Amazon is resetting its business. Is it doing enough to change its mindset?
In an analysis published this week, former Amazon executive John Rossman presents a blueprint for turning the company around — advocating a “zero-based” approach in which every initiative and project needs to be justified from scratch, and a “brutal rationalization of capital expenses,” among other steps.
“I honestly think that Jeff’s biggest concern about Amazon was always that it would become a bureaucracy,” says Rossman, referring to Amazon founder Jeff Bezos. “This is the opportunity to change the forward-looking narrative on Amazon: are they going to go into the slow, bureaucratic mindset, or are they going to return to their roots as a scrappy, small-team oriented, highly accountable organization?”
Rossman joins us on the GeekWire Podcast to discuss Amazon’s path forward.
Rossman is the founder of Rossman Partners, a management consulting team. He worked previously at turnaround consulting firm Alvarez and Marsal. During his tenure at Amazon, from 2002-2005, he helped to launch and build Amazon Marketplace, before leading the company’s Enterprise Services business.
In recent weeks, the company has been scaling back and exiting or eliminating a long list of products and services and businesses, and has started the process of laying off thousands of employees.
Although reports have said the cuts could range from 10,000 to 20,000 jobs, Amazon CEO Andy Jassy said the company isn’t targeting a specific number. The process is expected to extend into the new year.
Amazon is going from a “think bigger, more is better mindset” to something “more rationalized,” Rossman says.
As someone who makes a living helping others understand and adapt the company’s approach, Rossman says questioning the state of Amazon’s business was difficult but ultimately eye-opening for him.
Rossman also points to Amazon’s recent decline in the American Customer Satisfaction Index — a metric the company has focused on publicly in the past — as a wake-up call that needs to be addressed by Amazon leaders.
In addition to recommending that Amazon get more selective about its big bets, ranging from its Zoox autonomous driving company to its Project Kuiper broadband satellite initiative, he says the company should look seriously at spinning off Amazon Web Services to maximize overall enterprise value.
Most of all, he says, the company needs to act quickly and decisively.
“My advice is, don’t let this phase linger. Take it all now. Make it harsh, make it sharp, and that lets the surviving organization actually put it behind them and move forward with distinction and definition. … As painful as it is — nobody finds joy in having to do this, or to recommend this — it’s just what’s needed.”