the board meetings, coordinating with the CEO (if they’re not the same person) and handling feedback between the board and the CEO. In addition to these duties, an executive chairperson typically spends additional time internally, working with executives and key teams. When I was executive chairman at LinkedIn, my office was immediately next door to Jeff Weiner’s, so he could stop in at any time and vice versa.
I also took on some key strategic projects. For example, when LinkedIn was focused on China, I took the lead, and kept Jeff in the loop so he could coordinate my China efforts with the rest of the board.
Regardless, the CEO is the CEO, and makes the final decisions. Jeff Bezos and Andy Jassy will need to work out their own system for working together. There is no standard CEO/executive chair relationship; each pair needs to organically arrive at the specific way they partner.
One final piece of advice I have for Jeff and anyone else making this transition, is that CEO transitions are like brain surgery: you have to make sure that the neural pathways are firmly re-routed.
A few years before Jeff Weiner took over as CEO at LinkedIn, I hired Dan Nye to be the CEO. Dan was a great partner and talented executive, but I did not empower Dan appropriately. Because I was still around, instead of going to Dan, people would still come to me with problems and suggestions. This negatively impacted both of us and our effectiveness.
When Jeff Weiner stepped in as CEO of LinkedIn, I made sure I was out of the office for his first six to eight weeks, so that the people in the organization would be forced to go to Jeff Weiner – effectively, rewiring the “synapses”. I accomplished this by saying yes to all the overseas speaking requests I had received; being in inconvenient time zones made this brain surgery even more effective!
This is yet another way in which Jeff Bezos’ transition seems well-timed (and likely not by accident). The Covid-19 pandemic has forced us all into remote work via Zoom, Microsoft Teams, and many other videoconferencing and collaboration tools. Allowing the rewiring of the organization from Jeff to Andy to piggyback on top of this massive, in-progress change makes the process less painful and more effective.
I’ve spent this essay looking back on Jeff Bezos’ career, and with good reason. His accomplishments as an entrepreneur and CEO have changed the world. As I said, I place him on the Mount Rushmore of American CEOs. We can all learn from his business model and management innovations, which have helped make Amazon one of the all-time blitzscaling success stories.
But at 57, Jeff has several highly productive decades ahead of him. I look forward to seeing how he will use his considerable talent and energy to impact the world, whether in space exploration, journalism, or anything else he decides to do.