CASE1 : The Secrets of Bezos: How Amazon Became the Everything Store CASE2: Too Big to Manage: JP Morgan and the Mega Banks

1. MBA 61
HELLENIC OPEN UNIVERSITY
WRITTEN ASSIGNMENT 01
MANAGEMENT OF PEOPLE & ORGANIZATIONS
MIKELA MANOLOUDAKI
NOVEMBER 2013
Professor: Anastasia Constantelou
Submission Deadline: 12 November 2013, Time 23:59
Submission: http://study.eap.gr
Assignment Type: Personal
Graded: 9,2/10

2. CONTENTS
CASE 1
The Secrets of Bezos: How Amazon Became the Everything Store
URL Link: http://www.businessweek.com/printer/articles/159124-the-secrets-of-bezos-
how- amazon-became-the-everything-store
Question 1.1: Based on the information included in the story, how would you
describe Amazon’s organizational culture and organizational climate?
Question 1.2: Select any of the known leadership models and theories found in the
textbook and use it to define Jeff Bezos’ leadership style.
CASE 2
Too Big to Manage: JP Morgan and the Mega Banks
URL Link: http://blogs.hbr.org/2013/10/too-big-to-manage-jp-morgan-and-the-megabanks
Question 2.1: Based on the information provided in the article, please identify the
essential characteristics of an effective control system in a modern financial
organization.
Question 2.2: According to the information provided in the article, and to the theory
on the nature and purpose of organizing, what does maintaining an effective control
system imply for the organizational structure of a company?

3. CASE 1
Question 1.1:
There are today a number of definitions of organisational culture, however it can
basically be said that, as suggested by Mintzberg et al, organizational culture is the
character of a particular business, ‘the soul of the organization that holds the thing
together and gives it life force’1, the beliefs, the values, the shared assumptions and
how they are manifested. Similarly, others think of it as ‘the organization’s DNA –
invisible to the naked eye, yet a powerful template that shapes what happens in the
workplace’2. When discussing corporate culture we are actually referring to the
prevailing culture; that is, the fuel, the themes shared most widely by the
organization’s members (p. 498). Without that fuel, the “company car” won’t run3.
Organizations differ in their cultural content. In Amazon’s case, practicing economy
is clearly a corporate value. Amazon employees pay for their meals. Everyone’s
desks are slabs of wood made from doors. Extra chairs are considered an
extravagance. But as Amazon grew, the company culture stayed the same. According
to the Amazon’s CEO Jeff Bezos, there are a number of things that define a business
culture, but the most influential is an effective hiring process. He argues that
“Cultures are not so much planned as they evolve from that early set of people. Once
a corporate culture is formed, it tends to be extremely stable. It stays around. It ends
up building on itself”4. Besides, ‘cruising inside Amazon it’s like a three-ring circus
1 Sharing the Organizational Vision (part 4). Organizational Culture (chapter 10, p.353) [pdf].
Available at:
< http://connect.docuter.com/documents/397457557497f05f16f9f41233061361.pdf> [Accessed 4
November 2013].
2 Organizational Culture (chapter 16, p.498) [pdf]. University of Graz. Available at: <http://www.uni-graz.
at/iimwww/iimwww/orgculture.pdf> [Accessed 4 November 2013].
3 Jackson, L. 2012. Corporate Culture, Organizational Culture. Available at:
<http://www.corporateculturepros.com/2012/05/how-to-develop-a-successful-corporate-culture-formula/>
[Accessed 4 November 2013].
4 Blandino, 2012. Amazon’s Culture: How to Shape an Enduring Organizational Culture. Available at:
http://stephenblandino.com/2012/03/amazons-culture-how-to-shape-an-enduring-organizational-culture.
html [Accessed 4 November 2013].

4. that adds more rings each day’5. Companies shape culture very early on, establish the
code of behaviour and ethics and they get imprinted with a sense of right and wrong
on the corporate generic information. Ebay’ s Meg Whitman declares the same notion
claiming that every single day there are teaching moments and opportunities to
grapple with issues and that is how organizations are used to take in6.
Amazon’s organizational culture is founded on two main concepts: the “empty chair”
and the constant measurement. Bezos often leaves one seat open at a conference table
and informs all attendees that they should consider that seat occupied by their
customer, “the most important person in the room.”7 Moreover, the company relies
on metrics to make almost every important decision; that is, a data-driven –not social
cohesion- culture. Yet random customer tales can also change Amazon’s course.
“Determine what your customers need and work backwards. If customers don’t want
something, it’s gone – even if that means breaking apart a powerful department”
Bezos further debates (Jackson, 2012).
In addition, whereas organisational culture is concerned with “the way we do things
around here”, organisational climate is actually interested in the way each individual
of the staff considers and appreciates the relevant organisational culture, as the latest
notion, is strictly bound and dependent on the level of fairness, consistency and
integrity within an organization8. Based on the information included in the Amazon
story, employees seem to be experiencing a rough time at work judging from the fact
that when the big Bezos question mark is popping up on their inbox huge waves of
panic overrule the departments. Evidently, Bezos harshness towards his employees is
remorseless as he treats them like expendable resources without taking into account
5 Krantz, M. 1999. Cruising Inside Amazon. TIME Magazine. Available at:
http://content.time.com/time/magazine/article/0,9171,992929,00.html#ixzz2kBIXkfeQ. [Accessed 3
November 2013].
6 eBay's Meg Whitman on Building a Company's Culture, 2009. Available at:
<http://www.businessweek.com/managing/content/mar2009/ca20090327_626373.htm> [Accessed 3
November 2013]
7 Anders, G. 2012. Inside Amazon's Idea Machine: How Bezos Decodes Customers. Available at:
<http://www.forbes.com/sites/georgeanders/2012/04/04/inside-amazon/> [Accessed 10 November
2013]
8 Longo, R. 2012. Main differences between organisational culture and organisational climate.
Available at: http://rosariolongo.blogspot.gr/2012/01/main-differences-between-organisational.html?
[Accessed 2 November 2013]

5. their daily contribution whereas positive feedback from superiors is rare and
promotions even rarer9. Bezos frequently resorts to hyperbole and devastating insults
towards staff hurling legal threats to anyone who decides to leave company for a job
at a competitor. Given the dominant culture which is adversarial and very much a
performance-based affair, it is well known that most people do not last at Amazon
either from burnout or they under-perform and get fired. However, some people
might thrive in such a ‘gladiator’ atmosphere, despite the fact that they might be fired
any day. All things considered, we deduce that the climate is more of ‘dog eating
dog’ and less of team-oriented since everything revolves around numbers,
competitiveness and the customer centric philosophy.
Following a ‘diagnostic’, kind of cocky quiz, helping you to understand if you fill in
the criteria to be a perfect match for Jeff Bezos’s empire.
Source: http://www.forbes.com/sites/georgeanders/2012/04/06/could-you-work-for-jeff-bezos/
9 Stone, B. 2013. Why It's So Difficult to Climb Amazon's Corporate Ladder? Available at:
<http://www.businessweek.com/articles/2013-10-15/careers-at-amazon-why-its-so-hard-to-climb-jeff-bezoss-
corporate-ladder#p1>[Accessed 11 November 2013]

6. Question 1.2:
Jeff Bezos is one of the founding fathers of customer-oriented e-commerce market
that brought himself great success from the idea of online shopping. Today, his
business, Amazon.com, is an Internet goliath that sells everything from books to
tennis rackets to laptops. Bezos modestly claims that the success of Amazon was due
‘half to luck, half to timing, and the rest was attributable to brains’10. In fact, the
obsessive focus on the customer and the passion he brought to his business was what
set him off. ‘What many people are not aware of is that every new employee has to
spend time in the company’s fulfillment centers within the first year of employment.
In addition, every two years, they must do two days of customer service. Even Jeff
Bezos must fulfill this requirement, he revealed in an interview published in the
October 2007 issue of Harvard Business Review’11.
Jeff Bezos’ leadership of Amazon can be examined using one of the five leadership
styles identified on the Blake and Mouton Managerial Grid, the authority obedience
style of management as well as the achievement-oriented leadership type from
House’s Path-Goal Theory. Grid position 9,1 is characterized by a concern for
production as the only goal. Individuals must do what is demanded of them without
asking, including the elimination of the human element wherever is possible12 (p.3-4).
Failure is not an option for this type of manager13 (p.95). “Make no mistake, Amazon
rewards its teams” philosophy takes control while unsubstantiated reports or undue
resistance to the wishes of the leader is met with a biting sarcasm and a series of
piercing offenses, as noticed from the text. With reference to our story, it is also
proven that Bezos’s lofty working standards put severe strain on his employees
whereas the pressure to keep one’s rates up is great. According to evidence, Bezos
does not tolerate stupidity even the accidental one. He is also the type of leader who
sets high-level goals and constantly expects and requires high-level performance,
10 Spiro, J. 2009. The Great Leaders Series: Jeff Bezos, Founder of Amazon.com. Available at:
<http://www.inc.com/30years/articles/jeff-bezos.html> [Accessed 11 November 2013].
11 Steiner, I. 2009. Amazon.com's Jeff Bezos, Culture Eats Strategy. Available at:
<http://www.ecommercebytes.com/C/abblog/blog.pl?/pl/2009/3/1238212376.html>
[Accessed 7 November 2013]
12 Høgskolen i Oslo, 2003. Organisation Development: Important Theories of Leadership and
Management in Organisations [pdf].
Available at: vhttp://home.hio.no/~araki/arabase/emne/frncangel.pdf> [Accessed 11 November 2013]
13 Mihiotis, A. 2005. Management (Volume 1). Management of People and Organizations. Hellenic
Open University.

7. innovation and invention from his subordinates. That is how Amazon can become an
absolutely draining working environment that inspires a fiercely confrontational
culture.
Last but not least, although we try to define Jeff Bezos’ leadership style we should
also bear in mind that no matter ‘how far reaching his vision or how brilliant his
strategy is, neither would be realized if not supported by the organizational culture,
the sum total of what people at Amazon believe and value and that together they
would shape their norms of behavior and ultimately determine how things get
done’14.
CASE 2
Question 2.1:
Everything revolves around value. It is hard to measure the effectiveness of the
management control systems used within an organisation since one of the major
hurdles is knowing what constitutes effectiveness anyway. In today’s economy,
running a financial institution is trickier than ever. Leaders are dealing with crucial
challenges in finding more suitable ways to improve efficiencies, to empower balance
sheets, to increment top-line revenues, and to sustain necessary capital ratios.
Economic volatility, regulative changes, compliance, and issues involving data
security, afflicted lending and troubled assets add even more concern. Thus, it is
aphoristic to state that things can go wrong some times.
Nowadays, the enigma facing financial organizations is to decide how much resource
to deploy to create just adequate controls to restrain the possibility of bad incidents
and to limit the damage when they do occur. ‘One of the best defenses against
business failure, as well as an important driver of business performance, is having an
effective internal control system, which manages risk and enables the creation and
preservation of value’15. Successful financial organizations know how to capitalize on
14 Johnson, L. Culture Eats Strategy For Breakfast. Relational Dynamics Institute. Available at:
http://www.relationaldynamicsinstitute.com/?p=48> [Accessed 4 November 2013].
15International Federation of Accountants, 2012. Final Pronouncement. Evaluating and Improving
Internal Control in Organizations [pdf] Professional Accountants in Business Committee International
Good Practice Guidance. Available at:
<http://www.ifac.org/sites/default/files/publications/files/Evaluating%20and%20Improving%20Interna

8. opportunities and oppose to threats, in many instances through effective application
of internal controls, and therefore improve their performance. Such control systems
are effective when they restrict deviations from the strategic plan and wary
management when deviations are large enough to jeopardise the goals and objectives
of the organization. ‘Effective control systems also ensure that organizations’
activities comply with legal and regulatory requirements and internal standards,
reduces the possibility of significant errors and irregularities and assists in their
timely detection when they do occur’16. Hence, it is instrumental for a sound financial
corporation to strenghten its global presence by being in full compliance with the
spirit and letter of law.
Before the latest string of financial crises, many institutions were extremely focused
on financial reporting controls on the company’s cash flow activities, income,
expenses, and profits over a period of time, or either on financial position statements.
Although, these crises led to the fact that many, if not most, of the risks that
influenced organizations also stemmed from areas other than financial reporting
formats including business operations and external circumstances. As a consequence,
effective risk management and internal controls can mitigate the risk of failure to
achieve business objectives becoming the key part of good governing body oversight
at every level of a financial organization and across all operations.
While an effective control system ‘creates a competitive advantage’(International
Federation of Accountants, 2012), the cost must be reasonable compared to the
business it controls17. The anticipated benefits should be more than that of actual
expenditure related to the common goal18. Last but not least, an enforced control
system is also the foundation of safe and sound banking. ‘There are enough
ambiguous ethical situations, especially when dealing with international markets and
l%20Control%20in%20Organizations%20-%20updated%207.23.12.pdf> [Accessed 4 November
2013].
16 Comptroller of the Currency Administrator of National Banks, 2001. Internal Control [pdf]
Comptroller’s Handbook. Available at: <http://www.occ.gov/publications/publications-by-type/
comptrollers-handbook/intcntrl.pdf> [Accessed 4 November 2013].
17 Carol E. Brown, 1995. Sam Huston State University. Internal Control Concepts. [online] Available
at: <http://www.shsu.edu/~aac_cwb/control1.htm> [Accessed 6 November 2013].
18 Ryszard Barnat. Strategic Management: Formulation and Implementation. Characteristics Of
Effective Control Systems .[online] Available at: <http://www.strategic-control.24xls.com/en234>
[Accessed 6 November 2013].

9. regulations, that the baseline of legal compliance is a must’19. Based on this
assumption, a bank’s board of directors must safeguard that senior management
certifies the integrity and objectivity of the bank’s internal control measuring the
parameters that are relevant to the business whereas ‘having an open, transparent
performance that encourages but bounds business risk and that does not cut legal or
ethical corners to make numbers’20.
Question 2.2
Considering the JP Morgan case, what can a gigantic, archetypal financial
corporation as this one do to prevent ethical slippage in its modern workplace and
within its ranks? What does maintaining an effective control system imply for the
organizational structure of a company of this magnitude? According to Heineman, the
first precondition to create a culture of integrity within an organization is public
compliance with law principles and financial regulations. Besides, ‘any top-down
messaging can only be effective if the organization has strong, shared norms and
practices’ (Drobkov, 2013). Nonetheless, rules do not matter without ‘the strong CEO
commitment backed by the board’ (Heineman, 2013) and the employees’ share ‘in
order to buy in to the ethical change agenda’ of the coorporation (Drobkov, 2013).
Heineman also stresses that ‘the abstract, behavioral messaging required by the
board, CEO, and management of an organization to hone integrity within their ranks’
(Drobkov, 2013) is a matter of crucial importance. Leaders should identify risks at
the business functions and practically detect ethical dilemmas before they come into
light.
In such wise, the organizational structure of an institution has to be reshaped in order
to adapt to a company’s mutable character due to a perspective internal or external
turbulence, must fit in with the corporate goals and objectives while the CEO and the
19 Gleb Drobkov, 2013. How can an organization achieve high performance while maintaining high
integrity?
Johnson Cornell University. [online] Available at:
<http://www2.johnson.cornell.edu/alumni/enterprise/spring2013/index.cfm?action=web_extra&web_e
xtra_id=5> [Accessed 7 November 2013].
20 W. Heineman Jr., B, 2013. Too Big To Manage: JP Morgan and the Mega Banks. Harvard Business
Review Blog Network, [online] Available at: <http://blogs.hbr.org/2013/10/too-big-to-manage-jp-morgan-
and-the-mega-banks> [Accessed 6 November 2013].

10. board of directors should find the best way to attain that match in organizing the
company’s systems and tasks. For instance, as stated in our case, JP Morgan had to
make changes to effectively respond to its previously flawed and poorly reviewed
strategies enabling in that way the smooth application of the control procedures.
Apparently, JP Morgan announced a major restructuring and consolidating plan
including the appointment of business control officers in every line of operation,
staffing with project and oversight group managers in every major enterprise along
with the establishment of a new Firmwide Oversight & Control Group that is
separately staffed, reporting directly to the Co-Chief Operating Officers. The goal of
these rigorous attempts – to stregthen control environment across the company by
restructuring the organizational plan – is what maintains an effective control system
and what makes re-investment of time and resources worthwhile21.
21 Dimon J., 2012. Letter to Shareholders [pdf]. The Wall Street Journal. [online] Available at:
< http://online.wsj.com/public/resources/documents/dimon.pdf > [Accessed 6 November 2013].

11. REFERENCES:
1. Mihiotis, A. Management (Volume 1). Management of People and Organizations.
Hellenic Open University. Patras 2005.
2. Jackson, L. 2012. Corporate Culture, Organizational Culture. [online] Available at:
<http://www.corporateculturepros.com/2012/05/how-to-develop-a-successful-corporate-
culture-formula/>[Accessed 4 November 2013].
3. Longo, R. 2012. Main differences between organisational culture and organisational
climate. [online] Available at: http://rosariolongo.blogspot.gr/2012/01/main-differences-
between-organisational.html? [Accessed 2 November 2013].
4. Blandino, 2012. Amazon’s Culture: How to Shape an Enduring Organizational
Culture. [online] Available at:
<http://stephenblandino.com/2012/03/amazons-culture-how-to-shape-an-enduring-organizational-
culture.html>[Accessed 4 November 2013].
5. Sharing the Organizational Vision. Organizational Culture [pdf]. [online]
Available at:
<http://connect.docuter.com/documents/397457557497f05f16f9f41233061361.pdf>
[Accessed 4 November 2013].
6. Organizational Culture [pdf]. University of Graz. [online]
Available at: <http://www.uni-graz.at/iimwww/iimwww/orgculture.pdf> [Accessed 4
November 2013].
7. Høgskolen i Oslo, 2003. Organisation Development: Important Theories of
Leadership and Management in Organisations [pdf]. [online]
Available at: <vhttp://home.hio.no/~araki/arabase/emne/frncangel.pdf> [Accessed 11
November 2013].
8. Stone, B. 2013. Why It's So Difficult to Climb Amazon's Corporate Ladder? [online]
Available at: http://www.businessweek.com/articles/2013-10-15/careers-at-amazon-why-
its-so-hard-to-climb-jeff-bezoss-corporate-ladder#p1 [Accessed 11 November
2013].
9. Anders, G. 2012. Inside Amazon's Idea Machine: How Bezos Decodes Customers.
[online] Available at: <http://www.forbes.com/sites/georgeanders/2012/04/04/inside-amazon/>
[Accessed 10 November 2013].
10. Spiro, J. 2009. The Great Leaders Series: Jeff Bezos, Founder of Amazon.com.
[online] Available at: <http://www.inc.com/30years/articles/jeff-bezos.html>
[Accessed 11 November 2013].
11. Steiner, I. 2009. Amazon.com's Jeff Bezos, Culture Eats Strategy. [online] Available
at:
<http://www.ecommercebytes.com/C/abblog/blog.pl?/pl/2009/3/1238212376.html>
[Accessed 7 November 2013].
12. Krantz, M. 1999. Cruising Inside Amazon. TIME Magazine. [online] Available at:
<http://content.time.com/time/magazine/article/0,9171,992929,00.html#ixzz2kBIXkf
eQ> [Accessed 3 November 2013].

12. 13. eBay's Meg Whitman on Building a Company's Culture, 2009. [online] Available at:
http://www.businessweek.com/managing/content/mar2009/ca20090327_626373.htm
[Accessed 3 November 2013].
14. Johnson, L. Culture Eats Strategy For Breakfast. Relational Dynamics Institute.
[online] Available at: <http://www.relationaldynamicsinstitute.com/?p=48>
[Accessed 4 November 2013].
15. W. Heineman Jr., B, 2013. Too Big To Manage: JP Morgan and the Mega
Banks. Harvard Business Review Blog Network. [online] Available at:
<http://blogs.hbr.org/2013/10/too-big-to-manage-jp-morgan-and-the-mega-banks>
[Accessed 6 November 2013].
16. Dimon J., 2012. Letter to Shareholders [pdf]. The Wall Street Journal. [online]
Available at:
http://online.wsj.com/public/resources/documents/dimon.pdf [Accessed 6 November
2013].
17. International Federation of Accountants, 2012. Final Pronouncement. Evaluating and
Improving Internal Control in Organizations [pdf] Professional Accountants in
Business Committee International Good Practice Guidance. [online] Available at:
<http://www.ifac.org/sites/default/files/publications/files/Evaluating%20and%20Imp
roving%20Internal%20Control%20in%20Organizations%20-
%20updated%207.23.12.pdf> [Accessed 4 November 2013].
18. Ryszard Barnat. Strategic Management: Formulation and Implementation.
Characteristics Of Effective Control Systems. [online] Available at:
<http://www.strategic-control.24xls.com/en234> [Accessed 6 November 2013].
19. Comptroller of the Currency Administrator of National Banks, 2001. Internal Control
[pdf] Comptroller’s Handbook. [online] Available at:
<http://www.occ.gov/publications/publications-by-type/comptrollers-handbook/
intcntrl.pdf> [Accessed 4 November 2013].
20. Carol E. Brown, 1995. Sam Huston State University. Internal Control Concepts.
[online] Available at: <http://www.shsu.edu/~aac_cwb/control1.htm> [Accessed 6
November 2013].
21. Gleb Drobkov, 2013. How can an organization achieve high performance while
maintaining high integrity? Johnson Cornell University. [online] Available at:
<http://www2.johnson.cornell.edu/alumni/enterprise/spring2013/index.cfm?action=w
eb_extra&web_extra_id=5> [Accessed 7 November 2013].