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Amazon: Strategy as Simple Rules

Modern companies must take into account the speed trends’ shifts and respond to changing circumstances. Guided by the simple rules strategy, organizations use the current opportunities of markets, act unpredictably, conduct experiments, and their main goal is growth (Eisenhardt & Sull, 2001). This strategy is driven by the economics of numerator, following which companies expand by acquiring other firms, developing their activities and portfolios, expanding geography, and taking similar measures. A striking example of such a successful modern company is Amazon, an American technology company that has developed its activities in various fields and countries.

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Amazon was founded in the 90s of the last century as a platform for selling books and has now become one of the five most prominent technology companies in the United States. Gradually, Amazon’s activities began to expand to retail, logistics, cloud technology, health care, media, and entertainment (“Amazon strategy teardown,” 2017). The company acts unpredictably, constantly acquires other companies, such as the Whole Foods network (“Amazon strategy teardown,” 2017). Amazon supports constant experiments and is not afraid to compete with other giants, for instance with Netflix – in streaming technology.

Examples of simple rules that guide the company in its activities are the rule of two pizzas or starting with a simple system. Jeff Bezos, the company’s founder, is sure the most effective communication is possible in small working groups, where the people number is as much as one can feed with two pizzas (“8 laws driving success,” n.d.). The second rule was used to create Amazon Web Services (AWS) by following Gall’s Law – a complex system designed from scratch will not work; one needs to start with a simple one (“8 laws driving success,” n.d.). Such rules support the company quick changes for staying successful.

References

8 laws driving success in tech: Amazon’s 2-pizza rule, the 80/20 principle, & more. (n.d.). Web.

Amazon strategy teardown: Amazon’s barreling into physical retail, financial services, healthcare, and AI-led computing. (2017). Web.

Eisenhardt, K. M., & Sull, D. N. (2001). Strategy as simple rules. Harvard Business Review, 79(1), 106-119.

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StudyCorgi. "Amazon: Strategy as Simple Rules." October 29, 2022. https://studycorgi.com/amazon-strategy-as-simple-rules/.

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StudyCorgi. 2022. "Amazon: Strategy as Simple Rules." October 29, 2022. https://studycorgi.com/amazon-strategy-as-simple-rules/.

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StudyCorgi. (2022) 'Amazon: Strategy as Simple Rules'. 29 October.

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