Culture By Design, Culture By the Numbers

zappos

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.

zappos sales

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

Author of LEVERAGE: The CEO’s Guide to Corporate Culture, and FASTBREAK: The CEO’s Guide to Strategy Execution, available from Amazon in paperback and eBook formats.

See the review of LEVERAGE in The Economist (January 9, 2014.

John also writes thriller novels:  novels.johnrchildress.com

About johnrchildress

John Childress is a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. Between 1974 and 1978 John was Vice President for Education and a senior workshop leader with PSI World, Inc. a public educational organization. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress currently resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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One Response to Culture By Design, Culture By the Numbers

  1. Steve Borek says:

    Zappos is one of my favorite companies in regards to employee engagement.

    They do things differently.

    Employees helped design the employee handbook. It’s written in comic book style.

    In a month or so, they offer the new hire cash to leave the company. That’s right. They don’t want to have the wrong people on the bus nor spend time and effort training people that aren’t a good fit for their culture.

    Zappos has an ICF certified coach, like me, on their staff full time, helping employees achieve their personal and professional goals. Even if these goals means leaving the company to pursue a dream.

    I wish all my clients could adopt Zappos strategy.

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