At a normal company, when the CEO endorses an idea, it becomes a focus for the whole company, which is a recipe for wasting a lot of resources on ideas that don’t pan out. In contrast, Amazon creates a small team to experiment with the idea and find out if it’s viable. Bezos famously instituted the “two-pizza team” rule, which says that teams should be small enough to be fed with two pizzas.
I believe that ultimately, a big company can have only a few big projects. What is interesting about Amazon’s approach for selecting projects is that it seems to be more bottom-up than top-down. That is, lots of employees are allowed to start small projects. Presumably only a few of those succeed sufficiently well at small scale to become big projects. In contrast, Lee’s description of Google’s selection process makes it seem more top-down.
Thanks to a reader for the pointer.
Just 2 pizzas? Sounds like an excuse to hire more Asians.
This corporations-as-incubators is at once interesting and troubling to me. They don’t have big, obvious projects to pursue?
In terms of continuing to drive incremental improvements in their core businesses — sure, they do. But in terms of the next big thing? No, often they don’t.
I wonder if you can be more decentralized if your industry’s next big thing isn’t very capital intensive.
If they had big and obvious things to pursue, many others would have pursued them. Innovation tends to be more of an evolutionary and discovery process, not a plan and design process.
Google’s 20% time is a famous bottom-up innovation scheme that produced adsense, gmail, maps, and other products. Reporting from 3 years ago is that the 20% time is only taken by a tiny fraction of current Google employees.
” Reporting from 3 years ago is that the 20% time is only taken by a tiny fraction of current Google employees.”
I have become skeptical of all these stories where “company X does really interesting thing Y.”
Ben Thompson at Stratechery has some of the be analysis of Amazon. Well worth reading if you want some deep insights on the business models of major tech companies.
Today’s article Amazon is no exception: https://stratechery.com/2017/amazons-operating-system/
Excuse the poor editing of my above comment. On some strong pain meds for severe back pain.
It should read “… best analysis of Amazon.” And further down, “Today’s article on Amazon…”
Off-topic, on point:
https://www.youtube.com/watch?v=Q0QtZmLC14U
Start at 17:37
Isn’t this the theory behind federalism in a national government?