Sometimes great organizations can lose their agility and stumble into a period of inertia when they don't have an adequate growth strategy in place. Growth is commonly thought of as a good thing, but growth that is poorly managed can lead to sprawling expansion and clunkiness. Clunky tendencies can be accentuated when there is a clear mismatch of culture, when communication breaks down, and when strategy does not lead to performance.

Since its inception, Amazon has been the embodiment of a thriving organization. Under the leadership of Jeff Bezos, Amazon has kept it interesting, to say the least. Amazon is not afraid to experiment and try new things, it is not afraid to fail, and it is not afraid to walk away from products or services that don't work or don't have a lot of customer appeal. Amazon's customer-centered mission permeates the entire organization and is the string that binds its disparate initiatives together. Amazon has consistently shown that it can adapt to new trends, foster new ideas, and find new markets.

Amazon has a history of using acquisitions for strategic expansion, but in the last few years, it seems to be binging on acquisitions--from Whole Foods to home security firm Ring. While acquisitions are a time-honored method of growing, periods of too much or too fast acquisition can steer organizations into clunky territory. Sprawling acquisition is a form of inorganic growth that if not properly managed can backfire. At best, the firm can enter a period of inertia while the various parts are beginning to figure out how to make the new machine work, and at worst, it can signal future failure. Instead of the agility and innovation that helped them find their initial success, clunky organizations are hampered by indecisiveness and bloat. With its recent acquisitions, Amazon's leaders need to focus on culture, communication, and strategy.

With the Whole Foods acquisition, there have been some bumps in the road. While Amazon strives to provide an amazing customer experience, Whole Foods (before the merger) saw itself as having a nurturing culture, where employees are cross-trained, and a team atmosphere is encouraged. In fact, Whole Foods CEO John Mackey described the culture clash as "challenging" and announced a retreat to help him and other top Whole Foods executives align with Amazon's 'higher purpose." Both Amazon and Whole Foods had essential the same goal of serving the customer, but each company chose divergent paths to get there. Kudos to Amazon and Whole Foods for recognizing the culture disconnect and to actively find ways to promote a smoother integration.

Whole Foods is known for its relaxed yet constant communication with suppliers: "In the good old days ...vendors would send their reps into Whole Foods stores, often not even bothering to set up a formal appointment, to check on inventory, monitor product placements, hand out some free samples or just say hello to the store's buyers." Amazon's relationship with its suppliers takes a different tone, and has resulted in stricter controls, tighter restrictions, and the necessity of manager permission for in-store visits. This is an example of the acquiring company setting the tone and implementing "their way" of doing things. Holdover Whole Foods employees and suppliers may grumble in the short-term that the new way has made day-to-day management more complex and inefficient, but the challenge is to find a communication strategy that works well for everyone.

Surprisingly, Amazon had a different experience with Ring. Ring has traditionally lacked any constant formal communication among its teams, and team leaders had a great deal of freedom--"no regular management meetings, no budgets." The purpose is to enhance employee focus so they stay on mission and aren't sidetracked by performance goals. 

Ring may prove crucial to Amazon's overall strategy of combining home surveillance with in-home delivery. With Amazon Key, customers can be pinged when a delivery arrives, and activity can be transmitted in real time. Amazon's leaders are betting that this technology and service combination will enhance customer satisfaction. So far, with the acquisition of Ring, they seem to be off to a good start in moving toward in-home delivery. The challenge is for them to remain on track.

Amazon is at a crossroads. Every year, the organization expands and enters new markets and finds new ways to surprise customers. However, as argued in the volume, Transforming the Clunky Organization: Pragmatic Leadership Skills for Breaking Inertia, Amazon needs to be careful in managing its recent acquisitions, especially in terms of culture, communication, and strategy. Amazon is not a clunky organization, but it could move from thriving to clunky if it isn't careful.

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Published on: Jun 20, 2018