Let’s face it. Amazon is magical.
Need a new book delivered in two days? BOOM. It’s at your door.
Considering a career switch and need access to powerful cloud computing? Amazon Web Services (AWS) has you covered.
It’s so reliable that small and medium-sized businesses profit using their platform.
But with such an enormous empire, how on earth does Amazon keep everything running smoothly?
Today, we’ll crack open that Amazon vault and explore the secret behind its success.
We’ll unveil how Amazon’s organisational structure fuels its innovation, agility, and global reach. These details will inspire you.
Let’s dig in.
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What is Amazon’s organisational structure?
Imagine a company the size of a busy metropolis, bustling with activity like a beehive on overdrive.
Amazon’s organisational structure resembles this very image.
Amazon is a unique hybrid. This means that it blends elements of two main organisational structures: functional and hierarchical.
At the heart of this metropolis lie the functional groups. They’re like specialised city districts.
Check out our guide to organisational structure.
Amazon’s functional organisational structure
Amazon understands that global tastes differ as much as accents and dialects. So, they incorporate geographic divisions.
These divisions house teams from various functional groups.
Each group focuses on a core function that keeps Amazon’s engine humming. They work together to tailor Amazon’s offerings to local needs.
Imagine pop-up stores appearing throughout the city to cater to temporary trends. That’s what cross-functional teams are like.
These temporary groups are led by individuals from various departments.
They tackle specific projects like:
- Advertising
- Design, and
- Analytics
These groups function like independent departments, although not entirely independent. They work under the S-Team (details in the next section).
Each member of Amazon’s functional structure is overseen by a high-ranking executive.
Let’s talk about the hierarchical structure.
Also, check out Google’s organisational structure.
Amazon’s hierarchical organisational structure
Amazon’s hierarchical structure comprises three groups:
- The S-Team
- The board of directors and
- The executives.
#1. Amazon’s S-Team
Amazon’s S-Team is Amazon’s central decision-making body.
It includes high-level executives and senior leaders who meet regularly to discuss major decisions and steer the company’s direction.
The “S” stands for “Senior.”
CEO Andy Jassy sits at the top of this team, after the founder, Jeff Bezos.
Andy makes decisions that affect the entire organisation.
Currently, Amazon’s S-team comprises 32 leaders from various parts of the Amazon business.
This includes finance, retail, cloud computing (AWS), advertising, and legal.
#2. Amazon’s board of directors
They’re a group of individuals who provide oversight and guidance to the executive team.
They don’t directly manage the company but ensure it operates legally, ethically, and in the best interests of shareholders.
Some board members may also be executives (e.g. Andy Jassy). However, not all executives are on the board.
Examples include Jeff Bezos (Executive Chairman) and Judith McGrath (Director).
#3. Amazon’s executives
They’re the senior team in charge of Amazon’s day-to-day operations.
Executives have a fluid membership.
This means that some executives are simultaneously in the S-Team, executive team, and board of directors (for example, CEO Andy Jassy).
Why?
It ensures strategic decisions made by the S-team align with the board’s overall vision for the company.
Also, executives on the S-team can update the board on operational challenges. This provides better oversight during decision-making processes.
Also, check out Apple’s organisational structure.
Key differences between Amazon’s S-Team, board of directors, and executives
The key differences are in the focus, size, and selection process.
- Focus: Executives manage daily operations, the board oversees everything, and the S-team focuses on strategy.
- Size: The executive team is larger than the board, and the S-team is smaller than both.
- Selection: Executives are typically chosen based on experience and qualifications. Board members are often elected by shareholders. The S-team is likely chosen by the CEO.
Here’s an analogy: imagine Amazon as a ship.
- Executives: The captain and crew who steer the ship and keep it running smoothly.
- Board of Directors: The ship’s owners who set the course and ensure it adheres to maritime laws.
- S-team: The ship’s senior officers who meet regularly to plan the voyage and make critical decisions.
Amazon’s structure is genuinely innovative and flexible.
This approach allows Amazon to adapt to ever-changing market demands.
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Elements of Amazon’s organisational structure
There’s something a delicious dish, a smooth sailing ship, and a dominant football team have in common.
And what is that?
They rely on a combination of winning elements to succeed.
Amazon uses three of those winning elements:
- Clearly defined roles (starting at the top)
- Specialised teams, and
- Local teams around the world.
These four elements ensure everyone knows their part, works together easily, and can adjust to different situations.
That’s why they’re one of the largest employers in the world today, with over 1.5 million employees.
So, let’s break each one down.
Check out Facebook’s organisational structure.
#1. Clearly defined roles
Imagine a massive ship navigating dangerous seas.
Keeping everyone rushing around the deck won’t make it function.
Instead, there’s a clear hierarchy:
- The captain sets the course. Like the CEO in Amazon’s “boss tree” structure (currently Andy Jassy)
- Specialised deck crews handle specific areas. Like navigation, engine room, and others.
That’s similar to a football squad. The squad succeeds because each player has a clearly defined role.
This translates to Amazon’s hybrid structure.
The leadership sets the overall direction for the company.
And the specialised teams are just under them. They’re responsible for specific aspects, like online shopping and cloud computing.
Clearly defined roles prevent confusion.
It also ensures everyone is rowing in the same direction.
#2. Specialised teams
Amazon’s structure thrives on specialisation.
The online shopping teams are e-commerce experts.
They create amazing user experiences. They’re in the background, ensuring that you find that perfect gift.
And then, the cloud crew.
They’re the tech professionals who manage Amazon Web Services (AWS). This includes everything cloud computing.
These teams are the engines at Amazon. They ensure that everything behind the scenes is hassle-free.
#3. Local teams around the world
Every customer is different, no doubt.
What ticks James in London may not interest Muhammad in Saudi Arabia. And vice versa. Amazon understands this perfectly.
Because, with such a massive user base, they have to get it right.
Thankfully, Amazon’s structure is flexible. So, this is where their local teams come in.
Local teams understand customer preferences in their region. They’re in charge of different markets.
These teams use customer data to channel relevant products and services to customers.
Check out Microsoft’s organisational structure.
Why does this structure work for Amazon?
There are many reasons why this works for Amazon.
We’ll detail just three of them (the main ones).
#1. Things run smoothly
Amazon invented what they call the “Two-Pizza Rule.” The rule says that all teams should be small enough that two pizzas would feed everyone present.
They implemented this rule to boost efficiency. And clearly, it’s been working.
The “Two-Pizza Rule” makes team communication easier and decision-making faster.
Plus, there’s less time wasted in boring meetings.
They can focus on getting things done instead of just talking about them.
Think of how you can apply this to your business.
You could break tasks into smaller, more manageable chunks with a dedicated crew.
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#2. There’s a constant stream of new ideas
Picture a bunch of brilliant minds, each a master of their craft.
That’s precisely what Amazon’s specialised teams are like.
Is it making online shopping a breeze? Or keeping their cloud service (AWS) top-notch?
These teams are constantly cooking up innovative ideas.
#3. There’s always room for an expanding business
Big dreams require big plans.
Amazon’s structure allows them to think strategically and invest long-term in new technologies and innovative ideas.
Amazon’s organisational structure is flexible. It was designed with the future in mind. Amazon’s structure allows them to invest in the company’s future.
New teams can be formed quickly to address new markets or opportunities.
This allows Amazon to scale its operations efficiently.
#4. Amazon adapts faster to change than its competitors
The world is constantly changing. And so were customer needs in 1997 when one-click shopping became the in thing. And the pioneers? You guessed it right — Amazon.
The stats even get crazier.
Until 2017, Amazon was the only company offering one-click shopping.
Stunning, but true.
Indeed, Amazon’s structure makes them flexible.
Small, focused teams can react quickly to customer feedback. This way, Amazon not only flow with changing trends but influences them.
Remember when you had to change your presentation entirely at the last minute? Amazon’s structure allows them to do that on a large scale. This keeps them ahead of the curve.
Can everyone structure their company like Amazon?
Of course, Amazon’s organisational structure is impressive.
But you can’t just copy and paste it and expect the same magic for your business.
Realistically, one size still doesn’t fit all. And in this case, you’ll need your best judgement.
So, here’s my verdict:
You can only borrow strategies, not blueprints.
There are some definite pros and cons of Amazon’s organisational structure.
Pros of Amazon’s organisational structure
Here’s why Amazon’s organisational structure is a hit.
- Amazon’s structure keeps the focus laser-sharp on what matters most: the customer.
- Their setup fuels constant breakthroughs. They’re pushing the boundaries of what’s possible.
- No matter how big they get, Amazon can handle it with ease.
- In today’s e-commerce, fast decision-making is critical. And Amazon’s structure delivers.
- They manage a world-spanning operation with remarkable efficiency.
- From your groceries to the power behind the web, Amazon’s got it all sorted out. Thanks to their adaptable structure.
- Clear roles and responsibilities keep things running smoothly.
- Amazon’s structure allows it to adapt to changing markets and keep growing.
- Strong leadership ensures everything stays on track.
And what about their flaws?
Cons of Amazon’s organisational structure
Let’s not forget that Amazon is a big company with complex needs.
While their structure offers valuable insights, directly replicating it might not be suitable for everyone:
- One size doesn’t fit all. A tiny startup likely doesn’t need separate teams for online shopping and cloud computing. Their structure has to be adaptable to their specific needs and resources.
- Big decisions, diverse input. Not every choice benefits from a small, focused team. Strategic decisions often require input from various departments with different areas of expertise.
Check out Telebu’s organisational structure.
Now that we’ve dissected Amazon’s organisational structure. What have you learned so far?
It’s one thing to emulate Amazon’s organisational structure. And it’s another thing to keep your teams in sync with one another.
That’s why you need the best team collaboration and communication tools.
Watch how Talk Magnet boosts productivity for your remote and hybrid teams.
