- Amazon CEO Jeff Bezos will retire later this year.
- Amazon has an internal succession planning process that helps prepare for leadership changes.
- The process includes annual board reviews of internal charts containing the top executives.
- See more stories on Insider’s business page.
Amazon CEO Jeff Bezos’ decision to officially resign last month comes at short notice.
According to people familiar with the matter, even those who work closest to the CEO’s office found out two days before it was announced.
That was when Bezos signed the paperwork and formalized its move to executive chair, as the U.S. Securities and Exchange Commission requires that any material change be submitted to the company within four business days. Andy Jassy, CEO of Amazon Web Services, will replace Bezos as Amazon’s CEO in the third quarter of this year.
Behind the scenes, Bezos’ plan to eventually fire the CEO was, for years, underway, through the company’s succession planning process, these people said.
The succession planning involves an annual review of the top management team’s future plans and backup candidates, as well as a map that charts the rising stars of the company, Insider has learned. Managers are also encouraged to conduct follow-up discussions with two or three immediate reports in the event of an unexpected change.
It’s a fairly rigorous procedure based on intensive bureaucracy, years of research and a constant dialogue that all lead to a continuity of management within Amazon, which is just as detailed as the company itself.
People familiar with the process said it was an informal system rather than an established program, with enough flexibility enabling Bezos to keep Jassy’s appointment and the exact time of his resignation close to his chest.
Yet people say it’s an effective but little-discussed strategic tactic in Amazon’s playbook, which could help the company make the transition to the Bezos era smooth in the midst of the biggest leadership revolution in its 27-year history. .
Insider spoke with six current and former Amazon executives to learn more about the company’s succession planning process. All spoke on condition of anonymity because they were not authorized to speak in public about the company.
“It’s really for the business to systematize a process,” one person said. ‘Jeff [Bezos] try not to do things too suddenly. ‘
Amazon’s spokesman declined to comment on the record.
Top 25 drivers
Bezos said in an interview with Insider earlier in 2014 that Amazon has a succession plan for itself and ‘all our senior executives’. He did not disclose the name of his successor at the time, but he indicated that the company had already made plans for his eventual resignation.
Some of the discussions take place at board level. Two of the people held a meeting of Amazon every year, usually in late January, to explore potential successors to key positions. The meeting, which lasts about two hours, goes through a matrix chart of 20 to 25 top executives and their potential replacements, should anyone decide to leave the company.
The table lists two or three successor candidates from each manager. If the choice is not so clear, it would have a remark that an interim person is in place or that an external candidate is being considered. Not every executive position is reviewed, and the board can spend more time on just a handful of names.
The graph is compiled by the S team, Amazon’s group of about two dozen senior executives who make important decisions, with direct input from the human resources department.
The S-team meetings can get intense if you choose who it wants to include on the list. These meetings would often last four to five hours, and the longer people (or those who had spent nearly 20 years at the company) would become more noisy than the newer members of the team.
Bezos can especially start with his feedback beforehand because he likes to keep an extremely high streak with the addition of new names to the list. The S-team, for example, had very little turnover and rarely added new members until last year, when there were nine new members.
Generally, people who have been to those meetings say it is a good exercise to help the S team and the board get acquainted with other parts of the company and new leaders who are on the fast track at Amazon.
“It provides a good opportunity for discussion of strengths and weaknesses,” said one of the people.
As Amazon has become a popular poacher for other companies, Bezos has also started holding one-on-one sessions with many of the executives on the list in recent years, so he could better understand their future intentions. The goal is to prevent them from becoming ‘blind’, one person said, as Bezos likes to have ‘a lot of knowledge’ before his top lieutenants leave.
According to Amazon Schloetzer, a professor of business at Georgetown University, Amazon’s approach to succession planning is a ‘pretty orderly process’ that can be found in any ‘well-functioning’ business. The only risk, according to him, is that Bezos will remain part of the company’s board, which will make it difficult for Jassy to make decisions that his predecessor may not always agree with. Since former CEOs at other companies have been distracted by new leadership in the past, this is a dynamic way Jassy will have to navigate once he is promoted.
“It’s a little unusual,” Schloetzer said of Bezos’ new role. “But it’s the founder of the company who was hugely successful.”
Andy Jassy, CEO of Amazon Web Services, will replace Jeff Bezos as CEO of Amazon.
Isaac Brekken / AP
Bezos’s empty coffin
Although the chart reviewed by the board usually shows follow-up candidates for the two dozen senior positions at Amazon, there was always an empty box, especially Bezos’ name.
The CEO’s potential successor is not mentioned in the table reviewed by the board, in part because Bezos does not want to be too explicit about who he chooses as a replacement, one person familiar with the process said.
Instead, Bezos would hold private talks with the board, and he shared several names he would consider ideal as Amazon’s next CEO.
The candidates were almost always internal, as Bezos felt strongly about finding someone from within, two of the people said. Bezos feared that an external candidate would be less of a ‘risk-taker’, or someone unwilling to try new experiments, an important leadership trait at Amazon. One person said Bezos also became more cautious about hiring outsiders after the failed Joe Galli experiment – a sensational tenure in 1999 that left just 13 months after he joined the company as president and chief operating officer.
During board meetings, Bezos mostly raised three names: Jassy, the CEO of AWS who will replace Bezos later this year; Jeff Wilke, the former retail CEO; and Jeff Blackburn, the longtime former CEO for video and corporate development.
One person said it was hard to say that Jassy was the “first of equals” as all three have their own strengths and weaknesses. But the latest call to nominate Jassy as the next CEO is likely to come at Bezos’ own decision, even though the council has reviewed all three candidates, this person added.
This does not necessarily mean that Bezos liked Jassy over Wilke or Blackburn. Wilke announced his resignation last year, ahead of the new chief executive’s announcement, while Blackburn took a year off in 2020 before deciding to resign last month. Amazon’s spokesman said earlier that these changes had nothing to do with Jassy’s appointment, although there are internal speculations that they are related.
Bezos also “indicated” to the board last summer that he was ready to take on a new role, the Wall Street Journal reported last month.
The ‘hit by a bus’ plan
In addition to the list of 25 top executives and their potential successors, Amazon’s board is reviewing a separate chart containing about 50 of the company’s rising stars. People on this map differ from those on the other list because they are aimed at identifying the company’s future leaders.
The graph is divided into four quadrants: the highest quadrant is ‘very potential’ and the lowest ‘disappointing’ or ‘not enough potential’. One person said that the graph is primarily intended to guide new leaders to take on larger roles at the company. Some of them will move around the company to gain a broader experience, while others will be chosen to take on specific positions, such as Bezos’ ‘shadow’ adviser, who joins the CEO at each meeting.
In addition to the board and S team meetings, Amazon encourages its VPs and directors to plan informally for their own successors, three people said. Internally, some call it a plan “hit by a bus” because it allows the executive to prepare for the worst ahead of time. The people refer to a general expression by Bezos, who wanted to ask if the company planned ‘if I was hit by a bus’.
Amazon executives would usually have in mind two or three people who are qualified to replace them immediately. When former prime minister Greg Greeley left for Airbnb in 2018, for example, the company had two VPs, Jamil Ghani and Cem Sibay, to fill in for him. And when former physical store boss Steve Kessel abruptly left last year, Amazon was able to give another VP, Dilip Kumar, an expanded role in the team.
The planning that takes place outside the council chamber is nevertheless less formalized and often receives limited attention, people said. This is partly because Amazon likes to move fast and constantly reorganize teams when needed, and managers have little time to devise a detailed follow-up plan.
“Ideally, we should have succession planning for all director positions,” said one of the people. “But we’re just moving too fast.”
Do you work at Amazon? Contact this reporter via the encrypted messaging program Signal (+1 415 926 2066) or email ([email protected]) using a non-workable device.