How Jeff Bezos Chose Andy Jassy As CEO: In Amazon’s Succession Plan

• 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 key executives.
• See more stories on the Insider business page.

Amazon CEO Jeff Bezos’ decision to officially step down last month came quickly.

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

It was at this point that Bezos signed the documents and formalized his transfer to the position of executive chairman, as the United States Securities and Exchange Commission requires that any material change in the company be filed within four business days. . Amazon Web Services CEO Andy Jassy will replace Bezos as Amazon CEO in the third quarter of this year.

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

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

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

People familiar with the process said it was more of an informal system than an established one, with enough flexibility to allow Bezos to keep Jassy’s appointment and the exact time of his resignation close to his chest.

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

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

“It’s really up to the business to systematize a process,” said one person. “Jeff [Bezos] try not to do things too suddenly. “

The Amazon spokesperson declined to provide an official comment on this story.

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Bezos previously told Insider in an interview in 2014 that Amazon has a succession plan for himself and “all of our senior executives.” He did not disclose the name of his successor at the time, but reported that the company had already planned for his eventual resignation at the time.

Some of these discussions take place at the board level. Every year, usually at the end of January, Amazon’s board of directors holds a meeting to review potential successors to key positions, two people said. The meeting, which lasts about two hours, goes through a matrix board of 20 to 25 senior executives and their potential replacements, in case any of them decide to leave the company.

The table lists the two or three most preferred successor candidates for each executive. When the choice is not so clear, there would be a note indicating that an interim person is in place or that an external candidate is being considered. Not all leadership positions are reviewed and the board could spend more time on a handful of names.

The graph is developed by Team S, the Amazon group of around 20 senior executives who make important decisions, with direct input from the human resources department.

S team meetings could get intense when deciding who to include on the list. These meetings often lasted four to five hours, and older people (or those who spent almost 20 years with the company) were more vocal than newer team members.

Bezos could be particularly outspoken with his comments, as he liked to keep the bar very high for adding new names to the roster. Team S, for example, experienced very little turnover and rarely added new members until last year, when they saw nine new members.

Overall, people who attended these meetings say it is a good exercise to help the S team and the board get to grips with other parts of the company and the new leaders who are are on Amazon’s fast lane.

“It provides a very good opportunity to discuss strengths and weaknesses,” said one of the people.

In recent years, as Amazon has become a popular poaching ground for other companies, Bezos has also started hosting one-on-one sessions with many of the leaders on the list to better understand their future intentions. The point is to avoid being “blinded,” one person said, as Bezos likes to have “lots of notice” before his main lieutenants leave.

Amazon’s approach to succession planning is a “nice, orderly process” that can be found in any “well-performing business,” according to Jason Schloetzer, a business professor at Georgetown University, whose research includes CEO succession practices. The only risk, he said, is that Bezos will remain a member of the company’s board, which will potentially make it difficult for Jassy to lobby his predecessor to not always agree. Given that there have been cases in the past of former CEOs of other companies distracting new leaders, he is a dynamic Jassy who will have to navigate once he is promoted.

“It’s a little unusual,” Schloetzer said of Bezos’ new role. “But it is the founder of the company, which has been extremely successful.”

Isaac Brekken / AP

Bezos empty box

While the table reviewed by the board typically showed successor candidates for the roughly two dozen executive positions at Amazon, there was always a particularly empty box – next to Bezos’ name.

The CEO’s potential successors weren’t mentioned in the table considered by the board, in part because Bezos didn’t want to be too explicit about who he preferred as a replacement, said a person familiar with the board. process.

Instead, Bezos is said to have private discussions with the board, sharing several names he believes would be most ideal as Amazon’s next CEO.

These candidates were almost always internal, as Bezos had a firm belief in finding someone from the inside, two people said. Bezos worried that an external candidate would be less of a “risk taker” or someone unwilling to try new experiences, an important leadership trait at Amazon. One person said Bezos had also become more cautious about hiring from the outside after the failed experiment of Joe Galli – a high-profile recruit in 1999 who left just 13 months after joining the team. company as president and chief operating officer.

During these board meetings, Bezos most often mentioned three names: Jassy, ​​the CEO of AWS who is expected to replace Bezos later this year; Jeff Wilke, the former CEO of retail; and Jeff Blackburn, the longtime former head of video and corporate development.

One person said that it was difficult to say that Jassy was the “first of equals,” given that the three had their own strengths and weaknesses. But the final call to nominate Jassy as the next CEO likely came at Bezos’ own decision, even though the board considered all three candidates, the person added.

That 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 year off in 2020 before deciding to step down last month. The Amazon spokesperson previously said the changes had nothing to do with Jassy’s appointment, although there is internal speculation that they are indeed related.

Bezos also “signaled” to the board last summer that he was ready for a new position, The Wall Street Journal reported last month.

The “ hit by a bus ” plan

In addition to the list of the top 25 executives and their potential successors, Amazon’s board reviews a separate chart that includes around 50 of the company’s rising stars. The people on this chart are different from those on the other list because they aim to identify future leaders in the business.

The graph is divided into four quadrants: the higher quadrant being “a lot of potential” and the lower quadrant being “disappointing” or “not living up to the potential”. The graphic is primarily meant to coach new leaders to take on bigger roles in the business, one person said. Some of them would be moved around the company to gain broader experience, while others would be chosen to fill specific positions, such as Bezos’ ‘shadow’ advisor, who joins every CEO meeting.

Outside of board and S team meetings, Amazon encourages its vice presidents and directors to informally plan for their own successors, three people said. Internally, some call it a “bus hit” plan because it allows the executive to prepare for the worst in advance. The name refers to a phrase commonly used by Bezos, who liked to ask if the company had any plans “if I got hit by a bus,” the people said.

Amazon executives would typically have two or three qualified people in mind to replace them immediately. For example, when former SVP Greg Greeley left for Airbnb in 2018, the company had two VPs, Jamil Ghani and Cem Sibay, to replace him. And when former brick-and-mortar store boss Steve Kessel abruptly left last year, Amazon was able to give another vice president, Dilip Kumar, an expanded role on the team.

Yet those schedules that take place outside of the boardroom are less formalized and often receive limited attention, people said. Part of that is because Amazon likes to act quickly and constantly reorganize teams when needed, leaving executives little time to develop a detailed succession plan.

“Ideally, we should have succession planning for all directors and senior positions,” said one of the people. “But we’re just going too fast.”

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