Organization Design at Amazon

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In business, speed disproportionately matters. Over the last decades, we have learned that the most critical metric in innovation is time-to-value; how long it takes to turn an idea into customer value. All other things equal, organizations that move faster will innovate more simply because they will run more experiments.

Bias for Action Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk-taking.

Amazon Leadership Principles

Amazon organizes for speed. The organization’s structure aspires to maximize velocity by removing external obstacles, mitigating internal dependencies, and minimizing coordination overhead across teams. To prevent teams from slowing down, Amazon designs their organizations using the following concepts: two-pizza teams, single-threaded leadership, tolerating, then eliminating duplication, and increasing spans and decreasing layers.

Two-Pizza Teams

A two-pizza team is a cross-functional group of people that owns the entire lifecycle of its product. The team is the right size to maximize productivity and velocity. A group of six to ten individuals (the number of people who can share two pizzas) can communicate efficiently, reducing the communication overhead of keeping others informed. Two-pizza teams are the building block of Amazon’s organization, and they drive programmatic work.

Amazon sacrifices efficiency for speed. In practice, this means people distribute across a network of small, highly autonomous teams aligned to customer needs and business outcomes. Two-pizza teams can move faster because they have the right resources to complete their mission. Where independence is appropriate, organizing work around two-pizza teams removes bottlenecks and dependencies. It also encourages teams to think long-term because they are more likely to insist on the highest standards when they know they alone are responsible for the destiny of the products.

Two pizza teams help incubate and launch a new product. Larger services are often made up of multiple two-pizza teams. Many Amazon services started this way and then split off into new two-pizza teams as needed to keep the work moving quickly. These teams agree on how their services will interact and where there are dependencies, and then they work independently to deliver on their goals.

Single-Threaded Leadership

A Single-threaded leader is an individual or team responsible for leading just one initiative, someone who wakes up and worries only about that thing. Single-threaded leaders ensure the initiative’s vision and goals are always at the forefront.

Key initiatives may not get the attention they need without a clear decision owner, and teams might deprioritize the initiative over their work. Our experience has shown that competing priorities slow down decision-making in teams. Hence, teams that focus on one single priority move faster. Having a single-threaded leader guarantees that at least one person, free from other distractions and competing priorities, is singularly focused on driving the initiative forward.

Learn more about the single-threaded model

Tolerating, then Eliminating Duplication

A network of single-threaded teams can sometimes lead to team silos and duplication of work. Each team has its own goals and roadmap, creating a need to align goals. While one working solution is ideal, two working solutions are better than none. Amazon is often willing to make the duplication trade-off to deliver results faster. Although two solutions might create waste, the increase in velocity will outweigh the duplication effort.

Competing requirements make it hard for a single solution to meet every use case. It creates complexity and delays solutions. Teams solving challenging problems and moving fast would rather have multiple working solutions than slowdown waiting without any solution. Unless it affects customer experience, builders are willing to make the duplication trade-off to deliver results faster.

Learn more about tolerating, then eliminating duplication

Increasing Spans, Decreasing Layers

As companies grow, the number of layers increases. Each additional layer isolates the rest of the organization from the frontline. Keeping a flat organization reduces the distance between decision-makers and customers.

Organizing for speed requires adopting a flat, flexible, and loosely coupled operating model to have the flexibility and speed to make decisions quickly. Deep management layers are the enemy of agility. Leaders’ role is to provide context, empower teams, and allocate most decisions as close to the customer as possible. Decisions should be pushed to frontline teams, those closest to the customer, reducing the need for alignment and improving the decisions’ speed and quality.

In Conclusion

In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility. That’s it. Because nothing else is sustainable, everything else you create, somebody else will replicate.

Jeff Bezos, Amazon founder

Amazon uses these four design concepts to encourage speed and innovation in the context of Amazon’s Day 1 culture. The organizational design principles try to reduce cooperation and collaborative effort among teams by keeping teams as small, single-focused, and autonomous as possible. It might sound counterintuitive for incumbent companies. Incumbent organizations optimize for efficiency; Amazon optimizes for speed.

I would love to hear your experience adopting similar principles. Please reach out via LinkedIn or Twitter

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