Articles Tagged ‘Culture Book’

Zappos Is Different (Case Studies of Great Companies)

Wednesday, May 7th, 2014

I. Overview

Tony Hsieh wants to want to come to work

In 1998 Tony Hsieh was unhappy at the dot-com company he founded (LinkExchange), so he sold it to Microsoft for $265 million. But Tony was not ready to retire–he wanted to run a company where he would be happy to come to work.

That place was and is Zappos, known for selling shoes online (they sell clothing and other things, too) and their outrageously good customer service.

How did this successful combination of Hsieh and Zappos come about?

1) As if he were a venture capital god creating a myriad of worlds, Hsieh funded some 20-odd companies and tracked their evolution to find the one that was having the most fun (Zappos)
2) Hsieh proceeded to get Zappos company founder Nick Swinmurn (he couldn’t find the shoes he wanted, so he founded Zappos) to hire him as his CEO.
3) As CEO, Hsieh had this company of happy employees set down on paper the culture of the company by sharing what it meant to work at Zappos
4) Hsieh then took this information shared by the employees and articulated a written set of core values
5) Having laid out this set of core values Hsieh made certain that decision-making at Zappos was consciously driven by them: hiring, customer service ethic, way to treat employees, compensation and promotions, openness to new ideas, etc. are informed by the culture encapsulated in these principles

Hsieh’s targeting Zappos as the place he wanted to work and his enhancement of a company culture that was already successful has paid off for the company, its customers, and its employees. Consistent growth by Zappos led to $1 billion in annual sales in 2008, beating their internal goal to $1 billion by two years. Customers are cult-like in their following of Zappos and it is borne out by Zappos being in the top 10 for Customer’s Choice Awards in 2010 and winning the 2011 Stevie award for Sales & Customer Service. Another internal goal that they reached was making Fortune’s list of the Top 100 Companies to Work For in 2009 (#23) and the February 7th Issue of this year listed Zappo’s up to number 6 on that measure of employee satisfaction. Even though Zappos was sold to Amazon.com in 2009, Hsieh is still the CEO and “Zappos” lives on as a semi-autonomous entity within Amazon, with its culture and systems virtually intact.

And as testimony to its ability to go its own way, Zappos is in the process (it began in part in 2013, and is continuing as of May 2014) of implementing a hierarchy-averse culture in name as well as in practice. This business model is known as holacracry, whose concept is to “replace the traditional corporate chain of command with a series of overlapping, self-governing ‘circles.’ In theory, this gives employees more of a voice in the way the company is run.” Time will tell if Hsieh’s bet on this counter-mainstream paradigm pays off.

Zappos is Different

Zappos differentiates itself from other online retail establishments by its focus on customer service and making it easy for a customer to buy and to like the company:

1. There is a 365-day return policy
2. A phone number where the customer can contact a live representative of the company appears on each page of the web site (in contrast to other web-based companies who are unable to be reached by phone); Zappos’ philosophy is that the phone is an excellent means to build rapport and develop life-long customers
3. Only items that are actually available are listed for sale on the site
4. Surprise upgrades to overnight delivery and other wow experiences encourage customers to tell their friends about the super customer service
5. If Zappos is out of an item, they will even help the customer to find the item on another website (as their aim is lifetime loyalty, not just a quick sale)
6. The emphasis is on the customer and meeting their needs, as demonstrated by Zappos’ policy of not measuring the duration of calls of employees as a criterion for success

Fueling the excellence of customer service delivery is the culture of the company employees, which is reinforced by Hsieh and other Zappos management:

1. Every employee goes through call-center experience, underlining the importance of the front-line employees
2. There are no scripts for the call center personnel; they are to use their unique personality to connect with the customers
3. Spontaneous parades and celebrations may break out (and are encouraged) at any time among the employees
4. In order to foster transparency of the company, tours are conducted regularly throughout the whole of the company
5. After training, an employee is given the opportunity to quit for $2,000, thus weeding out those employees just there for the money–overall it saves time and money spent on such employees
6. Each year the company publishes its massive “Culture Book” which is composed of statements from the employees describing their view of Zappos company culture
7. Potential employees go through two interview processes, one for professional skills and the other for their personality. The hiring process seeks to hire those individuals that have an affinity to the existing culture
8. Numerous perks are available for Zappos employees — free lunches, no-charge vending machine, company library, a nap room, and free health care.
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