Many would assume that a large, hierarchical organization would be rigid and resistant to change.
However, this is not the case at Amazon. The company is a flexible and adaptive market leader in
eCommerce. Indeed, Amazon has caused disruptive innovation in online marketplaces and also in global
logistics.
How is this status maintained in the face of centralized decision-making and top-down control?
One key contributing factor is the Two Pizza Rule. Instituted by Bezos, the Two Pizza Rule states that no
meeting should be so large that two pizzas cannot feed the entire group.
The goal here is efficiency and scalability. Smaller teams spend less time managing timetables or keeping
others in the loop and more time doing what needs to be done. In turn, each team has access to
company resources to meet short and long-term goals. A product team, for example, can add new
product lines without having to meet with the project, process, or logistics teams.
Advantages Of The Two Pizza Rule
-The team members get more engaged and feel free to express their ideas. The members have to
interact with a few people allowing the decisions to be taken faster.
No two teams will be working on the same domain. This will save time.
-The team members get more innovative as ideas are shared freely in a small team. Thus, no team
member will feel suppressed or lost.
Disadvantages Of The Two Pizza Rule
-Much independence may break the data flow amongst the various teams.
-The team members working on a certain project should have complementary skills.
-If transparency is still not maintained, and good communication tools are not used, they may face a
challenge.
-Feedbacks have to be given regularly by every member. So, every member has to be active.
Amazon’s org structure works because it is highly effective at supporting international growth in a
variety of different markets. The company’s continued success in expanding and growing its many areas
of operation are testament to it working well.
The major advantage to Amazon of its overall hierarchical structure is that it enables Amazon.com, Inc.
to quickly and effectively address and implement directives from senior managers, executives, and
stakeholders business wide. At the same time, global and geographic divisions are advantageous in
supporting the focus on different the many different facets of the business and geographic locations that
come with their own challenges and economic conditions.
Advantages Of The Organizational Structure Of Amazon
-The organizational structure is stable as it has boosted the development of the company worldwide.
-Managerial directives can be implemented faster.
