Organizational Innovation

Amazon.com: Innovation via the "Two-Pizza Team"

Amazon.com widely is considered the world's best online retail site, the undisputed leader of Internet commerce. Although many e-tailers pulled their plugs during the dot-com bust of the late 1990s, Amazon has become a profitable multibillion-dollar business. The man behind the company's success is its founder and CEO, Jeff Bezos. And his secret to success, he proudly proclaims, is his willingness to innovate. His secret to being innovative is simple (to explain, at least) - being willing to take risks. As Bezos put it, "Innovation is part and parcel with going down blind alleys. You can't have one without the other." And at Amazon, being innovative is possible because it's engrained into the culture of the organization. Indeed, the very idea of starting an Internet-based bookstore in 1993 was then as unusual as it is unremarkable today. To keep innovation going at Amazon, Bezos does several things. First, company officials go out of their way to select people who are interested in being innovative. Those who are unwilling to take risks or who demand stable working environments "flee Amazon.com in hordes," says Bezos.

However, because Amazon is known for its pioneering focus, it also tends to attract individuals who buy into the company's highly innovative orientation. Second, to keep ideas percolating, managers form teams that introduce and test ideas constantly. And, because the company's only presence is Web-based, it's easy to test ideas without making large investments. For example, it's possible to expose some customers, but not others, to some features or descriptions or prices. Then, comparisons can be made to provide instant feedback on how people behave. Within the company's Seattle headquarters, these teams that test innovations are called "two-pizza teams." All projects involve only small numbers of people - "small enough that they can be fed on two pizzas," Bezo explains, explaining that six-person teams constitute a good size for getting things done.

At Amazon, "getting things done" is all about making the best possible experience for customers. Recently, this has taken such popular forms as "inside the book" (which allows guests to the Web site to examine and search through books before purchasing) and various deals that allow customers to have their items shipped free of charge. Both have been wildly successful. When asked if he considers himself to be an innovator, Bezos readily acknowledges that this description fits him perfectly. "I absolutely think of myself as an innovator," he says, adding that too often "we learn that we can't improve things." However, being innovative means learning that anything can be improved upon. And if Amazon's success is any indication, this clearly is so.

Questions:

1. As Amazon.com has grown in size over the years, do you think it has become easier or more difficult for innovation to occur, or do you think that the company's size makes no difference in this regard?

2. What role do you think Jeff Bezos has played in instilling the innovative culture at Amazon.com? How, if at all, do you think he is involved in maintaining an innovative culture?

3. Personally, would you like to work at a highly innovative company like Amazon.com, or would you be among those who leave because you prefer a more stable environment?

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