The Amazon Management System

The Ultimate Digital Business Engine That Creates Extraordinary Value for Both Customers and Shareholders

Ideapress, 2019

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Internet activity exploded 2300% in 1994, the year Jeff Bezos started Amazon.

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As of 2018, Amazon accounted for 45 cents of every dollar of United States’ online sales. Amazon Web Services is the top global cloud services operator. Fulfillment by Amazon (FBA) enables the operations of the millions of Amazon online marketing partners. The global giant’s other groundbreaking developments include Alexa (a sophisticated AI assistant), Echo (smart speakers) and Amazon Aurora (a data engine). In this illuminating analysis of the Amazon Management System (AMS), Ram Charan and Julia Yang unveil the company’s secrets of success.

Summary

Most conventional corporate management systems are passé.

Most leaders manage organizations based on age-old, command-and-control protocols and procedures whose roots trace back to the ancient traditions of the church and military.

In the 1920s, the DuPont Corporation’s Pierre DuPont and General Motors’ Alfred Sloan introduced divisions within their operations. The matrix structure, set up to optimize global supply chains, emerged in the 1960s. As businesses interconnected, management systems became increasingly top-heavy and bureaucratic. Decision-making slowed.

GE’s Jack Welch popularized the organizational operating system concept in the 1980s, but bureaucracy remained entrenched. Connections between manufacturers and customers were tentative and erratic. Top-down, hierarchical, corporate management systems proved ill-suited for the modern era of transformative big data.