Jeff Bezos Leadership and Communication Style - Case Study Example

Jeff Bezos Leadership and Communication Style Name Institution Introduction Leadership and communication style is a fundamental aspect in creating sustainable and successful business enterprise (Northhouse, 2013). A company is highly impacted by a leader’s capabilities to come up with the steps and solutions necessary for the growth of the organisation. Highlighting the leadership of a company can therefore establish insight as to why some organisation fail while others succeed. This paper will explore the communication and leadership styles exercised by Jeff Bezos, the founder and chairman of Amazon.com. This will be followed by evaluation of whether these leadership and communication style is suited for a globalised environment. Jeffery Bezos, an entrepreneur and investor was born in 1964. He is an American technology entrepreneur who has contributed to the growth and enhancement of e-commerce. He is a founder of Amazon.com, an internet retail that started as an online bookstore, but later grew to selling variety of products. Over the years, Amazon.com has grown to become the leading World Wide Web Company. In 2013, Jeff Bezos bought the Washington post newspaper. Its personal wealth up to now is approximated to be around $50 billion, ranking him the 15th richest man on Forbes billionaire list. Jeffery Bezos was born in New Mexico. His ancestors lived in Texas and acquired more than 25,000 acre ranch. For this, Bezos was one of prevalent land holders in Texas. He attended River Oaks Elementary school when he was young from fourth to sixth grade. From when he was young, Jeffery Bezos displayed great scientific interest and excellent technological skills (Martinez et al., 2012). For instance, he created an electric alarm to prevent his siblings from coming to his room. For his high school education, Bezos attended Miami Palmetto high school and university education at Princeton University. He intended to study physic at the university but pursued his passion for computers where he graduated with electrical engineering and computer science degree. After his graduation, he joined Wall Street where he worked as a computer scientist. Other companies that he worked for included Fitel, Bankers Trust and D.E. Shaw & Co. With all the experience he acquired from his studies and previous work, Jeffery Bezos established Amazon.com in 1994. The initial location of his company was at his garage. From there, the company grew to be leading online retailer. In addition, Bezos also founded Blue Origin Company dealing with spaceflight as a result of the passion he had for space travel. Also, Bezos purchased The Washington Post in 2013 for $250 million (Farhi, 2013). Leadership style Jeffery Bezos is highly respected and known business leader who is admired for his exceptional leadership styles (Brandt, 2011). Most current and aspiring tech entrepreneurs look up to him-an analytical, methodical and excellent entrepreneur. Bezos is considered different in terms of his entrepreneurial skills. His leadership and communication style that he uses in operating his company is based upon the philosophies outlined below. Never stop experimenting According to Bezos, if an individual doubles the number of business experiments he or she does every year, this gesture doubles the inventiveness. Many business inventors and CEOs say that experimentation is imperative to business operation. Through experiments, new innovations are developed and competitive advantage is elevated. Automotive companies experiment with concept cars, food companies experiment with either novel foods or beverages, drug companies carry out experimentation exercise at labs, retail companies build on experimentation by placement of commodities and store atmospheres.. Experimentation is a concept practised in almost all business enterprises. At Amazon.com, Jeffrey Bezos has introduced experimentation and willingness to invent as one of the cultures of the company (Marques, 2007). Examples of ways Bezos has incorporated experimentation in the company include; Test television advertising During the first years after Amazon.com was founded, Bezos wanted to know whether advertisement of the company on television was a good idea in increasing sales. The company focussed on market regions where there was a good customer blend and chose Portland and Minneapolis. They carried out a test for a period of 16 months, which was considered longer time than most organisations would experiment. But the CEO, Jeffery Bezos said that, “the company is unbelievably fixated on it, and it is a long, experiment test, but we are really determined to understand this for our company once and for all.” Although the experimentation advertisement gave the company bump in sales, Jeffery Bezos discovered that it was not enough to justify the costs incurred. Therefore, although the experiment was expensive and lengthy, it proved to be effective for Amazon.com strategy. Free shipping on purchase over $25 The existing shipping expenses have led to few online orders. Many people shy away from ordering online due to the high cost incurred in the process. Amazon.com is offering free shipping for purchases over $25. The program is termed as Super Saver Shipping. However, mathematically, since Amazon.com operate on low margins, this Super Saver Shipping cannot be profitable. The company would have to increase the $25 threshold. Bezos took the side of the customers and implemented the operation as he is considered customer obsessed. At first, the Super Saver Shipping was an experiment that showed that although it is not so great for the short term, it was successful for the long run as it increased customer loyalty and frequency of orders. As seen earlier, experimentation is the culture of Amazon.com. Not all the experiments implemented by Bezos have succeeded. However, the company has not stopped at that, they believe experimentation is like placing a bet, it is bound to succeed or fail, whatever the result, the company is always experimenting. Obsession about customers At Amazon.com, there is an identical line of thinking for all employees: the customers need come first before anything else. Bezos leadership style is focussed on putting all the attention on customers and working backward from that point (Drexler, 2007). Many companies are competitors obsessed, but Amazon.com has chosen to be customer obsessed and this has proved to yield positive results. In constrast with many organisations that come up with business idea, develop a product and then see whether the customers like it, Bezos supports the need to focus first on customer’s needs and problems before anything else. Bezos believe that what is good for the customers is often good for the organisation. Some of the ways Amazon focus on the customers includes: Elimination of Accidental Duplicate Orders Over the years, there have been accidental duplicate orders purchased from Amazon. The company decided to assist the customers from mistakenly duplicating orders by posing a warning on the commodity pages where orders have been placed. Through this, the company realised their sales had decreased but believe that in the long run, this would increase customer loyalty. Competitors advert on their website Another way that Amazon is putting the customers’ needs first before the short-term return is the decision Bezos made of allowing competitors advertise on Amazon website. This might sound crazy but Bezos did this since he knew this would be best for the customers. Allowing competitors to advertise their products on Amazon website has given more choices for the customers. This feature is still practised in the company up to today. Invitation of customer reviews Amazon feature customer reviews on product pages. The company does not remove poor reviews from the pages as it considers this to be good for the customers. With the accumulated customer reviews in the product pages over the years, Amazon.com has become resourceful for customers or individuals researching products. Bezos’s leadership style of taking customers’ side has proven to be useful for the success of the company. He has ignored publishers who say that he is making leadership mistakes. Customers’ needs before publishers are a good lesson learned here. Use of technology to impress customers Even with the unpredicted changes in the technology, Bezos is focussed on ways the technology can make the customers happy (Peppers and Rogers, 2004). The company uses raw products such as CPU processing power, disk space and bandwidth to impress its customers. It lowers the prices for its commodities as the technology changes. This has proven to be successful in increasing customer loyalty. Focus on unchangeable things Bezos created a business strategy on things that won’t change with time and situation. For instance, customers always want low prices on products and this will remain the same in years to come. Therefore, Amazon is focussed on those things that will pay off for their customers in years from now. Development of big ideas in business is a common thing, but maintaining a firm grasp on the ideas is very hard. But if a company keep firm and puts energy on the unchanging business ideas, with time, these ideas will yield returns. For Amazon.com, things that remain unchanged over the years are things that involve the customers. The company is always working on reducing product prices, increasing delivery pace, and adding new products-all these focus on the customers ‘needs. Therefore, according to Bezos, focussing on things that customers will still care about in years to come will pay off big-time in terms of the growth and success of the business enterprise. Willingness to invent Amazon.com is known for its invention culture. The company offers a good number of products and services. This can be traced back to the CEO’s philosophy and belief of rapid experimentation and invention. A good number of companies offer few products such as Apple but Amazon.com offer dozens. In the Amazon homepage, one can see variety of products and services offered by the company. Inventions are very paramount to Jeffery Bezos and his team. He describes his employees as pioneers, explorers and inventors. The company often looks for individuals with passion for invention and always search for ways to improve on their products. To set a good example, Bezos himself is an inventor. From his 10,000 year clock to Blue Origin, from his airbag phone system to solar cooking, he loves to invent. As an entrepreneur, no matter the field, you should love to develop things and invent, whether you are inventing cars such as Henry Ford, whether you are creating aircraft such as Wright brothers, invention is part of good entrepreneurs. Invention and investors has made the world the way it is today (Bel, 2010). Long term focus One of the most pronounced leadership style Bezos uses is long term focus. Amazon.com has been around for more than ten years from 1994. From the computers and the internet early days, Bezos had already known that people would be purchasing commodities off of it. The early days of Amazon were very difficult. Bezos was trying to raise only $1 million to grow the company but this proved to be very difficult. He asked for assistance from 60 individuals and only 22 of these people offered him $50 thousand. The reason why it was difficult for the company to grow was that people at that period did not know internet that well. Although even investors did not know what the internet was, Bezos had a pretty good idea about it and knew that it would reach a point where people would start buying commodities off if it. This is an example of his long-term vision at work. Obviously, long-term focus is not as easy as people think as it requires a lot of patient. This is the case especially if the CEO is also dealing with day-to-day operations. Thinking long-term and not focussing entirely on Quarter-to-Quarter finances can be good for customers. This is seen in the Amazon $25 shipping plan. It is very vague to think of short-term returns when you focus on being around for the long run. Long-term focus is also good for the company since one can be open to new ideas and innovation when the mind is set at long-term focus. According to Bezos, avoiding starting something early on because it will be inappropriate for short-term return is a bad strategy. Many things do not pay off immediately and needs time. Long-term focus brings better results and short-term focus is considered poor predator of long-term. Decision-making style An observation was made by Rick Dalzell that Bezos put two things in mind better than anyone. First, he always tries to determine truth at that particular time. Second, he does not accept the conventional wisdom on how things are carried out. What is in his mind is reinvention of everything, even the small things. For instance, ordinarily, when companies develop a new product, they hold an enormous press conference but for Amazon.com, Bezos just invited a small number of reporters and did product demonstration alone when Kindle was developed. This is an example of how Bezos most of the time tries to reinvent the way things are done. Bezos uses different decision making tools instead of slide shows. The traditional way of holding a meeting is someone gets up, goes in front of other corporate members and present idea and issues at hand with some kind of slideshow presentation. However, in Amazon.com, all members attending a meeting are required to read a 6-page memo written in full sentences and paragraphs in order to increase clarity of thinking. Bezos believes that when an individual reads a flow of writing, the brain produces ideas faster than the fingers can type them. One is often in an exciting and frantic zone since person wants to just putdown all thoughts so he does not forget. He argues that creation of PowerPoint slide shows limit an individual thinking to what is regarded as main points. Writing of the 6-page memo allows the author to think through the ideas jotted down, read, and discuss with the audience. Direct communication Looking at situation at Amazon.com, it has been reported that employees are overworked up to 80 hours a week. Also, they receive emails past midnights and text messages when they do not answer. Employees are seen crying at their desk due to reported non-conducive working environment. For this reason, employees are encouraged to communicate directly about such issues to bosses using discreet feedback tool that people can report any job misconduct and criticism without anyone knowing. Bezos encourages direct communication in case of poor management practices and sometimes such matters are reported directly to his through his email (Keuning, Bossink and Tjemkes, 2010). Bezos has also created e-mail communication within the company that elicits panic. Jeff Bezos read some complains from the customers and forward them to the relevant employee with a ‘question mark’. This allows them to solve the existing issues and prepare an explanation on how the issue occurred. This shows that customers complains are heard and acted upon. In addition to this, issues in question are being solved immediately. Transactional style Bezos has always been a goal-oriented transactional leader. Transactional leader is one who has vigorous benchmarks and is not interested or influenced by other people opinions. This type of leadership style is exceptional in that, it is in the best interest of employees to do exactly what the leader requires (Ismail et al., 2010). The leadership style has enabled Jeff Bezos to achieve almost all the company’s operational goals and objectives by developing business opportunities that succeed in this period of global competition. Although he has faced much criticism in his leadership style, he tends to ignore the external voices and focus more on the goals of the company (Stone, 2013). Transformational style Jeff Bezos has been termed as an agent of change and innovation. Transformational leader is described as a leader who yield exceptional results and offer follower creativity. Bezos has always been known for developing long-term vision which often positively influences the minds of people. He tries to connect Amazon.com long-term goals to people’s values. He has also created an interest to respond to the vision of the employees’ efforts beyond conventional possibilities. The growth and success of the Amazon has been attributed to Bezos’s ability to envision and inspire even when people do not believe in his vision and mission. Evaluation of the leadership and communication styles Work environment Bezos’ leadership and communication style has led to a stressful working environment for the employees (Cook, 2011). Amazon.com is termed as one of the most stressful working environment in the high-tech business. The company has also been reported to have second largest employees turnover in the United States (Mahapatra, 2013). Workers have complained that Jeff Bezos’ leadership style has berates them and is somewhat opinionated and tend to inform every employee that he is the CEO. There is evident that Bezos’ leadership and communication styles results in workers not being satisfied with their working condition. Company growth There is evidence that Amazon.com has shown a positive growth over the years. In the beginning of this year, Citi Bank promoted Amazon shares from ‘neutral’ to ‘Buy’. This means that Wall Street’s consultants believe that Amazon.com will continue growing in the coming future and the progress of the company is great. Amazon.com had also gained more customers by the end of 2014 in addition to the increase in its prime members. The company has gained more than 10 million prime members in spite of its product price increase and is enjoying a 25% increase in its sales (Mangalindan, 2014). Due to Bezos’ leadership and communication style, the company has grown on the basis of revenue and brand and has gained more customer base. However, Amazon.com has suffered losses also (Bessinger, 2014). For instance, in 2014, the company reported loss of approximately $123 million despite of the elevated 23% of revenue. Careful analysis will acknowledge that the losses, revenues and increase in customer base are all attributed to the communication and leadership style of Bezos. Bezos ‘leadership style has led to Amazon reaching the position it is today. The company started as an online book store and grew over the years to becoming a huge online retail store selling various products due to the focus and vision of its CEO, Jeff Bezos. In certainty, his hunger for innovation and stability he exhibit in his leadership style has resulted to successful business empire. Today, companies operate in globalised environment. Leaders are therefore required to succeed in this fast-moving and competitive world utilising the available resources (Cantwell, Dunning and Lundan, 2009). In globalised environment, competitive advantage is achieved by companies that focus on the customers at the same time provide environment that engage and favours the employees. Although there are a number of variations within different companies’ leadership styles, it is important to know that each leadership style affects the business. No given style is good enough to be used in companies at all times. Every leadership style is known for being effective in situations where other have proven futile. Much of these differences are attributed to diversity of the global world. Leaders should acquire knowledge that would enable them improve themselves by becoming adaptable and flexible in this ever-changing globalised business environment. By focussing on emotional intelligence and at the same time incorporating culture to enhance leadership style, leaders should strive to lead unbarred by limitations of any sort. A popular phrase used today in the global work environment is ‘employee engagement’ (Chawla and Joshi, 2010). Employees are part of an organisation who invests in their work and at the same time in the success of the organisation. Effective leadership styles in today’s globalised environment should be focussed on shaping and supporting employee engagement. This is to say that, in a globalised work environment, availability of multinational team that is involved in the decisions and changes in business organisation leads to the success of the business. Although Jeff Bezos leadership and communication style has led to the success of the organisation in terms of sales, customer base and revenues, his style does not encourage good working environment for the employees which is considered a very important factor in the globalised working environment. Therefore, Bezos must slow down his leadership styles that tend to discourage team involvement in order to allow Amazon grow in terms of profits in today’s globalised environment. His transformational and transactional leadership style has led to inflexible and poor working conditions. Bezos should tone down on a number of his leadership styles to this effect. However, communication and leadership style Bezos uses has proven to be effective in growing and making the business successful in this competitive and globalised working environment. Conclusion To sum up, Jeffery Bezos is an inventive, customer obsessed, task oriented, experimenter, transactional and transformational leader. He encourages direct communication and he is not influenced by external voices in the decisions he makes. His communication and leadership styles have led to the success of Amazon.com on the basis of revenue, sales and customer base. Although his leadership style has been criticised for creating a poor working environment for the employees, generally his style is the reason for where Amazon.com is today. References Bel, R. (2010). 'Leadership and innovation: Learning from the best'. Global business and organizational excellence, 29(2), 47-60. Bessinger, G. (2014, July). Amazon Reports Loss Despite Strong Sales Growth. The Wall Street Journal. 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