Jeff Bezos can’t set Amazon’s course by himself.
Since its early days, the founder and chief executive has worked with a small team of Amazon’s senior executives to disseminate his ideas, shape company culture, solve emerging problems and set high-level goals - an annual process that concludes in the early part of each year.
The senior leadership team - or S Team - added seven people in 2019 and saw two longtime members depart. That’s a significant change and expansion of a group including some of the company’s longest-tenured executives, but which Amazon rarely talks about.
Now numbering 22 people including Bezos, the changing composition of the group provides a sense of ascendant priorities for the company, which in general gives little in the way of strategic forecasting to financial analysts and investors. The 2019 S Team additions included executives focused on cloud computing, advertising, Alexa and fashion.
Much about the S Team is secretive. You won’t find a list of S Team members on a corporate website, though an Amazon spokesperson did confirm biographical details of individual members gathered by The Seattle Times from public records, LinkedIn profiles and other sources. Amazon declined to make anyone available to discuss the S Team on the record.
Financial analysts who cover Seattle-based Amazon generally receive little access to its top executives.
Amazon, along with fellow Internet companies such as Google and Facebook, are "notoriously not as easy to work with", said Brent Thill, who leads technology sector coverage at investment bank Jefferies. Other companies, such as Microsoft, routinely host financial analysts for events and briefings that enable them to mingle with senior leaders and gain a better understanding of the business.
Roles reflect major areas of focus
The S Team is responsible for all of Amazon. The group’s members, not all of whom report directly to Bezos, routinely hear presentations from teams across the company at meetings in the Day 1 building where he keeps his offices. The specific roles of S Team members - particularly the new members - provide a rough map of major areas of focus for Amazon, a company of unparalleled breadth across industries including technology, commerce, transportation and entertainment.
As is the case at many corporations, Amazon’s S Team includes the people in charge of finance (Brian Olsavsky), human resources (Beth Galetti), corporate affairs (Jay Carney) and its biggest business segments: Amazon Web Services CEO Andy Jassy and worldwide consumer CEO Jeff Wilke.
Not surprisingly, several S Team members focus on consumer markets and the massive network of fulfillment centers, transportation systems and workers necessary to serve them: Wilke, senior vice presidents Dave Clark (head of worldwide operations), Doug Herrington (in charge of North America consumer), Russ Grandinetti (international consumer) and Amit Agarwal, country manager for India, arguably Amazon’s most important market outside the US.
Joining them on the S Team as part of a group of new additions in December is Neil Lindsay, vice president of worldwide Prime and marketing. Prime is the company’s delivery and media subscription programme, which has more than 150 million paying members globally.
With the 2019 additions, there are now four S Team members, counting Jassy, focused on the company’s highly profitable cloud computing business: Peter DeSantis and Matthew Garman joined existing S Team member Charlie Bell.
Three S Team members focus on Amazon’s voice-computing technology and devices: Rohit Prasad, the head scientist for Alexa, was added in December, joining Tom Taylor and Dave Limp.
Tom Forte, analyst and managing director at D.A. Davidson, said the addition of another Alexa-focused executive signals the long-term strategic importance of the technology to Amazon, something he believes remains "underappreciated" by investors. He expects voice search to become more natural to consumers, which will in turn lead to other benefits in the company's core commerce business.
"Amazon has only scratched the surface on Alexa from a retail sales standpoint," Forte said.
But, he added, that hinges on Amazon overcoming the privacy concerns inherent in its effort to spread microphone-equipped devices throughout homes, cars and personal devices - concerns that came to the fore in 2019.
Another fast-growing, profitable business for Amazon is advertising, now represented by two individuals on the S Team: new addition Colleen Aubrey and longtime executive Paul Kotas. The company racked up nearly US$4.8bil in advertising sales in the fourth quarter of 2019, up 41% from a year earlier. Amazon has quickly gained market share in digital ad sales - selling sponsored product listings and branded stores on its site, as well as display and video ads on and beyond its media properties and devices - and now ranks a strong third behind Google and Facebook.
Another new S Team executive, Christine Beauchamp, heads the company’s fashion efforts. She has the shortest tenure at Amazon among the elite executive group at two and a half years. Her elevation to the S Team signals not only fashion’s importance, Forte said, "but it’s a reflection of where Amazon feels like it’s gaining traction."
Analysts searching for potential areas of meaningful growth for a company the size of Amazon focus on trillion-dollar markets. One such major market with no dedicated executive on the S Team is health care.
"They probably want to be bigger in that market, and the question is what do they want to do there," said Thill.
In the last two years, Amazon acquired mail-order pharmacy company PillPack for US$753mil , net of cash acquired; certified its Alexa system to handle protected personal health information; formed a joint venture with JPMorgan Chase and Berkshire Hathaway focused on employee health; and began a pilot programme for Seattle-area employees enrolled in its health insurance plan offering virtual care, house calls and prescription deliveries.
Meanwhile, longtime Bezos protege and S Team member Steven Kessel left Amazon last month, while Jeff Blackburn began a one-year sabbatical. Some of Blackburn’s business and corporate development responsibilities would appear to fall to new S Team member Peter Krawiec, vice president of worldwide corporate development.
Kessel’s latest assignment was Amazon’s growing portfolio of physical stores, which numbered 571 at the end of 2019.
Stores now fall under Clark’s portfolio, which has expanded recently and includes fresh food delivery, Prime, worker safety, robotics and sustainability, in addition to the core retail warehousing and logistics operations, Business Insider reported Thursday, citing an internal organisational chart. The Clark-led worldwide operations group is moving to Bellevue, as part of the company's growth there.
On a local level, several S Team members were active in last year’s Seattle city council elections, writing cheques to candidates and political action committees.
How the S Team manages
The S Team has been a close-knit group, with several executives working together at Amazon for more than two decades. In a recent New York Times story about Bezos’ tumultuous turn in the tabloids during the last year, Carney said, "In the senior leadership here, which includes some of the people who have known and worked with Jeff the longest, there is a lot of empathy for what he’s had to deal with and a lot of admiration for his remarkable ability to tune it out and focus on what matters."
One way the S Team manages Amazon is through an annual goal-setting process the company undertakes each fall that concludes early in the new year. Bezos, in his 2010 letter to Amazon shareholders, described goal-setting sessions that "are lengthy, spirited, and detail-oriented". That year, the company had 452 goals that were important enough to be monitored by the senior leadership team, which reviews them several times a year, adding, removing and modifying as necessary. A company spokesperson declined to discuss current goals.
Bezos said back then that senior leaders new to the company "are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs".
But, of course, the S Team routinely makes decisions - or hears Bezos’ decisions - with significant financial implications. During an S Team meeting in 2006, Bezos unilaterally cut the pricing of Amazon’s new cloud storage offering below what executives presenting it had suggested as a break-even price, according to an anecdote relayed in Brad Stone’s definitive profile of Amazon's first 20 years, The Everything Store.
More recently, the S Team set a goal in 2017 of securing US$1 billion in economic incentives for real estate development projects, apart from the billions it was offered for its second headquarters, The Wall Street Journal reported last month.
Another S Team meeting described in The Everything Store was held in the basement of Bezos' home in early 2002. He presented a plan to reorganise the company as a collection of small, nimble teams with no more than 10 people in a bid to stave off middle-management bloat. The idea of these "two-pizza teams" persists in Amazon’s corporate lore and structure, though not universally.
With its recent growth, it’s questionable whether the S Team itself still adheres to that two-pizza principle. Maybe if everyone only has one slice.
- Tribune News Service
Created by Tan KW | Aug 17, 2024
Created by Tan KW | Aug 17, 2024
Created by Tan KW | Aug 17, 2024
Created by Tan KW | Aug 17, 2024