Entrepreneurship

Corporate Strategy or Employee Autonomy?

In preparing for battle I have always found that plans are useless, but planning is indispensable.

– Dwight D. Eisenhower

Recently, I read an excellent analysis of the Amazon Whole Foods acquisition put out by Ben Thompson over at Stratechery. I’m linking it because it was one of the most detailed and well-thought out strategic analyses I’ve read in a long time.  While at Amazon I wasn’t in (or near) the retail division, so I can’t tell you if it’s accurate or not. Regardless, it helps the reader formulate questions about what is actually going on in the grocery sector.

My criticism of the piece though is that it all feels a little bit “too cute”. I mean, it almost makes too much sense.  This perfectly laid out plan of how Amazon is going to transform the grocery business: could Amazon really move 50,000 employees in their Amazon retail division in the exact same direction?

When I worked on the Amazon Echo, I remember writing a feature to ease the way we organized and transformed the voice data we collected.  It was basically a simple service to classify an individual piece of data as DEV/BETA/PROD based on the device it was coming from.  But here’s the thing: no one told me to build it.  There had been talks about doing some sort of similar service for a long time in the organization, but no one had prioritized or architected it at all.  It was basically a thought floating around the water cooler, and then I built it.

Although obviously not at the scale of the Whole Foods acquisition, my example shows that at large organizations, things just sometimes happen. Beyond a certain scale, it’s hard to understand every last thing that happens in a fast-moving firm.

giphy (5)
Amazon at Scale

Which brings me back to Stratechery’s analysis.  Amazon has done a lot of experimenting in groceries and instant delivery.  It’s clever to think that the Whole Foods acquisition is part of a perfect strategy to implement a multi-year plan to convert grocery shopping into a set of “primitives”.

But my view is that analysts are reading far too much into this.  Heider and Simmel showed nearly a century ago that humans very often see narrative where there is none. The simple explanation for big moves like this is that tech companies perform bold, extreme experiments in new industries they seek to understand and dominate.  Facebook followed a simple strategy of experimentation and delayed profitability with its massive WhatsApp acquisition (which is finally starting to bear fruit). In fact, the risk for Amazon seems fairly low here.  Whole Foods, at the close of last year, had more than $6 billion in mostly tangible assets and more than $5 billion in revenue.  That makes a $13.7 billion acquisition price seem extremely reasonable after comparable infinite-multiple tech acquisitions.

For entrepreneurs and leaders, I think the important lesson to realize is that culture matters an incredible amount. Corporate strategy is important to think about and, as General Eisenhower wrote, plans can be very useful.  But the most important plans a company can lay remain a unique and compelling company culture.  The reason I was able to build the service I did, and a passionate team of retail Amazonians were able to acquire Whole Foods, is because the Amazon Leadership Principles are so clearly defined and deeply imbued into the organization that employees feel confident moving quickly and boldly. The Amazon Leadership Principles are the 14 best-laid and most well-kept plans that Jeff Bezos has ever made. Perhaps one could argue that a defined, unique culture is an integral part of a good corporate strategy, but it’s more about planting seeds than harvesting fruits.

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