What might happen now that Amazon is Amaz-Off in New York

The impact of HQ2’s bust on Amazon’s management structure is keeping analysts busy.

James McCusker

James McCusker

Amazon founder and CEO Jeff Bezos’ dream scenario might have gone something like this: In the opening scene, a helicopter-borne overhead distance shot gradually zooms in to a black GMC Yukon as it pulls up at a landing dock in a marshland. Two men get out of the SUV and walk to the dock. They pause, share a few words, and the younger of the two men hands a notebook to the other, who turns and goes aboard a waiting tugboat.

The camera pulls away to reveal that the marshland was at the far end of an airport near New York City. The tugboat proceeds along the shoreline, the camera angle allowing views of the Statue of Liberty. By that time, Bezos had come on deck and is standing in front of the tug’s pilothouse. Behind him is a brass,. Durer-like “A” that contrasts with the dark blue of the tug’s topside.

The camera pulls away a bit to show the tug and its bow-wave, Bezos, a bit of lower bay and the NYC skyline. It is a classic movie scene, and, perhaps because he is now in the movie business, Bezos recognizes his “star moment” just as it was for Humphrey Bogart and Barbra Streisand before him. On the dream soundtrack we can hear the voice of Frank Sinatra, belting out the words, “If I can make it there, I’d make it anywhere; It’s up to you, New York, New York.”

If that were Bezos’ dream, it ended when he awoke to the unattractive reality of New York City politics. Caught in the middle of a name-calling, mud-slinging fight between the city’s administration and a leftist insurgent political movement, the Amazon project took on a nightmarish dimension. It appeared that Amazon had already been through that experience in Seattle and wasn’t about to voluntarily go through it again. In short, they could make it anywhere but in New York, New York.

The collapse of the plan for Amazon’s New York City complex with its over 24,000 jobs was well reported in the news media. What has received little attention, though, is how the company’s management intent to build an “HQ2,” a parallel to its current Seattle headquarters, has been jettisoned, too.

This is a major change to the company’s management plan for its organizational structure and growth. The company has said that it will distribute the new jobs throughout its facilities across the country, but this says little about how it intends to manage its operations in the future.

There is a saying in the design field that “form follows function.” And while Amazon has not disclosed exactly what its new plan is, they have revealed that, for the moment at least, the HQ2 concept is out and new jobs will be distributed geographically rather than clustered in a single campus.

This is a major change in form, and it implies a significantly changed structure of the company’s management functions. This is a lot more, and a lot more difficult than a paper exercise of drawing a new organization chart.

Once a company starts to place decision-making responsibility in the hands of executives at remote sites, all sorts of communications, financial, and human resource issues begin to sprout up. And somehow, they are magnified by distance. A simple, predictable issue like a time zone difference, for example, can loom large in communications and become a major irritant, especially if it is unplanned. And management team “get togethers” can become a travel, and time, nightmare.

The company will have to take a hard look at how dependent on interpersonal “facetime” their run of successes was managed and determine how that structure can be made to fit into a country-wide and global strategy.

Analysts and investors will be watching closely for clues and evidence of what that new management structure will look like. It’s all part of the continuous evaluation – which is one determinant of the company’s stock price.

Of course, one option for Amazon is going back to the NYC campus plan, whose management details they had undoubtedly already worked out. New York Gov. Andrew Cuomo is leading a coalition attempting to restart the negotiations between the city and the company. And 80 of the city’s leading citizens have signed an open letter in the New York Times with a straightforward “Come back Shane “message.

Amazon’s Seattle experience and the way the NYC talks ended make the company’s return unlikely, but we should never underestimate the power of a dream, especially in an entrepreneurial setting. Keep that tugboat warmed up.

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