Amazon.com Organizational Complexity Assignment

How complex is your organization internally? Place your organization on the following chart.

Due to the unavailability of an official organizational chart for Amazon, some inferences will have to be made regarding the complexity of the organization. Amazon’s website lists the top leadership and board of directors for the company, and some third-party research will be utilized to further judge its complexity. At first glance, one would assume that Amazon has the highest level of organizational complexity, given that the company employs over 560,000 people (Amazon, 2018). While it is evident that this massive quantity of employees necessitates complex management, it needs to be broken down further, with each level of the organizational structure being analyzed. At the top of the organization, CEO Jeff Bezos directs the company with a board made up of 9 other members, with 6 top officers reporting underneath the board (Amazon, 2019). These officers are dictated by function, and while I do not have information on the specifics of middle management, we can use a few examples to examine the differentiation underneath. Jeffrey Wilke is the CEO of Worldwide Consumer, which means that every aspect of Amazon’s global consumer website falls under him – shipping and fulfillment centers, and all the management and employees that entails. Jeffrey Blackburn is the Senior Vice President of Business Development, which would include a notable example such as Amazon Studios – responsible for the creation and distribution of television and movie content available to customers through Amazon Prime. Andrew Jassy is the CEO of Amazon Web Services, and every aspect of client service and product development under that function reports to him. (Amazon, 2019). Jeff Bezos is credited with the “two pizza rule”, where teams should be small enough to be fed with two pizzas during meetings (Dudovskiy, 2018). We can speculate on the exact number that meets this criterion, but this indicates more horizontal differentiation than vertical. The top management of the company is more horizontally diverse than vertically, as all officers report to Jeff Bezos, but more vertical differentiation is added outside of the corporate headquarters. For example, a typical Amazon fulfillment center will have senior management, 4 lead managers for 4 departments (Receiving/Picking, Sorting, Packing, and Shipping), and the individual associates that make up each of those 4 departments, the number of which is determined by the physical size and order processing frequency of that fulfillment center (Rumel, 2016). Using this information, it can be concluded that Amazon does experience high levels of organizational complexity, with higher levels of horizontal differentiation than vertical, given the number of employees and grouping by function which Amazon utilizes.

Locate your organization on the figure, what is the complexity?

Amazon is positioned as a Symmetrically complex organization, weighted towards horizontal differentiation. The high number of workers Amazon employs necessitates significant horizontal differentiation, because teams/units are separated by business function and work independently of each other. Each of the 175 global fulfillment centers operates with autonomy from the rest, as do the AWS facilities, Amazon Studios, Customer Service centers, and the legal department at Amazon Headquarters, just to give a few examples. If a full organization chart was to be mapped, (or if a more complete one was publicly available through Amazon’s website), it would look like a wide pyramid, due to the high horizontal differentiation with a centralized chain of command working up each of the vertical levels. There are certainly more than the 2 or 3 listed vertical levels of differentiation, but without more information on middle management, it is hard to tell how they might exactly be grouped and by what function. The high horizontal differentiation is a bit more obvious to infer, given the enormous number of employees to be accounted for and the fact that the majority of them work at the lower levels of the organization.

Does your organization’s complexity fit its structural configuration?

Given the information above, and the massive size of Amazon, the matrix configuration only seems fitting. From the top leadership of the organization, tasks are assigned divisionally, to suit the needs of Amazon as a global company. Fulfillment centers and the supporting website/infrastructure required to maintain operations are divided by region/country, along with AWS and the other ventures that Amazon pursues. Within each of the fulfillment centers, data centers, corporate offices, etc., tasks are divided functionally by skills required to complete them. In essence, the first “level” (from the top down) of Amazon’s structure follows a divisional configuration, and the levels below follow a functional configuration, to suit the needs of specialized tasks across a multitude of different business functions. The combination of these dictates the matrix configuration for the organization as a whole, which does line up with its classification as a Symmetric type in organizational complexity.

Is there “fit” across the organization’s components? What would make them more effective? Should the organization change its structure based on its complexity?

Comparison between the results of this analysis and the results of the Environmental Complexity assignment shows that there is fit across all of the organization’s components except for organizational goals. The classification as a Symmetric type aligns with the Matrix configuration, Turbulent environment, and Analyzer with Innovation strategy type, but this organization is not positioned to focus equally on Efficiency and Effectiveness. The discussion in previous assignments detailed the reasoning for Amazon’s position focused on effectiveness over efficiency; it is a result of their dedication to the customer in all aspects of business, at the cost of operational efficiencies and high costs of goods sold. Given the goal of “being Earth’s most customer-centric company”, it is unlikely that significant change will be implemented to shift the organization from Effectiveness goals to Effectiveness and Efficiency (Amazon, 2018). Implementing better inventory management systems to reduce costs of goods sold and increase profit margins is the most logical step to achieving more organizational efficiency. While it is uncertain whether steps in this direction will be implemented, it could provide significant value for the organization. Given the current level of success that Amazon enjoys, and progress made in turning out better margins over recent years, the organization does not need to change its structure. Complexity is managed effectively by Amazon, and further efforts in increasing efficiency would be the only recommendations I have.

References:

Amazon.com, Inc. (2019, January 31). 2018 10-K Form. Retrieved from https://ir.aboutamazon.com/static-files/ce3b13a9-4bf1-4388-89a0-e4bd4abd07b8

Amazon.com, Inc. (2018, February 2). 2017 Annual Report. Retrieved from 
https://ir.aboutamazon.com/static-files/917130c5-e6bf-4790-a7bc-cc43ac7fb30a

Amazon.com, Inc. (n.d.). Officers and Directors. Retrieved from https://ir.aboutamazon.com/board-of-directors

Dudovskiy, J. (2018, August 01). Amazon Organizational Structure. Retrieved from https://research-methodology.net/amazon-organizational-structure-2/

Mercer, T. (2016, June 5). What is the organizational structure of Amazon fulfillment centers? Retrieved from https://www.quora.com/What-is-the-organizational-structure-of-Amazon-fulfillment-centers