Lecture Notes: Zappos' Corporate Culture and Business Strategy

Introduction

• Presenter: Paul Solman, Economics Correspondent
• Subject: Zappos' corporate culture and its impact on long-term success.
• Series: Making Sense, airing every Thursday.

Zappos' Corporate Culture

• Unique Approach: Emphasis on a quirky and different environment.
• Campus: Located in downtown Las Vegas.

Wallflowers

• Jason Brown: Front desk dress code enforcer.
• Three Rules for Wallflowers:
  1. Take it off if sentimental.
  2. Wear as a headband.
  3. Cut and add to collection.

Importance of Company Culture

• Tony Hsieh's Background: Formerly sold LinkExchange to Microsoft.
• Reason for Selling: Deterioration of company culture.
• Focus on Culture: Integral to hiring and company operations.

Hiring Process

• Criteria: Personality fit over education.
• Interview Question: "How weird are you on a scale of 1 to 10?"
• Example: Tyler Williams' application through a video valentine.

Core Values

• Key Values:
  • Embrace change
  • Be humble
  • Create fun and a little weirdness
  • Build a positive team and family spirit

Employee Engagement

• Activities:
  • Tutu Tuesdays
  • Elevator games to encourage interaction.
• Rewards:
  • Zollars redeemable for Zappos swag
  • Monthly $50 bonus for extraordinary effort

Business Rationale

• Service Focus: Essential to business strategy.
• Amazon Acquisition: Acquired Zappos for over a billion dollars.
• Customer Experience: 365-day free return policy.
• Service Example: 10-hour customer service call.

Growth and Sales

• 2008 Milestone: First year of a billion dollars in sales.
• Current Status: Several times the 2008 sales figure.
• Growth Drivers: Repeat customers and word of mouth.

Management Structure: Holacracy

• System Introduction: Eliminates traditional bosses.
• Structure: 1,500 employees in 500 self-governing teams.
• Meeting Structure: Tactical meetings with specified roles.

Challenges and Benefits

• Challenge: Rigidity of process conflicts with company culture.
• Benefit: Enhanced commitment and transparency.

Employee Response

• Severance Package: Offered for those not supportive of holacracy.
• Turnover: 18% accepted buyouts; turnover rate reached 30%.

Conclusion

• Longevity Vision: Hsieh's goal is for Zappos to last 500 years.
• Lesson: Self-management and culture as keys to sustained success.