Uncommon Service: The Zappos Case Study | Inc.com
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An excerpt from the book, Uncommon Service: How to Win
Putting Customers at the Core
of Your Business, by Francis Frei and Anne Morriss.
Clarity: Know Where You’re Going
Zappos will take an order as late as midnight and deliver it
to the customer’s doorstep before breakfast. It has the
world’s largest selection of shoes, and its service includes
free returns. If it doesn’t have the shoe you want in stock or
in your size, a Zappos call center employee will go to three
competitors’ sites to try to help you locate what you want
to buy. Seventy-five percent of its business comes from
repeat customers, despite the fact that its prices are far from the lowest. (Price is an
area where Zappos has made a conscious trade-off in its service model in order to
deliver exceptional service.)
It’s not surprising, then, that managers from other companies—including many from
service and quality leaders like Southwest and Toyota—make regular pilgrimages to
Zappos facilities to learn how the company pulls it off. Everyone wants to know what
the heck is going on. A quick look around reveals that part of its success is the
company’s IT strategy, including a real-time inventory management system that is 99
percent accurate, compared with accuracy rates as low as 40 percent in other areas of
retail. But what gets visitors every time are the clues to Zappos’s true competitive
advantage: its culture. And no one inside the company is surprised.
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The most visible champion of Zappos’s culture, naturally enough, is president and
CEO Tony Hsieh (pronounced “Shay”). Hsieh is crystal clear on the culture he needs to
make the company thrive, and he and his team have broken it down into ten core
company 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.
Hsieh embodies these values. He is passionate, positive, fun, humble. And a little
weird. As the fearless leader of a high-profile shoe company, Hsieh unapologetically
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Uncommon Service: The Zappos Case Study | Inc.com
2015-04-14, 9:17 AM
wore the same pair of shoes every single day for two years. He then replaced them
with the exact same pair. Hsieh’s definition of weird, however, is closer to authentic or
real. He’s betting that the “real you” will be more valuable to Zappos than the safe,
watered-down version that usually shows up in a work environment. So go ahead, be
a little weird.
Early in his career, Hsieh had a breakthrough about how much culture mattered to the
performance and motivation of employees. He sold a software company he had
founded when he realized that even he no longer wanted to come to work, primarily
because of the culture. Now Hsieh does many things you’d expect from an
enlightened CEO, like taking calls at the call center on holidays to give his employees
a break and staying in direct touch with his customers.
But what really sets Hsieh and his team apart is their deep awareness that culture is
the company’s most important asset. “Service is a by-product of culture,” says former
chief financial officer Alfred Lin, as are things like supplier behavior and employee
turnover. In 2005, when the company’s call center moved from the Bay Area to Las
Vegas, an astonishing 80 percent of its California employees relocated—for a $13-anhour job. In 2008, a year in which the average turnover at call centers was 150 percent,
turnover at Zappos was 39 percent (including turnover owing to promotions).
Managers attribute the loyalty to a culture that cultivates the passion, purpose, and
humanity of its employees.
But it’s not just management that gets it. The conviction that culture is key is
embraced throughout the ranks at Zappos. It’s so central to the company’s belief
system, in fact, that the company publishes the Zappos Culture Book, which is
updated regularly and contains hundreds of unscripted comments and essays written
by Zappos employees and vendors about the company’s culture, why it matters, and
how it affects what they do every day. It was conceived as a training tool for new hires
and partners, but consumption of the book has gone way beyond that internal circle.
Ringing in at 348 pages in the 2009 edition, it’s a moving and persuasive testament to
the power of employee engagement (“happiness” in Zappos-speak), and the role of
culture in eliciting it. We recommend buying it and just paging through.
Here’s a taste, from Abbie “Abster” M., an employee who had been working at the
company for three-plus years:
The Zappos culture to me is unlike anything I’ve ever experienced before. It’s always
fun and weird, we’re all creative and open-minded, passionate and determined, but
most of all, we’re humble. I think it’s because most of us have worked in horrible
dead-end jobs before and can cherish our Zappos culture for what it is. It’s what
makes me want to come to work every day, even my weekends.
. . . I hear so many horror stories from friends about the places they work
and it only makes me feel that much more fortunate to be a part of the
Zappos family. I can’t imagine my life without Zappos, and the amazing
people that I work with.
The quote that moved us most was from Ryan A.: “At my last job I was afraid to be
anything: right, wrong, smarter, dumber . . . At Zappos being yourself is the best thing
you can do.” Perhaps the cultural feature we observe most often is unproductive fear,
fear of looking bad or doing something wrong. If organizations did nothing else but
address that part of their environment, we’re confi dent that the creativity and
engagement of their people would have a real chance of being unleashed. Human
beings are not at their best in a defensive, self-distracted crouch.
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Uncommon Service: The Zappos Case Study | Inc.com
2015-04-14, 9:17 AM
Hsieh named his book on building Zappos Delivering Happiness, but he and his team
didn’t just deliver happiness for its own sake. Like IDEO’s relationship with creativity,
Zappos understood that the happiness of its employees, partners, and customers was
a deadly serious endeavor, the most reliable route to sustaining excellence in the
industry in which Zappos chose to compete. Everyone inside Zappos, from the CEO to
the front line, understood the link between its culture of happiness and the company’s
daily performance. What’s the cultural analog in your own business? What’s your
version of happy?
Reprinted by permission of Harvard Business Review Press. Excerpted
from Uncommon Service: Hot to Win by Putting Customers at the core of
Your Business. Copyright 2012 Frances Frei and Anne Morris. All right
reserved.
PUBLISHED ON: APR 28, 2010
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Quirky Makes First Acquisition in Pivot to Serve
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Ben Kaufman's crowdsourced design company has acquired organizational design firm Undercurrent to
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"
BY GRAHAM WINFREY Staff writer, Inc.
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Uncommon Service: The Zappos Case Study | Inc.com
2015-04-14, 9:17 AM
Ben Kaufman is the founder of Quirky.
The company known for making "invention accessible" is reinventing itself--again.
Crowdsourced product company Quirky has acquired organizational design firm
Undercurrent, the first acquisition for Quirky since it launched in 2009. The
transaction will help Quirky shift its business model from being a product company to
adopting a more service-oriented approach, a transition Quirky began last summer.
Financial terms of the deal were not disclosed.
"We really weren't set up to service companies," says Quirky founder Ben Kaufman,
adding that Quirky has a long history of collaborating with Undercurrent and its CEO,
Aaron Dignan. "We were meant to work as a consumer products brand, and what
Aaron and his team do is run an organization that really powers and enables a much
more service-oriented approach."
By way of background, Quirky sources product ideas from its online community of
roughly 1.3 million people. The company then hand picks the best ideas to develop
and ultimately create new consumer products, to be sold in stores such as Target and
Bed Bath & Beyond, as well as online shops including Amazon and Fab. Undercurrent,
meanwhile, provides a service to large clients such as GE, American Express, and
PepsiCo, helping them tackle issues related to design, technology, and innovation.
Having joined forces with Undercurrent, Quirky can now give large companies access
to its community of inventors and will give those companies exclusivity to certain
product ideas. Quirky has already partnered with General Electric division GE Lighting
and publicly-listed audio company Harman, and plans to announce a third major
partnership in the next week.
"We've gone from [being] a company that only makes products for ourselves to a
company that makes products for some of the largest brands in the world," Kaufman
says.
Products that originate within Quirky's online community and get released by partner
companies will be branded under the partner organizations' names, but will carry
a "Powered by Quirky" seal. Inventors who come up with the ideas for the new
products will continue to receive a percentage of sales once Undercurrent's team joins
forces with Quirky, which will happen this summer.
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Uncommon Service: The Zappos Case Study | Inc.com
2015-04-14, 9:17 AM
By bringing in Undercurrent's 33 total employees, Quirky's total headcount will grow
to roughly 300. Both Quirky and Undercurrent are based in New York.
Quirky and its community are responsible for bringing popular products like the Pivot
Power, a bendable power strip, and a citrus spritzer dubbed Stem to market. To date,
Pivot Power inventor Jake Zien has made more than $827,840, while Tim Houle has
netted more than $50,000 from his Stem invention.
PUBLISHED ON: APR 13, 2015
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help.
The World’s #1 Cloud-Based ERP Software
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http://www.inc.com/inc-advisor/zappos-managing-people-uncommon-service.html
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Page 5 of 5