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Moving Beyond the Matrixed Organization to Achieve Greater Scale


To say that Amazon and its founder Jeff Bezos are household names would be an understatement. Although the company regularly finds its way into mainstream media, Amazon’s presence has been more pronounced in recent headlines. As we’ve written over the past couple of weeks, the “Amazon effect” has been felt by countless struggling retailers, with Toys “R” Us as the latest example. The nimble, elastic, digital approach to business has redefined its very nature. This trend is further paving the way for a new era of commerce, where blockchains, business ecosystems, and crowd-based work will overturn traditional operations. Put another way, Jeff Bezos hasn’t merely altered the mechanics of business, he’s reshaped HR by pioneering new innovations in workforce management. If companies want to compete, they must mold themselves into similarly scalable, lean, integrated teams. Bezos’ Two Pizza Rule is a great place to start.

Amazon’s Recipe for Workforce Success

Inc. Magazine published a piece by Auren Hoffman, CEO of SafeGraph, which explores the Two Pizza Rule and its effect on fueling Amazon’s agility, adaptability, and dominance in the market. Hoffman explained that the Two Pizza Rule “is an incredibly important innovation and is the future of company scaling strategy. Bezos’ core philosophy, that every team needs to be small enough to be fed by two pizzas, has allowed Amazon to be agile while many other companies have struggled with growth.”

In this economy, scalability is imperative. New innovations are introduced at breakneck speeds today. Smaller startups have gained more power and prominence, and oftentimes outpace larger enterprises because of their project-based approach and matrixed structures. Consider Google, an incredibly well-managed corporation by most standards. Its reorganization into Alphabet two years ago was, at the core, a sweeping attempt to break up divisions, stimulate scale, and prevent scope creep.

Hoffman expanded on the idea of the Two Pizza Rule, proposing a fascinating take on the essence of Amazon’s people processes: they mirror the concepts of APIs in technology systems.

Amazon's secret sauce is its services architecture of the whole company. Every team, especially in product and engineering, owns what it does from end-to-end. Every team interacts with other teams as an API -- getting specific inputs and outputs (that can change over time). By interacting with others as an API, it means teams can move really fast, innovate, and eventually automate themselves so they can move to more interesting projects.

Small groups understand their mission and they can act autonomously to accomplish their mission. They can even have budgets, etc. to accomplish their mission through getting vendors (or ultimately replacing themselves entirely with a vendor so they can move on to more interesting projects).

This HR innovation is the most important thing other companies should understand about Amazon. It allows Amazon to fulfill its promise of "Day One" and it allows it to move really fast. Each pod can innovate or fail on its own. And as these pods succeed, they create more and more opportunities for new pods to be built to support their visions.

Networked Micro-Teams

Ultimately, companies that evolve will embrace these kinds of models, transcending even the notion of a matrixed organization. In 2015, for Harvard Business Review, former Navy Seal Chris Fussell illustrated how even the U.S. military was leaving behind its tradition of top-down control, favoring networked teams instead.

The structure of the bureaucratic model was designed for efficiency and control -- controlling the flow of information between verticals was the ultimate display of power. This leadership model worked especially well for the [Special Operations Forces (SOF)] community. There were complicated threats in the world, but they tended to exist in isolated pockets, so highly effective small teams were a sufficient solution... But in the post-9/11 fight against Al Qaeda, SOF realized that the complexity of 21st-century problems wouldn’t be solved with a 20th-century approach. The speed of information flow and the interconnectedness of individuals had created an entirely new type of battlefield.

SOF came to realize that reliance on the abilities of small, scalable teams was now insufficient. In place of top-down leadership and hierarchies, they began to lead themselves using a networked approach. The U.S. military remains a paragon of efficiency because it is evolving -- and its refreshed model should continue to inspire business operations. What’s fascinating is that the shift toward an integrated network structure (a “team of teams”) is how business are adapting with modern economic realities.

Emerging talent acquisition ecosystems are being designed promote scale and Amazon’s API-like people structures. Consider a rudimentary example.

  • The staffing curator receives intelligence and requisitions from hiring managers.
  • They impart that data to crowds of networked recruiters around the world. In our own company, those recruiters are independent professionals, integrated into our platform and processes, but empowered through their own networks and crowds.
  • The recruiters connect with their talent groups and selecting matching candidates.
  • Issues, obstacles, progress, milestones, and performance are all tracked in a technology platform, and the staffing curator facilitates the communications across the network.

Growing Reliance on Crowds

The increasing capacity, strength, and prominence of the crowd will also influence scale in business. IKEA’s purchase of TaskRabbit, I believe, speaks to more than strategy, leveling playing fields, and the economic necessities of our digital age. It underscores the accelerating reliance on and power of the crowd. TaskRabbit now enables IKEA to offer in-home assembly of its furniture as an enhanced service offering -- through freelancers who are connected by the technology platform.

The philosophy of the workforce transitioning to a crowd-based, per-project solution may very well become a vibrant aspect of the near-term economy. And the way we think about talent acquisition will need to complement that transformation. This is why a Crowdstaffing ecosystem is already poised to help address these future needs, augment scalability, and ensure that two pizzas really can feed every team.

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