Amazon founder Jeff Bezos is among a very few who can claim to have revolutionised global retail, but his decision to stand aside as chief executive barely registered on the online giant’s share price.
That’s partly because the 44% sales jump to $125.6bn (£92bn) in the fourth quarter, with net income more than doubling to $7.2bn (£5.3bn), understandably reassured investors that the juggernaut powers on.
It also reflected the fact that Bezos will continue to be involved at Amazon – he will become executive chair – rather than sailing off into the sunset.
And it showed confidence in Andy Jassy as Bezos’ successor as CEO – after all, he has been at the business since 1997 and built up its cloud computing business, a division that contributes about half of Amazon’s operating income.
The changing of the guard also shines a spotlight on one of the thorniest problems faced by retailers and businesses more generally: succession planning and the difficulties of weighing up the merits of promoting tried and tested executives versus bringing in outsiders.
Fresh faces are often associated with fresh ideas. When ‘transformation’ and the ‘new thing’ are so fetishised, as is often the case at present, the first instinct is often to opt for new brooms.
When someone is described as a safe pair of hands, it is often seen as lukewarm endorsement at best and overt criticism at worst.
“Amazon’s relentless success is surely testament to the value committed leaders who are in it for the long haul can bring”
But Amazon’s top team is full of safe pairs of hands. Chief financial officer Brian Olsavsky has been with the company since 2002. Worldwide consumer chief executive Dave Clark has been there even longer – since 1999. General counsel David Zapolsky joined the same year. Worldwide controller and principal accounting officer Shelley Reynolds is a comparative newcomer – she’s only been there for a decade and a half.
Former consumer boss Jeff Wilke, who was seen as a potential successor to Bezos but last year said he would retire early, was another veteran of the ’90s intake.
Amazon’s relentless success is surely testament to the value committed leaders who are in it for the long haul can bring. And it seems to be happening more.
Research this week from executive search specialist Korn Ferry showed that 67% of new chief executives last year were internal appointments. In turbulent times, as the pandemic took hold, safe hands were valued.
Safe hands can bring change
It’s a hard call, though. Sometimes it has been experienced internal hires who have dropped the ball most spectacularly when they’ve reached the top of the pile.
The obvious example is Tesco, which floundered during the tenure of Phil Clarke. He joined the retailer as a 14-year-old school holiday shelf-stacker and worked in everything from supply chain to Tesco’s international operations before leading the group – to the brink of disaster, as it happened.
Surely what ultimately matters is affinity with a business and understanding what made it great – things Clarke lost sight of.
It doesn’t necessarily mean business as usual. It might bring quite radical change – as with Amazon’s shift into cloud computing rather than sticking to retail – but change in tune with company values.
Amazon’s leadership principles offer telling insight into how the business operates and the behaviour expected at the top to create success.
“It doesn’t necessarily mean business as usual. It might bring quite radical change, but change in tune with company values”
Number one is ‘customer obsession’. Many retailers would say the same, but it is not always true. That much is obvious from the difficulties and sometimes collapses suffered by some big names.
At Amazon, “leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”
Another principle is to “invent and simplify”. Amazon says of leaders: “They are externally aware, look for new ideas from everywhere, and are not limited by ‘not invented here’.”
Other characteristics include not thinking “their or their team’s body odour smells of perfume”, a bias to action and delivering results through the ability to “rise to the occasion and never settle”.
Another rule is to “hire and develop the best” – presumably what got Jassy the job. The new boss has been at Bezos’ side pretty much since “day dot”, one former Amazon executive tells Retail Week. He has always “asked good questions” and been innovative.
If Amazon’s principles have worked, then the online giant will continue to grow under the new leader. To turn around the old saying, it should be a case of the more things stay the same, the more they change.