Into the Shark Tank?

Amazon 1

Amazon:

Into the Shark Tank?

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Amazon: Into the Shark Tank?

In August, 2015, Jodi Kantor and David Streitfeld rocked the business world with their controversial New York Times article on the purportedly cutthroat business tactics of a retail empire that has in recent years been a darling of the corporate world: the groundbreaking and frequently awe-inspiring e-retailer, Amazon. The often heated dialogue that ensued in the wake of Kantor and Streitfeld’s article bruised Amazon’s largely sterling reputation, prompting a vociferous denial of the article’s claims and a strong repudiation of the company’s critics from Amazon founder, Jeff Bezos. Though Bezos and his supports strongly deny the way that Kantor and Streitfeld characterize the workplace environment at Amazon, the negative publicity generated in the late summer of 2015 speaks in important ways to the failures of risk management defined in the course text. If, as the article claims, a condition of “purposeful Darwinism” truly prevails atAmazon, then this would indicate a lapse in risk management associated with the failure to unite employees at all levels in a shared vision of organizational success.

One of the most important strategies for ensuring operational success is to deploy a technique of transformative leadership, one which empowers employees to invest in the organization’s success by recognizing and buying into their own role in that success. Rothfelder, Ottenbacher, and Harrington (2013) note that under a transformative leader, employees “tend to feel coached, supported, and listened to. They respect their leaders and feel more self-confident through their leader’s individual support at esteem-building” (p. 205). If the New York Time’s article is indeed accurate, then the atmosphere cultivated at Amazon is incompatible with the kind of transformative leadership discussed by Rothfelder et al.

Because so much of risk management operates at the level of the employee, the cultivation of a strong, effective, and united workforce is key. Only then will it be possible to effectively respond to external risks because a coherent risk management strategy depends first upon the presence of an informed, motivated, and proactive team to implement it. In her analysis of effective change management strategies, Brisson-Banks (2010) argues that failures derive principally from a leader’s inability to build a shared vision of success, particularly through periods of transition. To be certain, the same would apply to organizations preparing for or responding to organizational risk, whether that risk originates internally or externally.

The workplace environment described by Kantor and Streitfield is one characterized by competition and division, as exemplified by the “purposeful Darwinism” descriptor. The authors write,

Many of the newcomers filing in on Mondays may not be there in a few years. The company’s winners dream up innovations that they roll out to a quarter-billion customers and accrue small fortunes in soaring stock. Losers leave or are fired in annual cullings of the staff. (2015, n.p.)

Whether or not this characterization of the internal operations at Amazon is accurate or fair, there can be no doubt that such workplaces do exist and that they constitute an abject failure of risk management insofar as they promote an environment of fear, uncertainty, and instability. High turnover rates within a company are associated with organizational failure, an inability not only to efficiently and effectively achieve goals but also to adapt successfully to evolving market conditions and to respond to risk.

While Bezos and his supporters vehemently denied the accusations leveled at the organization, however, there can be no doubt that the intense negative publicity adversely affected the company, at least in the short term. This, too, can be seen as a failure of risk management, in as much as an organization with a clear mission statement and a united workforce will be less amenable to such attacks. While there is no such thing as an entirely invulnerable organization, it seems unlikely that such charges would have been able to gain such traction within the corporate world had there not been some leadership failure in play here. If the workforce is as united as Bezos and his supporters claim, then the culprit may be a lack of operational transparency. Kantor and Streitfeld write, “Tens of millions of Americans know Amazon as customers, but life inside its corporate offices is largely a mystery. Secrecy is required; even low-level employees sign a lengthy confidentiality agreement” (ibid.) If the old axiom holds true that sunshine is the best disinfectant, then it may well be that at the root of Amazon’s troubles, the risk that it opened itself up to through this negative publicity, is less a united and happy workforce and more a condition of operational opaqueness in which suspicion and rumor were allowed to fester and infect.

The controversy surrounding Amazon may reflect two distinct forms of risk management failure. If as the New York Times article claims, a culture of cutthroat competition truly does prevail at Amazon, then the lack of a cohesive workforce united in a shared vision of success is to blame for these risk management failures. If the report is false, then at the heart of the issue is an overall lack of transparency leading to the rumors that may profoundly harm the company brand Though Bezos and his colleagues were intense and immediate in their repudiations, the fact remains that the word was out there and the damage was done.

References

Brisson-Banks, C. V. (2010). Managing change and transitions: A comparison of different models and their commonalities. Library Management, 31(4/5), 241-252.

Kantor, J. & Streitfield, D. (15 August 2015). Inside Amazon: Wrestling big ideas in a bruising workplace. New York Times Online. Retrieved from

Rothfelder, K., Ottenbacher, M. C., & Harrington, R. J. (2013). The impact of transformational, transactional, and non-leadership styles on employee job satisfaction in the German hospitality industry. Tourism and Hospitality Research, 12(4), 201-204.