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 / Autumn 2010 / Issue 60(originally published by Booz & Company)


At Zappos, Culture Pays

The architect of Zappos’ determination to build a culture that applauds such things as weirdness and humility is Tony Hsieh (pronounced Shay), who became CEO in 2000. He would stand out as a little weird himself in a room full of CEOs: He shaves his head, spends at least 10 percent of his time studying what he calls the science of happiness, and speaks of becoming less focused on “me.” As an April Fools’ Day prank this year, Hsieh put out a press release announcing that Zappos was suing Walt Disney Company in a class action claiming that Disney was misleading the public by saying that Disneyland is “the happiest place on Earth”; clearly, Hsieh argued, Zappos is.

As cofounder of the Internet advertising network LinkExchange and of an incubator firm that invested in Web startups, Hsieh saw firsthand the dysfunction that can arise from building a company in which technical skill is all that matters. He reached a point of not wanting to go to work because of all the backstabbing and ladder climbing he saw — and this was at startup companies, blank slates emerging from revolutionary new technologies. Many of these companies didn’t get very far.

When he joined Zappos, Hsieh was determined that it would be different — that its success would be informed primarily by an unorthodox and comparatively benign culture. He invited Zappos’ 300 employees to list the core values that the culture should be based upon. That exercise, which involved grouping like-minded suggestions together, readily yielded the 10 values that continue to drive the organization, now numbering about 1,800 people.

A far more difficult challenge than defining these values has been keeping them in the foreground of employees’ attention and making certain that abstract qualities such as weirdness and humility are given concrete reality. Hsieh and his management team meet that test in myriad ways. For example, the value “Pursue growth and learning” is supported by a company library and an in-house life coach.

But non-management employees must do their part as well; their performance reviews are based in large part on how well they participate in the culture. “That doesn’t mean you have to be at every [company] happy hour,” Magness says. “But are you living the brand promise? Are you organizing team events? What is your relationship like with outside vendors? How are your relationships with other members of your team?”

Corporate culture is more than a set of values, and it is maintained by a complex web of human interactions. At Zappos, the liberal use of social media facilitates the network that links employees with one another and with the company’s customers. A recent scan of found customers discussing Zappos’ coupons, the attractiveness of Zappos’ pricing, and the company’s “teleportation technology.” As one tweet stated, “I wish Zappos would share [it] with the rest of the world. Ordered shoes at 8 p.m. last night, got here today?” Also on Twitter, employees share advice about shipping procedures and SOS calls: “Hey. Did anyone bring a hairdryer to the office today?”

Zappos takes the pulse of the organization monthly, measuring the health of the culture with a happiness survey. Employees respond to such unlikely questions as whether they believe that the company has a higher purpose than profits, whether their own role has meaning, whether they feel in control of their career path, whether they consider their co-workers to be like family and friends, and whether they are happy in their jobs.

Results from the survey are broken down by department, and opportunities for development are identified and acted upon. For example, when it was clear from the survey that one department had veered off course and felt isolated from the rest of the organization, a program was instituted that enabled individuals in the group to learn more about how integral their work was.

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