How Jeff Bezos picked Andy Jassy: Amazon executives detail how the company’s intense succession planning process works

By Business Insider

  • Amazon CEO Jeff Bezos is stepping down later this year.
  • Amazon has an internal succession planning process that helps prepare for leadership changes.
  • The process includes annual board reviews of internal charts that list top senior executives.
  • See more stories on Insider’s business page.

Amazon CEO Jeff Bezos’s decision to officially step down last month came on short notice.

Even those working closest to the CEO’s office learned about it just two days before the announcement, according to people familiar with the matter.

That’s when Bezos signed the paperwork and formalized his move to executive chairman, as the US Securities and Exchange Commission requires any material change at the company to be filed within four business days. Amazon Web Services CEO Andy Jassy will replace Bezos as Amazon’s CEO in the third quarter of this year.

Behind the scenes, however, Bezos’s plan to ultimately relinquish the CEO title had been in the works for years, through the company’s succession planning process, these people said.

The succession planning involves an annual review of the top executive team’s future plans and backup candidates, as well as a chart that maps out the company’s rising stars, Insider has learned. Executives are also encouraged to have succession talks with two or three direct reports, in case an unexpected change occurs.

It’s a fairly rigorous procedure that’s based on intensive bureaucracy, years of research, and a constant dialogue that all leads to a continuity of governance within Amazon that’s as detail-oriented as the company itself.

People familiar with the process said it’s more of an informal system than an established program, with enough flexibility that allowed Bezos to keep Jassy’s appointment and the exact timing of his resignation close to his chest.

Still, people say it’s an effective yet little-discussed strategic tactic in Amazon’s playbook that can help the company smoothly transition to the post-Bezos era amid the biggest leadership upheaval in its 27-year history.

Insider spoke with six current and former Amazon executives to learn more about the company’s succession planning process. All of them spoke on the condition of anonymity because they were not authorized to speak publicly about the company.

“It’s really for the company to systemize a process,” one person said. “Jeff [Bezos] tries not to do things too suddenly.”

Amazon’s spokesperson declined to provide an on-the-record comment for this story.

Top 25 executives

Bezos previously told Insider in a 2014 interview that Amazon had a succession plan for himself and “all of our senior executives.” He didn’t reveal the name of his successor at the time, but he signaled that the company had already been making plans for his eventual resignation even back then.

Part of those discussions take place at the board level. Every year, typically in late January, Amazon’s board holds a meeting to review potential successors for key positions, two of the people said. The meeting, which lasts about two hours, goes through a matrix chart of 20 to 25 top executives and their potential replacements, in case any of them decides to leave the company.

The chart lists each executive’s two or three most-preferred successor candidates. When the choice is not so clear, it would have a note saying an interim person is in place or that an external candidate is being considered. Not every executive position is reviewed, and the board could spend more time on just a handful of names.

The chart is put together by the S-team, Amazon’s group of two dozen or so most senior executives who make important decisions, with direct input from the human resources department.

The S-team meetings could get intense when choosing who to include on the list. Those meetings would often last four to five hours, and the longer tenured people (or those who spent almost 20 years at the company) would get more vocal than the newer members of the team.

Bezos could get particularly upfront with his feedback, as he liked to keep an extremely high bar on adding new names to the list. The S-team, for example, has seen very little turnover and rarely added new members until last year, when it saw nine new members.

Overall, people who have been in those meetings say it’s a good exercise to help the S-team and the board to familiarize themselves with other parts of the company and new leaders who are on the fast track at Amazon.

“It provides a real good opportunity for discussion of strengths and weaknesses,” one of the people said.

In recent years, as Amazon became a popular poaching ground for other companies, Bezos also started holding one-on-one sessions with many of the executives on the list so he could better understand their future intentions. The goal is to prevent getting “blindsided,” one person said, as Bezos likes to have “a lot of notice” before his top lieutenants leave.

Amazon’s approach to succession planning is a “nice orderly process” that can be found in any “well-functioning” company, according to Jason Schloetzer, a professor of business at Georgetown University, whose research includes CEO succession practices. The only risk, he said, is that Bezos will remain part of the company’s board, making it potentially tricky for Jassy to push for decisions that his predecessor may not always agree with. Given there’s been past cases of former CEOs at other companies ending up a distraction to new leadership, it’s a dynamic Jassy will have to navigate once he’s promoted.

“It’s a little unusual,” Schloetzer said of Bezos’s new role. “But this is the founder of the company, who’s been tremendously successful.”

Bezos’s empty box

While the chart reviewed by the board typically showed successor candidates for the two dozen or so senior positions at Amazon, there was always one notably empty box — next to Bezos’s name.

The CEO’s potential successors were not mentioned in the chart reviewed by the board, in part because Bezos didn’t want to be too explicit about whom he favored as his replacement, one person familiar with the process said.

Instead, Bezos would have private discussions with the board, sharing several names he thought would be most ideal as the next Amazon CEO.

Those candidates were almost always internal, as Bezos felt strongly about finding someone from within, two of the people said. Bezos feared an external candidate would be less of a “risk-taker,” or someone unwilling to try new experiments, an important leadership trait at Amazon. One person said Bezos had also become more cautious about hiring from outside after the failed Joe Galli experiment — a high-profile hire in 1999 who left just 13 months after joining the company as its president and chief operating officer.

During those board meetings, Bezos would most often bring up three names: Jassy, the AWS CEO who’s set to replace Bezos later this year; Jeff Wilke, the former retail CEO; and Jeff Blackburn, the longtime former video and corporate development executive.

One person said it’s hard to say Jassy was the “first of equals,” given all three had their own strengths and weaknesses. But the final call to name Jassy the next CEO most likely came down to Bezos’s own decision, even if the board reviewed all three candidates, this person added.

It doesn’t necessarily mean Bezos liked Jassy over Wilke or Blackburn. Wilke announced his retirement last year, ahead of the new CEO announcement, while Blackburn took a one-year leave of absence in 2020 before deciding to resign last month. Amazon’s spokesperson previously said these changes had nothing to do with Jassy’s appointment, although there’s internal speculation that they are indeed related.

Bezos also “signaled” to the board last summer that he was ready to move into a new role, the Wall Street Journal reported last month.

The ‘hit by a bus’ plan

In addition to the list of top 25 executives and their potential successors, Amazon’s board reviews a separate chart that includes roughly 50 of the company’s rising stars. People on this chart are different from the ones on the other list, as it’s aimed at identifying the company’s future leaders.

The chart is divided into four quadrants: the highest quadrant being “lots of potential” and the lowest being “disappointing” or “not living up to potential.” The chart is primarily intended to mentor new leaders to take on bigger roles at the company, one person said. Some of them would get moved around at the company to gain a broader experience, while others would be picked to take specific positions, like Bezos’s “shadow” advisor, who joins the CEO’s every meeting.

Outside the board and S-team meetings, Amazon encourages its VPs and directors to informally plan for their own successors, three people said. Internally, some call it a “hit by a bus” plan because it lets the executive prepare for the worst ahead of time. The name is in reference to a commonly used phrase by Bezos, who liked to ask whether the company had plans “if I got hit by a bus,” these people said.

Amazon executives would typically have two or three people in mind who are qualified to immediately replace them. For example, when former Prime VP Greg Greeley left for Airbnb in 2018, the company had two VPs, Jamil Ghani and Cem Sibay, to fill in for him. And when former physical stores boss Steve Kessel abruptly left last year, Amazon was able to give another VP, Dilip Kumar, an expanded role within the team.

Still, those plannings that take place outside of the board room are less formalized, and often get limited attention, people said. That’s in part because Amazon likes to move fast and constantly reorganize teams when needed, leaving executives with little time to come up with a detailed succession plan.

“Ideally, we should have succession planning for all director and above positions,” one of the people said. “But we just move too quickly.”

https://www.businessinsider.com/how-amazon-picks-executive-successors-ceo-jeff-bezos-andy-jassy-2021-3