Jeff Bezos is always at the cutting edge of business trends, and he made another bold announcement this week. Amazon is now offering employees $10,000 to quit the company and start their own package delivery business.
This decision was driven by Amazon's new Delivery Service Partner program, which Amazon is using to build a network of delivery services throughout the country. When many employees applied to be a part of the program, but were unsure how to transition to the new venture, Bezos decided to give them a push.
Amazon isn't the first example of a company taking a creative approach to incentivizing employee departures--Zappos and Netflix are two trend setters in this department as well. But Amazon's decision is more clever than it appears, and is yet another sharp move from Bezos. Here's why.
1. It supports a key part of their business strategy.
A key strategic priority for Amazon is to become less dependent on UPS and FedEx, which inspired the Delivery Service Partnership. Amazon has a vision where several delivery companies provide options around the United States for Amazon to ship its products, leading to better prices and service.
By investing in employees who start delivery companies, Amazon is effectively incubating the exact partners they need--with the bonus of having the strongest possible connection to the company. This demonstrates how to achieve a long-term goal by committing to it fully and incentivizing behavior that helps reach it.
Bezos and his team recognize that achieving a long term goal requires short-term sacrifice. Bezos is betting that building a network of partners in the package delivery business will be far more valuable in the future than the money they're spending now or the talent they are giving up. Given Amazon's history with bold moves, it's probably a smart bet.
2. Some people make better owners than employees.
Before I started Acceleration Partners back over a decade ago, I contemplating a full time role or starting my own business. A friend who was recruiting me told me that he guessed I was very close to becoming unemployable and he meant it as a compliment.
He was right. The fact is that some people are far better suited to running their own business than they are to being an employee. The exact skills the best entrepreneurs have--thinking outside the box, betting on big risks, charting a different course--can be a liability or poor fit within he confines of another business. Many entrepreneurs spent years bored as employees, or were dropped from one company after another because they couldn't fit in.
Amazon's new program is an acknowledgement of this reality. If Amazon has employees who could perform better at the helm of their own company, and that new venture will ultimately benefit Amazon, it makes sense to encourage those employees to start their own business instead of staying with the company.
Bezos knows as well as anybody that people who want to start their own business probably will at some point. With this move, he's getting his cake and eating it too.
3. Quitting and staying kills businesses.
The most damaging employees aren't the ones that quit abruptly or who are fired for incompetence. Rather, the worst employees are the ones who don't want to work at the company anymore but stay anyway. They become more disengaged and unproductive each month, and their attitude can spill over into their teammates as well. It's no surprise that over half of American workers are disengaged in their jobs.
Not everybody who is considering leaving Amazon to start a package delivery company is a disengaged employee, but the bet is that there are a few who want to do something else with their career and it could be just a matter of time before they grow dissatisfied with their current job and want out.
The problem is that it's usually easier to keep the status quo. By providing some cushion, Amazon is making the choice easier and addressing the financial constraints might hold a person back from quitting their job to start a new company. This gives employees who want to try starting a new business the best chance they'll get to do it; they get permission and money!
Bezos has always been fanatically driven most by three core principals at Amazon: customer value, speed of delivery and price. By using this incentive to build a network of delivery services, this move is a baseball equivalent of a triple play. Unhappy employees move on, customers get their packages faster, and Amazon will save on costs by being less dependent on UPS and FedEx--and helping to keep prices competitive as a result.
While offering $10,000 to quitting employees seems unconventional, it's just another brilliant move by Amazon and a visionary leader.