- Jeff Bezos is stepping down as CEO of Amazon and will take on a new role as CEO.
- Facebook will be the only technology company in the ‘big five’ that still has its founder as CEO.
- This type of transition is common because it keeps the most important visionary of the business at big decisions.
- Visit the Insider Business Department for more stories.
Amazon CEO Jeff Bezos announced on Tuesday that he will retire as the CEO of the online retail empire he founded in 1994 and has developed into one of the world’s most valuable technology companies.
Andy Jassy, a longtime Lieutenant of Bezos and CEO of the company’s thriving cloud business, will replace him in the third quarter of 2021. But that doesn’t mean Bezos is done with Amazon; he will take on a new role as executive chairman, taking into account big-picture decisions such as product strategy and new projects.
If this sounds familiar, it should be. Bezos is officially a member of the club of elite technology founders who have stepped down from their role as CEO to focus on managing key strategic decisions and other major projects.
When Larry Page and Sergey Brin officially retired from their respective roles as CEO and president of Google Parent Alphabet, they wrote that it was time for them to ‘accept the role of stubborn parents, offer advice and love, but not daily. ! ‘
Bill Gates, the billionaire philanthropist and co-founder of Microsoft, said he gave up his CEO back in 2000 to return to what he loves most: “focusing on technologies for the future.”
And now Bezos is transitioning from CEO to an executive chair role that will enable him to focus on early initiatives and new products, while also freeing him up to focus on his other passions like Blue Origin and The Washington Post.
“Being the CEO of Amazon is a deep responsibility, and it’s inspiring,” Bezos wrote in a letter to employees announcing his transition. “If you have such a responsibility, it’s hard to pay attention to anything else.”
Bezos’ decision means that some of the largest technology companies in the United States are still run by their founders. Of the FAANG stock companies, an abbreviation that refers to technology giants Facebook, Apple, Amazon, Netflix and Google, only Facebook and Netflix founders have an executive lead. The case is the same with the ‘Big Five’ technology companies – Apple, Amazon, Facebook, Alphabet and Microsoft. Only Facebook still counts its founder as its CEO.
According to experts, there is a reason why large technology companies follow this pattern. First, if you had a CEO who is known as an iconic visionary like Bezos, the prospect of losing his involvement would surely attract investors and almost every other company or institution that is somehow on the company trust, ghost. It also gives Bezos the opportunity to run the company to some extent and stay in the spotlight to some extent while Jassy gradually becomes the face of the company.
“You want to go up, you want to go out if it’s going really well,” David Yoffie, the Max and Doris Starr professor of international business management at Harvard Business School, told Insider. “And you give the reins to a successor who can build on the momentum you’ve established.”
After the news of Bezos’ transfer became known on Tuesday, Amazon was quick to explain that it was still going to play an important role in the company. As executive chairman, Bezos will be involved in one-way door issues, Amazon chief financial officer Brian Olsavsky said during the company’s fourth-quarter returns on Tuesday. The term refers to critical decisions such as acquisitions, strategy and the decision to move to new markets such as the grocery industry, Olsavsky said during the call.
Bezos will continue to be a big part of Amazon’s future
This type of transition also suggests that we should not expect any major shifts in Amazon’s overall strategy and direction, simply because Bezos is no longer at the helm.
“If you see a CEO taking on an executive chair role, it’s a sign that the board really wants to stick to the current strategy,” said Mary-Hunter McDonnell, associate professor of management at Wharton School at the University of Pennsylvania. , told Insider. . “This is not the time to appoint a new CEO.”
This is what makes Bezos’ position as CEO different from a non-executive chairman, such as William Klepper, author of the book “The CEOs Boss: Tough Love in the Boardroom” and academic director of executive education at Columbia Business School, show.
‘Non-executive chairman [means] Klepper told Insider. “In this case, if you use the term executive chairman of the board, it basically means I will not keep my hands off the company… So it is in many ways a partnership.”
Jassy, a 24-year-old Amazon veteran, is known as Bezos’ second commander and was even his first shadow adviser, a role that involves attending every meeting with the CEO. Since joining the company in 1997, Jassy has become one of the most influential and important figures at Amazon, building the cloud industry from the ground up, as Eugene Kim and Ashley Stewart of Insider outlined in their profile on Jassy.
The intimate knowledge of Bezos is critical, because what happens next for Amazon will come down to the type of executive chairman, what Bezos decides to be, and his relationship with Jassy.
“When the chairman and the CEO have a very strong personal relationship, they are able to handle all the tensions and conflicts that will inevitably arise,” Yoffie said. “If the relationship is a bit strained or a bit distant, and there is no deep trust between the two players, it can be a very challenging problem to have the founder in the role of executive chairman.”
It is also very common for technology companies led by founders to follow this succession plan because of the specific challenges that technology companies face in bringing in outside leadership. Outsiders may not understand the culture and technology that are crucial to promoting the business’ success, according to Yoffie.
The shift to a role that is more focused on decision-making in the big picture without the pressure and responsibility of day-to-day management is, in some respects, also the next step in the career of a technical founder.
“Most of these businesses that start in a garage,” Klepper said, referring to the famous Silicon Valley tropics, “are growing up.”