Jeff Bezos is a giant in management. Forbes magazine recently named him its top CEO based on the performance of the company he founded, online retailer Amazon. Bezos started Amazon a few years after earning a degree in computer science and electrical engineering. Not satisfied with applying his analytic skills to finance, he started an online bookstore, incorporating the business in 1994 and launching the website in 1995. Today, Amazon is a retailing monster, with more than 20 million products and revenues of $48 billion. It is also a company built on 14 leadership principles that reflect the character of the company’s founder. Topmost in Bezos’s mind as a business leader is his passion for pleasing customers. In a famous gesture, Bezos requires that in meetings, an empty chair be placed at the table to represent the customer, the invisible presence everyone must be most concerned about. Even if a service that delights customers costs money—say, sturdier boxes that customers can reuse—Bezos will forge ahead. He even has a publicly available e-mail address, jeff@amazon.com, so that he can learn directly what customers love and hate. When he receives a complaint, he is apt to forward it to Amazon managers, adding as his only comment a question mark, implicitly demanding an investigation and explanation. Employees know they have just a few hours to resolve the problem and report their solution. In addition, Bezos insists that decisions be firmly grounded in data. At weekly meetings, managers must evaluate their performance based strictly on data related to the company’s 500 quantitative goals, 80 percent of which are related to customer satisfaction. Because the data will inevitably point to the best answer, Bezos does not shy from confrontation in decision making. He expects employees to argue their positions, on the assumption that the best ideas will become evident. As one of Amazon’s leadership principles state, “Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion.” Therefore, the employees who succeed at Amazon are the ones who thrive on conflict. Another of Bezos’s values, frugality, partly derives from Amazon’s start-up experience. The company was not profitable for years, and many observers doubted it would survive, with its strategy of charging prices below costs. Survival required limiting any expenses not connected to making customers happy. In contrast to tech companies that keep employees happy with fun amenities, Amazon gives employees desks made out of doors and charges them for snacks. However, the basis for forcing employees to be frugal is not just to help the company earn a profit; it is also to enable the company to continue pleasing customers with the best prices. Bezos is notoriously demanding. If employees let customers down or fail to live up to his high standards, he is blunt—even rude—in his assessment (reported comments include “Are you lazy or just incompetent?” and “If I hear that idea again, I’m gonna have to kill myself”). If his harsh comments hurt employees’ feelings, well, that is not a major concern of his because the goal is to make customers happy. However, employees observe that when Bezos says an idea is bad, his own idea almost always is the better one, even in functions outside his expertise. The demands he places on others inspire them to improve, innovate, and make a difference continually.

1. Which theory of leadership do you think best describes Jeff Bezos’s contribution to Amazon’s performance? Describe how it applies.
2. Does Bezos create an environment in which you could contribute effectively as a manager? Explain.
3. Do you think Bezos is a better leader or a better manager? Explain.