In my executive speeches and my recent book, LEVERAGE: The CEO’s Guide to Corporate Culture, I use the case study of Zappos.com, the internet shoe and clothing retailer to illustrate the power of culture by design.
If you don’t know the Zappos.com story, basically it started in 1999 with Tony Hseih and a few others on a mission to create an internet retailer powered by customer service as their core USP and competitive advantage. Very few people gave it much of a chance for survival since we all “know” that people want to try on shoes, not order blindly over the internet. And in 1999 giving your credit card out over the internet was still a little risky for most consumers.
All companies have a corporate culture, but for most it’s a culture by default. They set up a business, develop a product or service, hire people and before long a certain type of culture begins to develop. In most cases management is unaware of the culture or the power of their culture and its impact on performance. But more often than not the culture becomes an issues when the company is faced with marketplace or business changes and they find it difficult to adapt. Strong cultures can act like an anchor during times of change.
But a few companies, like Zappos.com, created their culture by design, from the beginning building in the policies, behaviours, hiring profiles, rituals and principles of customer service and teamwork.
Businesses often forget about the culture, and ultimately, they suffer for it because you can’t deliver good service from unhappy employees. ~Tony Hseih, CEO, Zappos.com
And one of the important insights the Zappos.com team had early on was that systems and procedures should also be designed to reflect the culture and values of the firm. Thus they spent time on developing technology and order fulfilment and shipping systems that would help them deliver world-class customer service.
And what do people who buy online want most? Speedy and accurate delivery of their purchase. At Zappos.com the average time from customer order to the product packaged and ready to ship from the distribution center is 8-minutes! That’s world-class. And customers are delighted.
In fact, the value of a culture of customer service can also be shown in the revenue growth numbers. I came across this chart recently and have been using it in all my management team and conference speeches.
Zero to $10 billion in ten years! All retailers sell shoes on-line, but none can boast this type of growth.
If you think corporate culture is still HR fluff or just a nice to have, take a look again at these sales growth numbers. Then look at your sales growth!
In 2009, Zappos.com was acquired by Amazon for an undisclosed amount and remains today as a high growth part of the Amazon family of companies.
Without a doubt, the Zappos corporate culture is our number one competitive advantage! ~Tony Hseih, CEO, Zappos.com
John R Childress
See the review of LEVERAGE in The Economist (January 9, 2014.
John also writes thriller novels: novels.johnrchildress.com