Aspects of the Organizational Identity of Zappos
Paper for the Corporate Communication course ‘Organizational Identity’
Daphne van Roosendaal, Karin Elgin-Nijhuis, Jacqueline van Marle,
Shayna Rector Bleeker, Karina Dilag
December 2011
Contents
Introduction
About Zappos
Some facts and figures
Outstanding customer service
Cultivation of culture
Add here: titles paragraphs based on questions 1-7
Stories drive success
That is, only success stories drive success
Principles and logics of success stories
Deliveries Happiness
Hero Hsieh
The Beneficiaries
The Villains
Developing and implementing a corporate story
Conclusions
Literature
References
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Introduction
This paper examines the organizational identity of Zappos, the online retailer that two
years ago was the highest-ranking newcomer in Fortune magazine’s annual ‘Best
Companies to Work For’ and now also outside the US well-known for Delivering
Happiness thanks to the number 1 New York Times and Wall Street Journal Bestseller
with that same title.
Our analysis will focus on the nature and relevance of Zappos’ organizational identity in
terms of perceived, desired, projected identity and Zappos’ perceived external prestige,
and the impact of each of these organizational perceptions on identification and
behaviour. We will describe and define the brand in terms of Henderson’s design
taxonomy. In addition, we will describe the crucial role story telling plays in cultivating
the company culture, in promoting the brand and in realizing company success and
(especially CEO Tony Hsieh’s goal) delivering happiness.
About Zappos
Some facts and figures
In 1998 Nick Swinmurn, a 26 year old marketing manager for an online car-buying
service from San Francisco, decided to develop an online footwear retail site. In 1999 he
launched ShoeSite.com, but soon renamed the website Zappos.com, a name with a
recognizable relation to the Spanish word for shoes ‘zapatos’. There were more than
1500 websites offering footwear, but they offered only a handful of complementary shoe
styles and sold for under $48 million, while the US footwear market represented $37
billion.
From year one Zappos focused on outstanding customer service, offering more than 100
brands, easy online shopping, shoe sizing templates, photographs from nine different
angles, very detailed descriptions, online chat service and free shipping, all this fuelling
growth.
In 2000 Venture Frogs, an investment and incubation firm founded by Tony Hsieh and
Alfred Lin two years earlier with the money earned from the sales of their company
LinkExchange to Microsoft and specializing in internet and e-commerce start-ups, decide
to invest $1.1 million.
In 2000 Zappos was honoured by PC Data Online as the highest-ranking “pure-play”
online footwear retailer in its annual ranking of top 10,000 e-commerce websites. Its
overall ranking (1,134) indicated that almost 1% of all internet users in the US visited
Zappos’ website.
In 2001 Hsieh joins Swinmurn as co-CEO, to in 2003 become sole CEO and Swinmurn to
become chairman.
By 2005, after a period of exceptional growth, the company moves its headquarters from
San Francisco to Las Vegas. Las Vegas was chosen because of the lower costs of living
compared to the Westcoast and thus lower wages, the offer of workers, and the fit for
Zappos’ lifestyle i.e. a 24-hour town accommodates the 24-hour call centre. Of the 100
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call centre staff, called Customer Loyalty Team, a majority move to Las Vegas.
Swinmurn, though, stays behind and pursues other interests.
By 2008, Zappos had become a $1 billion retailer and reported net income of $10,8
million on 2008 net revenue of $635 million, employing 700 “team members”. i
Already in 2006 began to offer additional services and products such as running ecommerce sites for other companies, online business advice, handbags, sunglasses,
athletic apparel, and clothing.
In July 2009, Zappos learned that Amazon had won its Board of Directors’ approval to
offer to merge the two companies. Zappos was and has been operating since as an
independent subsidiary with Hsieh and Lin at the top.
Outstanding customer service
Outstanding customer service is, according to Hsieh and Lin, the reason for Zappos’ rapid
growth and success. Their policy to instil customer service in the company is based on
the following 10 principles:ii
1. “Make customer service a priority for the whole company, not just a department.
A customer service attitude needs to come from the top.
2. Make ‘WOW’ a verb that is part of your company’s everyday vocabulary.
3. Empower and trust your customer service reps. Trust that they want to provide
great service…because they actually do. Escalations to a supervisor should be
rare.
4. Realize that it’s okay to fire customers who are insatiable or abuse your
employees.
5. Don’t measure call times, don’t force employees to upsell, and don’t use scripts.
6. Don’t hide your 1-800 number. It’s a message not just to your customers, but to
your employees as well.
7. View each call as an investment in building a customer service brand, not as an
expense you’re seeking to minimize.
8. Have the entire company celebrate great service. Tell stories of WOW experiences
to everyone in the company.
9. Find and hire people who are already passionate about customer service.
10. Give great service to everyone: customers, employees, and vendors.”
75% of Zappos orders come from repeat customers. The majority of customers place
their orders directly through Zappos’ website, in 2011 an average of 5,100 calls per 24hour are handled by Customer Loyalty Team members, who are not evaluated using
traditional call centre metrics such as average call handle time, but are free to talk to the
now record set to 5 hours and 20 members to assist customers to make their choice.
More about Zappos and “On going to extremes for customers” in sections below. iii
In order to deliver outstanding customer service Zappos management does not outsource
any of their core businesses. Fulfilment, for example, is done in two warehouses outside
Louisville, Kentucky. Frei et al describe the way – to the standards of external analysts
also - high efficiency and flexibility are ensured there. iv Another decision to ensure
outstanding customer service is delivered, is to cultivate their company culture.
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Cultivation of Culture
Today, Zappos offers tours of their headquarters in Las Vegas, 8 to 10 a day! They
decided to open themselves up to the public because they’ve found that it’s a great way
for people to really feel and get a true sense of their culture. v It is that company culture
that was carefully cultivated and nurtured, for that was and is THE prerequisite for
delivering the outstanding customer service.
Hsieh states employees know that the number one priority at Zappos is the company
culture. Many aspects of it “have come about organically”, a few things we do are more
purposeful and planned. For example:
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

All employees walk through a central reception area to get in and out of the
building even though there are more convenient doors located closer to the
parking lot. The goal is to build a community by increasing “the chances of
serendipitous employee interactions”.
When logging in the computers, employees are asked for login details, but are
also shown a photo of a randomly selected employee and are given a multiplechoice test to name that employee (and a record of everyone’s score of ‘The Face
Game’ is kept).
The strength of the company culture is measured regularly through employee
surveys. Employees are asked whether they agree of disagree with statements
such as ‘I believe that the company has a higher purpose beyond just profits’, ‘My
role at Zappos has a real purpose – it is more than just a job’, and ‘I consider my
co-workers to be like my family and friends’.
Hsieh: “Over time, as we focused more and more on our culture, we ultimately came to
the realization that a company’s culture and a company’s brand are really just two sides
of the same coin. The brand is just a lagging indicator of a company’s culture”. “Your
culture is your brand.”vi
At Zappos a ‘Culture Book’ was cultivated. Employees were asked to describe the
company culture in two or three paragraphs and to answer the question “If you asked
your co-workers to do the same, how similar (or different) do you think their answers
would be?”vii The responses were compiled and published in an 450-page book.
After a process of collecting and selecting, the Zappos culture was formally defined in
terms of 10 core values:
1. “Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and a Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships with Communication
7. Build a Positive Team and Family Spirit
8. Do More with Less
9. Be Passionate and Determined
10. Be Humble”viii
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Many of Zappos’10 core values were grounded in research on factors such as worker
efficiency and productivity. For example, Hsieh studied research showing that people
were happier and more engaged in their work if they made friends on the job (see core
value number 7) and as a result “Zappos is like a lifestyle”. ix
According to Hsieh, many companies have core values, but do not commit to them.
Commitment means that you’re willing to hire and fire based on the core values. Only
then you can build the brand you want and let employees be your brand ambassadors
(instead of the marketing and PR department only) both inside and outside the office.
So Zappos hires “for cultural fit”, consisting of two interviews: a traditional skills-based
interview conducted by the hiring manager and a “culture” interview conducted by
recruiters in the human resources department. This second interview exists of 10 to 15
behavioural-based interview questions for each of the core values.x
All new hires are expected to complete four weeks of paid training. Uncommitted new
hires are weeded out by offering them in the first week of training $2000 to leave.
Furthermore a so-called pipeline was implemented, a process used to develop employees
from entry level to the highest level of management, requiring employees to undertake
225 hours of core level training, additional courses on issues such as communicating
effectively and overcoming conflict, and classes such as ‘Science of Happiness’. The
result is transparency about the skills and courses employees have to master in order to
progress within the company. xi
Call centre turnover in 2009 was 7% (partly due to the transient nature of the Las Vegas
community and performance-based firings) while the industry standard was 150%!
Frei et al also describe how in Zappos warehouses in Kentucky work is done in a highly
efficient mannerdue to company culture. Interesting is that although the Kentucky and
Las Vegas operations shared core values, there is a noticeable difference and that
difference “has to be” as fulfilment work is less social and more production. xii
YOU CAN INSERT HERE YOUR SECTIONS
1. Why is organizational identity (OI) a relevant topic for Zappos? What will be
the added value for the company? Explain in detail, and use the appropriate
theories and literature that are provided.
The identity of an organization consists of what is central, distinctive and enduring.
Organizational identity is relevant because if employees identify with their organization, it
influences behaviour in a positive way: it stimulates extra-role behaviour and cooperation
(Dutton, Dukerich, Harquail, 1994, p. 255; Dukerich, Golden, Shortell, 2002, p. 527).
Dutton, Dukerich, Harquail define organizational identification as follows: “When a
person’s self-concept contains the same attributes as those in the perceived
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organizational identity, we define this cognitive connection as organizational
identification. Organizational identification is the degree to which a member defines himor herself by the same attributes that he or she believes define the organization”
(Dutton, Dukerich, Harquail, 1994, p. 239). Organizational identification is the cognitive
link between the definition of the organization and the self.
Organizational identification means alignment of employees. 1 Alignment means that
management has to manage less because employees themselves know exactly what to
do. Management can empower them and production will probably grow.
KEN: It might be handy to include here the scheme Elstak gave us for OI. So that it is
clear that you concentrate here on what this means for employee alignment, but that
further down the article also other aspects of OI will be treated (Q3).
In this part of the assignment we focus on perceived organizational identity.2 When you
research perceived organizational identity you ask employees questions like: How would
you describe your organization at a party? What are the characteristics that you regard
as essential to your organization?3 When you research perceived organizational identity
you look (bottom-up) at employee perceptions.4
All this is important if you want to stimulate organizational citizenship behaviour (OZB).
This does not exclude the other instruments management can use, like command &
control and carrots & sticks. But it can be added to the ‘managerial toolkit’.
The attractiveness of the organizational identity for an employee depends on the degree
in which the three principles of self-definition overlap with the perceived identity of the
organization. The three principles of self-definition are: 1) self-continuity, is the
organization similar to what the member believes of him- or herself 2) self-
Sheet 23 Mirdita Elstak 15 November 2011. There are three ways in which to manage employees: 1)
command & control, 2) carrots & sticks (economic inducements), 3) self-governance. Which type of
management is considered dominant partly depends on who you ask. Top management will be biased and will
say: self-governance. Workers in the lower regions of the organization will oftener experience command &
control. Perhaps line management will say: carrots & sticks.
The type of management also depends on what is most appropriate for the organization. For example, in a
professional organization self-governance works best. “In professional organizations these outcomes [important
organizational outcomes, such as cooperation] can’t easily be based on economic inducements, thus, we need
to consider other means by which busy professionals […] express willingness to engage in behaviors that
benefit the organization” (Dukerich, Golden, Shortell, 2002, p. 530).
2
The three basic articles in the binder are about perceived organizational identity.
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Sheet 31 Mirdita Elstak 15 November 2011
Sheet 27 Mirdita Elstak 15 November 2011. Perceived organizational identity (bottom-up): employee
perceptions. Projected organizational identity (top-down): management claims and projections.
Van Riel and Fombrun distinguish four types of organizational identity: 1) perceived identity, 2) projected
identity, 3) desired identity, 4) applied identity (Van Riel, C.B.M., Fombrun, C.J., Essentials of Corporate
Communication, 2007, p. 70).
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4
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distinctiveness, does it provide distinctiveness 3) self-enhancement, does it enhances
self-esteem.
Research conducted by Mirdita Elstak shows that organizational identification does not
necessarily lead to desired behaviour (notes RSM/MCC/OI, 15 November 2011 - see also
question 4). Also Dutton, Dukerich, Harquail seem to be cautious as to the effects of
organizational identification: “Strong organizational identification may translate into
desirable outcomes such as intraorganizational cooperation or citizenship behaviors. […]
Organizational membership can also confer negative attributes on a member. […] these
personal outcomes could lead to undesirable organizational outcomes, such as increased
competition among member or reduced effort on long-term tasks” (Dutton, Dukerich,
Harquail, 1994, p. 240 - our italics).
But at the end of the 1994 article ‘Organizational Images and Member Identification’ they
more strongly describe what they expect from organizational identification: “In addition
to affecting beliefs, strong organizational identification affects behaviors” (Dutton,
Dukerich, Harquail, 1994, p. 253). But how? “People are motivated to maintain
consistency between their self-perceptions and behavior,” (Dutton, Dukerich, Harquail,
1994, p. 254). Non-consistency leads to ‘cognitive dissonance’. Cognitive dissonance is a
discomfort caused by holding conflicting ideas and behaviors simultaneously. The theory
of cognitive dissonance proposes that people have a motivational drive to reduce
dissonance. They do this by changing their attitudes, beliefs, or actions.5 Therefore
strong organizational identification (the positive way people think and feel about their
organization) can lead to changed behavior.
Organizational identity is a relevant topic for Zappos, or for any other company and
organization, because it can help employee alignment in the way they think, feel, ánd
behave. “Strong identification prompts increased cooperation with organizational
members as part of the organizational group and increased competition with
nonmembers. […] members direct additional effort toward tasks that contribute to
coworkers and to the organization” (Dutton, Dukerich, Harquail, 1994, p. 254).
Not every employee at Zappos will identify as strongly with the organization as the next
employee. Describe how it works at Zappos? Tony Hsieh is projecting identity in the
article ‘How I did it: Zappos’ CEO on going to extremes for customers’.
KEN: See book Delivering Happiness, the two HBR articles we were given and about-us
pages Zappos website (see links in sources list I made). There (but also in my answeres
on Q8, 9 and 10) the reasons for paying attention to company culture (f.e. huge turnover
call center staff in general, client service, efficiency fulfilment workers etc.) are given, the
development of the company culture based on 10 values is described (a cooperation
between employees and management!!), the implementation of the 10 values, the
http://en.wikipedia.org/wiki/Cognitive_dissonance
Vonk, R. (2007), Sociale psychologie, p. 380.
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process of ‘hiring for cultural fit’, the low turnover and the best-company-to-work-for
nomination.
Organizational identification creates a group with in-group behavior. An organization can
really benefit from this, although negative effects must be taken in account (see for
example the Stanford Prison experiment).6 Group behaviour is very strong, and
potentially dangerous. KEN: Maybe change group behaviour in to group pressure? As not
so much behaviour bur felt pressure, the need to conform or delegate responsibility to
group or leaders is a potential danger?
Illustreren met Zappos? Jezelf tegenover een minder klantvriendelijke buitenwereld
plaatsen kan een organisatie ook lui maken, zodat men niet tijdig weer vernieuwt?
KEN: See HBR article for hiring for cultural fit at Zappos. As to innovation: for now no
signs of Zappos becoming lazy as the HBR articles describe as the OI and happy
employees have resulted in an oiled machine and Zappos is extending its product range
to bags and clothes
The added value is ‘organizational citizenship behaviour’ (OCB). “[M]embers who identify
with the organization are more aware of the collective consequences of winning and are
thus more competitive with out-group members […] People who strongly identify with the
organization are likely to focus on tasks that benefit the whole organization rather than
on purely self-interested ones. This is organizational citizenship behavior. Organizational
citizenship behaviors are organizationally functional behaviors that extend beyond the
role requirements and are not contractually guaranteed” (Dutton, Dukerich, Harquail,
1994, p. 255).
Illustreren met Zappos?
People identify with more than one group (family, colleagues, their sports club, favourite
football team etc.) and not every group membership is equally important in that it
“contribute[s] equally to one’s definition of oneself” (Dukerich, Golden, Shortell, 2002, p.
508). Work is not for everybody equally important. Not every employee will experience
the same level of organizational identification, because the degree to which a member
defines him- or herself by the same attributes that he or she believes define the
organization, can differ. Not every person is the same and not every person will have the
same perception of the characteristics of the organization.
Illustreren met Zappos? Verschillende levels van commitment? KEN: Probably, bt I would
refer here to the figures of call center and fulfilment employees turnover (% that leaves
the company vs industry average). See my texts. They indicate the measure of
successful alignment, I think
http://en.wikipedia.org/wiki/Stanford_prison_experiment. See also Zimbardo, Ph., The Lucifer effect: How
good people turn evil, 2007. In this book the author combines insights from his Stanford Prison Experiment
with things that happened at the Abu Ghraib prison and the Guantanamo Bay prison.
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The idea that organizations have identities that influence the way their employees feel
and act is developed in the 1991 article of Dutton and Dukerich ‘Keeping an eye on the
mirror: image and identity in organizational adaptation’. This article presents a case
study of the Port Authority of New York and New Jersey, which was confronted in the
80’s with more and more homeless people. Dutton and Dukerich put it like this: “the
organization’s identity limits and directs issue interpretations and actions” (Dutton,
Dukerich, 1991, p. 520).
Because employees saw the Port Authority first and foremost as a professional
organization with technical expertise, they could only with difficulty see the homeless
people issue as an issue for the Port Authority. They had strong negative emotions if the
identity was compromised, for example by engineers holding aids babies. Actions that
presented themselves as logical for the employees (meaning: consistent with the
organizational identity) were engineering type of solutions (Dutton, Dukerich, 1991, p.
544). Dutton and Dukerich: “The port Authority’s identity offered implicit guidelines for
evaluating the effectiveness of its actions on the issue. Using the speed with which the
two drop-in centers were completed as a criterion for the success of the Homeless Project
Team and overall success in dealing with the issue typified this connection. Organization
members used efficiency in task completion as an important barometer for the Port
Authority’s success with the issue even though they admitted that the actual problem, in
terms of the number of homeless at facilities, had not changed” (Dutton, Dukerich, 1991,
p. 546).
Illustreren met Zappos? Wat is hun kern? Hedgehog principles?
When employees are aligned on a certain organizational identity, this means they have
certain routines. Strong identification will make employees willing to go the extra mile,
because the organization and the employee are ‘one’, and the individual employee is
dependent on the prestige of the collective: “An organization’s image [Perceived External
Prestige, DvR] is directly related to the level of collective self-esteem derivable from
organizational membership […] the damage to the organization’s image hurt individuals
personally. […] As a result, individuals are strongly motivated and committed to take
actions that will restore their organization’s image” (Dutton, Dukerich, 1991, p. 548). 7
But apart from being a great advantage, it can also limit the possibilities of management
in an organization. “The relationship between individuals’ senses of their organizational
identity and image and their own sense of who they are and what they stand for
It is important to take in account that the perceived external prestige is not a monolith. There are different
external audiences. Every organization has different stakeholder and the PEP can differ for each stakeholder.
Employees may implicitly reason from a generalized PEP (‘the outside world thinks this or that…”), but on closer
view they may refer to different stakeholder PEP’s, depending on whom they interact mostly with (clients,
investors, media etc.). Dukerich, Golden, Shortell miss this point explicitly: “[W]e conceptualized perceived
organizational identity as a multidimensional construct, whereas we thought of construed external image
[CEI/PEP] as more of a status marker […] the multidimensional (POI) and more general (CEI) images”
(Dukerich, Golden, Shortell, 2002, p. 528).
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suggests a very personal connection between organizational action and individual
motivation. It suggests that individuals have a stake in directing organizational action in
ways that are consistent with what they believe is the essence of their organization”
(Dutton, Dukerich, 1991, p. 550). This can be problematic when you take into
consideration that every organization has multiple identities. Top management might
have different views from professionals8, older employees might have different views
from younger employees. Strong identification therefore can limit the adaptive
possibilities of an organization.
Illustreren met Zappos? Kunnen hedgehog principles naast een absoluut voordeel ook
een nadeel zijn? Mirdita Elstak zal zeggen van niet, blijf bij je kern. Aan de andere kant
moet je ook kunnen aanpassen. De mensen van de financiële administratie denken
misschien ook anders over dingen dan de telefonisten?
KEN: OK, maar gaat het bij OI niet om het streven ALLE employees te alignen? Als dat
niet lukt doe je iets niet goed  Je zou hier kunnen verwijzen naar die values en naar
Zappos 10 core values die iedereen onderschrijft, naar de ‘happiness class’, de cultuur
van met elkaar omgaan buiten werk in Vegas etc. Zappos gaat verder en vraagt in
zekere zin ook van leveranciers zich te alignen: zie anti-bont statement op de site.
Nog iets toevoegen uit de literatuur over multiple identities? Het is al redelijk veel kopij
als antwoord op de vraag.
KEN: Lijkt mij hier niet nodig. Zou alleen verwijzen naar het feit dat sprake kan zjn van
mutiple identities. Vraag 1 vraagt van ons dat we aangeven waarom OI het voor Zappos
relevant is. Daar is geen sprake van multiple identities. Wat we/ik wel kan doen is in mijn
stukken beter verwijzen naar het feit dat nu Zappos door Amazon is overgenomen, er
sprake is van multiple identities binnen het Amazon concern. Ik geef al aan dat dat een
van de redenen kan zijn geweest DH te schrijven.
Literature
Dukerich, J.M., Golden, B.R., Shortell, S.M. (2002), ‘Beauty is in the eye of the beholder:
The impact of organizational identification, identity and image on the cooperative
behaviors of physicians’, Administrative Science Quarterly, 47(2002): 507-533.
“[E]xecutives in health care systems […] may frequently find the interests of the organization at odds with
the norms of their profession or the interests of their patients” (Dukerich, Golden, Shortell, 2002, p. 508).
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Dutton, J.E., Dukerich, J.M. (1991), ‘Keeping an eye on the mirror: image and identity in
organizational adaptation’, The Academy of Management Journal, 34(3): 517-554.
Dutton, J.E., Dukerich, J.M., & Harquail, C.V. (1994), ‘Organizational Images and
Member Identification’, Administrative Science Quarterly, 39(2): 239-263.
Riel, C.B.M. van, Fombrun, C.J., Essentials of Corporate Communication, 2007.
Vonk, R., Sociale psychologie, 2007.
2. What are the three hedgehog principles of the organization?
You don’t have to do extensive examination to identify the 3 hedgehog principles of Zappos.
Interestingly enough, the subtitle of the Zappos CEO Tony Hsieh’s book published in 2010 is “path to
profits, passion and purpose” in a way, this phrase serves as a shorthand for the three elements of
the Hedgehog Principle itself. So much so that perhaps Jim Collins, the author of the book “Good to
Great” which first introduced and then popularized the Hedgehog Principle, and Tony Hsieh should
collaborate on their next publication.
The ‘what are you deeply passionate about’ aspect is clearly demonstrated in everything Zappos does
and is summed up in the title of Zappos CEO Hsieh’s book Delivering Happiness. As he says in the
book, and as he has established in Zappos, the company’s purpose is “delivering happiness to the
world”, and all those that work for, shop from, visit or just read about can see that this really is what
Zappos is and does. To spell this out in more detail, Hsieh defines happiness as being really about
four things: perceived progress, connectedness, perceived control, and being a part of something
bigger than yourself.
The emotional third of the hedgehog principle identified lets us look at the rational element or “what
drives your economic engine”. In Zappos’ case this is surely low overhead (vis-a-vis bricks and mortar
stores), volume sales, and repeat business, as well as opting to invest in building a strong company
culture of service which breeds almost evangelical word-of-mouth-promotion rather than spending on
marketing and advertising.
The third element of the hedgehog principle, or ‘what you can be the best in the world at’ I would sum
up as being ‘making the purchase of shoes a delight’ by making selection, comparison, purchase,
delivery, and any return, exchange, or warranty all easy and highly enjoyable transactions.
3. Describe the nature of the OI at this company, regarding the Desired, Projected, Perceived
Identity and its Perceived External Prestige? Use available resources such as your own
expertise/experience with this company, the company’s website, other corporate material or
relevant (news) articles about the organization. Describe the (potential) gaps between the three
organizational perceptions.
The very strength of Zappos is that you can’t find much of a gap between the Desired, Projected,
Perceived Identity and its Perceived External Prestige of this company. This is a combined function of
it’s singular focus or passion of purpose on ‘Delivering Happiness’ and it’s continuous investment in
growing and promoting the corporate culture that it breeds through it’s vision, core value and general
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approach to business, recruitment of staff, handling of customers etc. As such, we realize that while
this company is a good study of where OI is joined up and driving value for the company and it’s
employees, customers, and shareholders, it is not a great study of where things go wrong and there is
room for significant improvement and learning.
That said, much has changed at Zappos since Amazon acquired it in 2009 and Tony Hsieh published
his book on Delivery Happiness in 2010. Now it has diversified into a much wider range of products
and while this may delight Zappos-ters, as I will call their customers, new audiences could find the
current website and online store and blogs a bit overwhelming and cumbersome to navigate. Unless
they notice and are compelled to explore the “Zappos Family Core Values” banner at the bottom of
Zappos webpages or they know to check out the “About us” section of Zappos and educate
themselves about the company culture and customer service they may just opt for a larger online
portal like Amazon or their local department store rather than embarking upon the additional customer
journey and registration with Zappos.
Nonetheless, the word-of-mouth in support of Zappos supercedes all of this and through my own
personal informal study many who people who have never even used its services are evangelizing
about the brand simply as a result of reading about it in the business press and through coming across
reference to Hsieh’s Delivering Happiness book. So, Zappos certainly is a case of Organizational
Identity at work – whether via actual experience with the brand or just through reading about it as an
effective case study.
QUESTIONS 4, 5, 6, 7
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Stories drive success
Reasons for an organisation to develop and employ storytelling include:
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To develop an overall vision for the future of an organisation
To develop a more practical/tactical strategy for innovation, product and service
development for part of the organisation or for the organisation as a wholexiii
To define and strengthen the identity of an organisation
To developing a strong corporate culture within an organisation
To define and strengthen a corporate or product brand
To communicate a major change such as a take-over, a merger or a product
name change to clients and/or stakeholders.
One can argue about what the main argument is, most compelling of these reasons to
develop a corporate story. All reasons, though, are connected to and influence each
other. While developing and employing a corporate story one should take into account all
these internal and external aspects and effects.
The reasons, the ‘ranking’ of the reasons as to importance, and the moment an
organisation may want to use storytelling will depend on that organisation’s needs.
In the end, though, it is the success of an organisation, the results, that counts and
success should be seen as the main argument. Stories drive success. Employing
storytelling to develop and communicate a clear vision, a sound product strategy, a
strong identity, a healthy corporate culture and/or a powerful brand - all these are
instrumental to achieving success.
Stories tell who we are. Stories contribute to a sense of self, individually and collectively.
A well-developed corporate story defines and communicates the identity of an
organisation, its purpose and its future in the vision of its leaders. As a result the
organisation benefits from continuity, congruence, cohesion and consistency in many
ways. Stories are an instrument of vision driven leadership, which together with a strong
organisational identity contribute to alignment of management, a sense of common
pursuit, intrinsic motivation of employees and united effort. Externally, they are
requirements for strong branding, a good reputation and a positive press. Vision driven
leadership is about knowing how to position the organisation and its services distinctively
and create attractive propositions and thus customer loyalty. All this brings the desired
results in terms of innovation, value creation (even happiness, as in the case of Zappos)
turn-over and/or margins, or, in other words, the success of an organisation.
Cognitive research has shown that stories are central to human intelligence and memory.
As a child we learn to imagine a course of action and the effects of that action (on
others) and to decide whether or not to do it. Stories assist us in understanding and
organising life. Storytelling is also an effective way of teaching and learning and thus for
projecting identity, vision and strategy, and for powering and promoting brands. For a
good story defines relationships, a sequence of events, cause and effect, and priorities.
People are more likely to remember all this as a whole than if elements are presented in,
for example, the bullet outline format. xiv
According to Ramzy “People do not buy brands, they buy the stories behind the brand.“ xv
It is the story behind a company or a brand that drives engagement, identification and
participation.
In addition, the social-economic and political environment in which businesses and other
organisations operate is characterised by increasing and constant change. It is therefore
more important than ever to be in control by developing a sense of self and a sense of
purpose. The environment is also characterised by hyper-competition, product parity and
13
an overload of information.xvi It seems therefore all the more important to try to
communicate effectively and engage employees and consumers using proven
methodologies such as storytelling.
The reasons for Zappos to create and communicate a corporate story are discussed in
the following section.
That is, only success stories drive success
Principles and logics of success stories
For stories to drive success they need to be success stories. Success stories are,
according to Ramzy, characterized by principles and logic typical for success stories and
a-typical for tragic stories.xvii
SUFFERS & STRUGGLES
HERO
VILLAIN
quest
theft
HOLY GRAIL
SAVES
&
RESTORES
gain
loss
THREATENS
&
DAMAGES
VICTIM /
BENEFICIARY
Figure …
Two main elements of a story are the main character (dramatis personae or protagonist)
main character and the plot. Figure … shows the basic structure of a success story and
its components. In success stories the main character is a hero trying to rescue a victim
or group of victims or to do good for a beneficiary or a group of beneficiaries. This is to
safeguard from threats and (possible) harm from one or more villains.
The hero leaves the comfort zone of everyday life to confront evil. His path is one of
suffering and struggle, of overcoming obstacles. In the end, though, he prevails and
receives recognition and praise. There is more, for the hero is not on just any redemptive
mission, his path has a greater purpose.
We see this structure in old myths (‘myth’ means story), that is, not in tragic Greek
myths, but in those myths that tell about “an encounter with universal human energies
and experience. It is, as Joseph Campbell said in his final and most refined definition, ‘a
metaphor transparent to transcendence’.”xviii Carl Jung’s and Joseph Campbells’ thoughts
on myth and archetypes assist us in understanding the mythical archetype ‘hero’. xix
“The hero is the seeker of the grail, the decider of roads. Two of the strongest symbols of
the hero are the cup, or Grail, and the road, or path of adventure. The grail represents
the quest, the hero as seeker. It signifies the fullest potential of life, the yearning for
14
one’s true life. The road represents choice, the crossroads of decision, the hero as
decider. What will you give your life for? Whom does the grail serve. The key for the hero
is consecration to service for humanity.”xx
Decision-making is an essential part of human life, according to writer Laurence Boldt,
the power to decide what to focus on, in other words, the power to decide what is
important and the power to decide what you want to create, are basic to the creative life.
“The choices that will not only effect himself and the closest to him, but in some way the
whole world. The Hero energy is about claiming the decision-making power, being
conscious of the decisions he make, and accepting responsibility for them.” xxi In Ashraf
Ramzy’s words: the hero shows ‘vision driven leadership’.
The success story is not just a causal chain of events but has a plot, the hero’s journey.
The plot serves as a sense-maker and explains the ‘why’. The main character is the
connector and someone one can identify with, the plot can arouse alignment and
participation. Character and plot, identification and participation/alignment, are essential
for engagement.
Delivering Happiness
“Wow, I thought to myself. The room was packed. I was on stage at our all-hands
meeting, looking over a crowd of seven hundred Zappos employees who were standing
up cheering and clapping. A lot of them even had tears of happiness streaming down
their faces. Forty-eight hours ago, we had announced to the world that Amazon was
acquiring us. […] As all the eyes in the room were on me, I tried to trace back to where
my path had begun. In my mind, I was travelling backward in time searching for the
answer. Although I was pretty sure I wasn’t dying, my life was flashing before my eyes.
[…] I didn’t know why. I just knew I needed to know where my path began. My path
began on a worm farm. “xxii
If one was not already aware of it, these sentences from the Introduction: Finding My
Way of Tony Hsieh’s book Delivering Happiness - A Path to Profits, Passion and Purpose
make clear that what will follow is not just another manual for entrepreneurs, but a
story. A story with obviously a happy end: a success story.
Delivering Happiness is - the logo on the cover leaves no doubt about it - a corporate
story: the story of Zappos, “the world’s largest shoe store”. Delivering Happiness is also
a personal story: the story of entrepreneur and Zappos CEO Tony Hsieh.
The book is divided in three sections:
1. Profits consisting mostly of stories of Hsieh growing up and finding his way to
Zappos.
2. Profits and Passion is more business-oriented, covering the philosophies “we at
Zappos” believe in and live by.
3. Profits, Passion, and Purpose outlining “our vision at Zappos for taking things to
the next level [...]”.
As mentioned above stories can be deployed as drivers of engagement, identification and
participation. Stories can drive success. However, in order to drive success, stories have
to be success stories. As a number 1 New York Times and Wall Street Journal Bestseller
Delivering Happiness has obviously been doing what stories should do, namely engage
and a very large audience indeed.
We will analyse the book in more detail to show that the story of Zappos and its CEO
Tony Hsieh complies to the above given recipe for success stories, therefore engaging
and perfect “for taking things to the next level” and driving success at Zappos.
15
Hero Hsieh
Delivering Happiness’ Introduction quoted above shows Tony Hsieh cheered by Zappos’
employees. Tears of happiness stream down their faces. He is the hero about to tell “the
path” he had taken, the mission he had been on, the difficulties he had overcome. xxiii
In 1999 Hsieh and partner Alfred Lin get involved in Zappos and invest $1.1 million in the
online store. Hsieh did not need to get involved, work hard and suffer. Hsieh and Lin had
just sold their company LinkExchange to Microsoft for $265. He could have chosen a very
comfortable life.
Myths, stories, are about the birth of a hero, according to Ramzy, chosing to leave the
comfort zone. In this story we certainly see one born. Part 1 is about Hsieh never from
age 9 seeking profits by starting a worm farm. He is blessed, as hero’s typically are with
devoted parents and endowed with entrepreneurial talents. We see him trying several
businesses, running a pizza business at University and LinkExchange before finding his
way to Zappos, never chosing the confort zone.
A hero is characterised by having “the power to decide what is important and the power
to decide what you want to create”. Hsieh is a decider. Delivering Happiness is a story of
decisions and actions. Als Hsieh’s Harvard Business Review article How I did it illustrates
his power to decide as the first sentences are: “In the 11 years since Zappos was
founded, we’ve had to make some big decisions. One of the most significant one can in
early 2004, over lunch at Chevy’s, a chain Mexican restaurant in San Francisco. We
hadn’t expected to make a life-changing choice over a plate of fajitas, but when you’re
part of a fast-growing company, a lot of decisions arise at unlikely moments.” xxiv
The Beneficiaries
Hsieh is not a seeker of profits alone. He knows what he wants to create, he has a vision
and is on a mission: he got involved in Zappos and develop it working from the
conviction that “a pure discount model was not sustainable in the long run” and “building
a life-style that was about delivering happiness for everyone”. He decides to “go to
extremes for customers”, to provide stellar service, makes steady gains in gross revenue
coming for more than 70% from returning customers. The profit margin is only 1%. Not
profits but happiness is, in the end what he seeks: happy customers who get from
Zappos what they do not get from other online shoe stores, such as a 24/7 call center,
365 days return policy, unexpected upgrades like overnight shipping, and personal hand
written notes from employees. The Zappos customers are therefore the first group of
beneficiaries (first not indicating a ranking of importance).
The second group of beneficiaries are Zappos’ employees. Finding the right employees to
staff the call center and provide the stellar service is Hsieh’s biggest problem. He needs
to create a happy Customer Loyalty TEAM and also happy fulfillment center workers to
deliver happiness. He succeeds in creating a strong company culture grounded in 10 core
values the employees have come up with and hires “for cultural fit” so that the
employees can go on to “create fun and a little weirdness” and be happy. xxv
It would be wrong to think that writing the book Delivering Happiness is all Hsieh did and
does as to storytelling. Telling stories was encouraged by him early on in Zappos.
Employees write stories about what is so special to work at Zappos. The stories are
collected and shared internally.
Hsieh is a fervent and famous user of Twitter. Where other companies are at least
cautious to allow employees to tweet, Zappos’ employees are encouraged to tweet. All
tell stories, stories about Zappos. In 2009 Hsieh writes a blog article called How Twitter
16
Can Make You A Better (And Happier) Person. xxvi. In this article he explains how the use
of Twitter contributes to transparency and values, framing reality (in a positive way),
helping others and gratitude and appreciation of the little things in life.
In addition, stories of customers are collected, shared and published. Stories, in short,
have fuelled company culture before Delivering Happiness was published. At the end of
the book the company as a whole has become a hero with the purpose of delivering
happiness.
The third group of beneficiaries are the board of and the investors in Zappos. They are
made happy with the increase of Zappos’ turn over and value and – because some of
them are unhappy with the profits, the take over by Amazon in 2009, a deal valued at
over $1.2 billion on the day of closing.
The fourth group of beneficiaries are other entrepreneurs. Hsieh does a lot of speaking
and realizes that “we were actually changing other companies and other people’s lives. It
slowly started sinking in that we could be part of something much bigger than Zappos.
We realized that we could change the world not just by doing things differently at
Zappos, but by helping change how other companies did things.”xxvii
Hsieh wrote Delivering Happiness to help other entrepreneurs avoid the mistakes he
made and improve their business (by, for example, using the principles of strong
company culture, great customer service and delivering happiness). In 2009 Zappos
develops Zappos Insights, a subscription-based website providing video interviews with
Zappos senior management, articles and other resources: “a great way to share our
learnings” with other businesses.xxviii
At the end of this book Hsieh states: “And even though this book will serve as a
handbook for future Zappos employees (and maybe get us a few additional customers as
well), this book wasn’t written for the benefit of Zappos either.
I wanted to write this book for a different reason: to contribute to a happiness movement
to help make the world a better place.”xxix So the fifth group of beneficiaries – target
group may be a better term - are we all.
The quest for happiness goes on. Hsieh is now accompanied by a ‘Zappos Family’ and a
growing audience for Zappos stories and assistance, offline and online.
The book was published in 2010. One year earlier, in 2009, Zappos was acquired by
Amazon. It is speculation but it may not be coincidence that this new ownership, Amazon
as the owner now, is another reason, at least a good moment, to write down Zappos’
corporate story in a book format. For although Amazon is planning to keep Zappos as an
independent subsidiary with Hsieh and Lin as CEO and COO and CIO respectively and to
respect the corporate culture, the change of ownership is a major one and a good
moment to consolidate and communicate the story and corporate culture that made
Zappos so successful in a book for external and internal audience.
The Villains
To complete the Zappos version of figure … - the basic structure of a success story – it is
necessary to fill in the upper right corner: the villain. Hsieh is always positive in telling
his story and does not talk in negative terms about the powers he encounters and his
opponents - certainly not in terms of ‘villains’. It is, however, clear who and what they
are:

business owners who seek to profit from “a pure discount model”,
17






business owners who do not invest in a strong company culture characterized by
shared values
business owners who do not provide excellent customer service and who’s
employees do not know how to serve a customer asking for “shoes like the ones
Julia Robberts wears in Eat, Pray Love?”
business owners who do not invest in “employee training and development”,
owners of call centre where turn over is the industry standard of 150% instead of
Zappos’7%.xxx
efficiency and management consultancies charging high rates for advice,
Board members wanting a financial exit and maximized profits instead of building
Zappos, or any other company, further.
What it boils down to is that the villains in Hsieh’s story are all those people and business
owners who seek the comfort zone, who live by conventional ‘wisdom’, who do not
understand that profit, passion and purpose is what makes businesses successful and
people happy. These threaten Zappos in its existence and certainly do not bring
happiness. All this results in figure …
HERO:
Hsieh and
“we at Zappos”
VILLAINS:
competitors/conventional
business thinking
SUFFERS & STRUGGLES
quest
theft
HAPPINESS
SAVES
&
RESTORES
Figure …
gain
loss
THREATENS
&
DAMAGES
BENEFICIARIES:
customers,
employees,
investors, other
business owners,
all of us in a
better world
Hsieh frees himself from conventional ideas about how to do business, struggles with
competition, practical problems, and forces like “unusual growth”. He knows, in Ramzy’s
terms, how to lead from the core, clarify his vision, power his company culture, charge
his brand and create his future and that of his company and deliver the holy grail:
happiness.
Hsieh’s story is one of decisions and actions, in a chronological order, but also with a
plot, a sense-maker: “It was no longer just about Zappos. We were helping change the
world”. Transformation, an important element in success stories, has taken place: the
boy with high hopes of huge profits from a worm farm in his garden has reaped great
awards from his business ventures is now changing the world.
Developing and implementing a corporate story
18
Narrative management addresses two key questions: what is our story and how are we
going to tell it? As explained above a story is a cognitive construct. For a story to be a
good corporate story and drive success it needs to be a success story. Success stories
comply to specific characteristics and patterns.
Developing a corporate story therefore requires a process of collecting, selecting and
excluding, shaping, organizing and connecting information so that it becomes a story
complying to those specific characteristics and patterns. In addition the story should
transform the information into meaning and insight.
Delivering Happiness describes Hsieh and his colleagues and employees at Zappos
developing an insight and delivers insight to the readers: the insight that it is creating
and delivering happiness what makes this particular company successful, can make other
companies successful and change the world.
And this is an important point, according to Shaw, Brown and Bromily, “to communicate
is an insight”, “you have to be able to show that the right insight is there”. xxxi The
process of developing a success story, when done properly, brings insight and in turn the
story communicates that insight. For example, the insight of how to really solve a
problem for customers or create value for stakeholders, or a vision for the future of the
organisation.
A proven approach to developing a corporate story has more or less three stages: xxxii
1. Setting the stage.
It is essential in this phase to first collect all information necessary to define the current
situation the company is in. It is recommended in this phase to look mainly outward, but
also inward. Information to be collected should pertain to the environment, society, and
economy and to the industry the company belongs to and the developments and drivers
of change there. The information to be collected should answer question such as: Who
are the other players in the field? How do they deal with developments? What do we
know about their strategies and capabilities? The analysis should also be inward and
pertain to the company’s own capabilities and possibilities.
Existing methods/assessment such as SWOT-PESTLE analyses can be most helpful in this
phase whereby information on political, economic, social, technological, legal, and
environmental developments is collected and used to identify strengths and weaknesses,
threats and opportunities. Figure … below illustrates this methodology.
19
Figure …
Reality is often complex and one may include more aspects, such as expressiveness, i.e.
the way the company and its competitors express itself in traditional and new media.
It essential to, as Shaw et al argue, to not limit oneself to bullet points, but to create a
picture as rich and coherent as possible. It is storytelling that clarifies thinking, surfaces
assumptions about cause and effect, brings out tensions and relationships.
2. Introducing the dramatic conflict.
In this phase from the information collected detailed descriptions of main opponent(s)
and challenges and obstacles to overcome should be deducted. And as a vision on result
the desired outcomes and an insight in how to achieve them and in (radical) changes and
innovations necessary should surface. For as mentioned above, in the end
communicating insight in how to achieve the desired results is crucial.
3. Reaching the resolution.
In this phase a detailed description is described of how the company actually will win or
has won from its opponents, has overcome obstacles and achieved the desired results (or
even the holy grail).
Models can assist in discovering, developing and diagnosing corporate stories. Above we
explained the specific characteristics and structure a success story complies to. The story
resulting from the three-phase-process described above should be well-written and finetuned so that it has all main characteristics and complies to the success story structure.
To do so one can also use the following checklist of Ashraf Ramzy: xxxiii








Protagonist: leadership, pro-active, initiative, responsibility, accountability.
Suffer & Struggle: fight, battle, invest time, effort, energy, money, work hard, be
busy.
Greater purpose – good cause: audacious goals, a beyond the immediate efforts and
rewards understanding of why, raison d’être.
Overcome obstacles: inventiveness, creativity, innovation, endurance, perseverance,
patience.
Defeat evil: decisiveness, action ready, sense of urgency, clarity, ethical, integrity,
honesty.
Bring rescue: real value proposition, real benefits, real answer to real needs, do no
damage, do no evil.
To beneficiary: real understanding, real empathy, beyond target demographics
understanding of whom do you serve.
Receive recognition: good reputation, strong brand, appreciation, respects, profit.
20
As stories have to drive results they have to be able to align all aspects and activities of a
company and address and engage all involved in a company. We therefor recommend
performing extra checks to see whether the story can do all that at the following levels:





Corporate/leadership (identity and purpose)
Organization/top management (strategy, values and goals)
Business unit/management (tactics, behaviour and objectives)
Teams/employees (operations and tasks)
External audience (performance , brand, positioning, reputation)
Conclusions
Here our overall conclusions.
21
Literature
Ashraf Ramzy, Corporate Story – The Narrative Approach to Organizational Identity and
Corporate Communication, lecture given at Erasmus University Rotterdam 16 November
2011.
Joseph Campbell, Bill Moyers, The Power of Myth, Bantam Doubleday Dell Publishing
Group, 1988.
Joseph Campbell, The Hero With A Thousand Faces, Princeton University Press, 1949.
Laurence G Boldt, Zen and the Art of Making a Living. A Practical Guide to Creative
Career Design’, Penguin Group, New York, 1991.
Tony Hsieh, Delivering Happiness. A Path to Profits, Passion, and Purpose’, Business
Plus, New York, 2010.
Tony Hsieh, ‘How I Did It. Zappos ‘s CEO on Going to Extremes for Customers’, in:
Harvard Business Review, July-August 2010.
Tony Hsieh, How Twitter Can Make You A Better (And Happier) Person’, blog post on
http://blogs.zappos.com/blogs/ceo-and-coo-blog/2009/01/25/how-twitter-can-makeyou-a-better-and-happier-person (2009).
Frances ., Frei, Robin J. Ely, Laura Winig, ‘Zappos.com 2009: Clothing, Customer Service,
and Company Culture’, in: Harvard Business School Review, 610-015, June 27, 2011.
References
i
Frei et al., p. 1-3.
Hsieh (2010), p.169.
iii
Hsieh (HBR 2010). Frei et al., p. 6-7.
iv
Frei et al., p. 7-11.
v
Hsieh (2010), p. 217.
vi
Hsieh (2010), p. 170-174.
vii
Hsieh (2010), p. 158-159.
viii
Hsieh, (2010), p. 177; http://about.zappos.com/our-unique-culture/zappos-core-values.
ix
Frei et al., p. 4.
x
Frei et al., p. 5.
xi
Frei et al., p. 6.
xii
Frei et al., p. 11.
xiii
See for an example of storytelling for business planning the article: Gordon Shaw, Robert Brown, Philip
Bromiley, ‘Strategic Stories: How 3M Is Rewriting Business Planning’in: Harvard Busines Review (May 1998),
p.1-6 (original numbering?)
xiv
Shaw at al., p.1.
xv
Ashraf Ramzy, ‘’ Corporate Story. The Narrative Approach to Organizational Identity & Corporate
Communication’, lecture given at Erasmus University Rotterdam 16 November 2011.
xvi
Steve Denning, ‘Can Storytelling become a business? An interview with Ashraf Ramzy’, in
http://www.stevedenning.com/slides/InterviewAshrafRamzyMar06.pdf (2006), p.1.
xvii
Ramzy (2011).
xviii
Boldt, p. 41.
xix
Campbell (1949), Campbell (1988).
ii
22
xx
Boldt, p. 46.
Boldt, p. 47.
xxii
Tony Hsieh (2010), p. 1-3.
xxiii
, Frei et al., p. 2.
xxiv
Hsieh (HBR 2010), p. 41.
xxv
Frei at al., p. 5; Hsieh (2010, p.
xxvi
Hsieh (2009).
xxvii
Hsieh (2010), p. 236.
xxviii
Hsieh (2010), p. 235-237. Frei et al., p. 25. See also http://www.zapposinsights.com.
xxix
Hsieh (2010), p.272.
xxx
Frei et al., p. 7.
xxxi
Shaw et al., p. 4
xxxii
This method has proved successful, see Shaw et al., p. 33ff.
xxxiii
Ramzy (2011).
xxi
23