Joe

Delivering Happiness

March 24, 2021
, 7:15 pm

In the following video by Productivity Game you'll learn three pivotal decisions Tony Hsieh made to make the Zappos culture and make the company incredibly profitable.

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Key Takeaways

"For individuals, character is destiny. For organizations, culture is destiny."

-Tony Hsieh

In 1998 Tony Hsieh dreaded going to work at a company that he built. His internet company Link Exchange was growing quickly, so he hired people as fast as possible. His new hires were smart and motivated to make money, but didn’t seem to care much about the company.

Gradually Hsieh’ company went from an all for all-for-one, one-for-all team environment, to a company consumed with politics, positioning and rumors.

Hsieh desperately wanted out and at the end of 1998 he got his wish when Microsoft offered to buy his company for 265 million dollars.

Hsieh took the money, walked away from his first company and vowed to make culture a top priority at his next company.

Fast forward 10 years and Hsieh is leading an online shoe company called Zappos.

Hsieh has invested a significant amount of money and time to make the Zappos culture great and it’s paid off in unexpected ways. Zappo’s is not just one of the best places in the world to work, it now generates billions of dollars a year in revenue.

Primarily because shea discovered that when you build a great culture, your employees enjoy being at work. Then those employees go above and beyond for the customer, which creates happy and loyal customers.

Great culture = happy employees = happy customers = more sales.

Zappo’s great culture, which results in awesome customer service, is Zappos’s competitive advantage.

They don’t have the cheapest product or the most innovative product, but Zappos customers don’t care because they know that zappos employees will take care of them if something goes wrong with their order.

If you want to make your culture your competitive advantage, check out these three pivotal decisions that Tony Hsieh made at Zappos to make the Zappos culture great.

Hsieh' Three Pivotal Decisions

1. Hire and fire on your values

Most companies have a mission statement and a list of values but they’re meaningless.

Let’s say you work for a company that has building a positive team and family spirit as one of their core values, but you have a co-worker who berates and demeans other employees, but is a star performer and makes the firm a lot of money.

What does management do?

Well odds are the managers look the other way because the only core value they really have is making money.

At Zappos if you violate any of their 10 core values you’re fired, regardless of how good you are at your job. In fact, if you are not someone who exemplifies the Zappos core values, you won’t be hired in the first place.

Zappos has two sets of interviews:

One to see if you’re qualified to do the job.
The other to see if you align with their values.

The people running the values interviews have veto power and can block any candidate who doesn’t fit in.

Zappos has 10 core values and their 10th core value is be humble.

So if you brag about your accomplishments and come across as arrogant during your interview, it doesn’t matter how smart you are or how much relevant experience you have or how great you’ll be at the job, you’re not getting hired.

Now if you do align with their values and are hired, you will be praised and promoted for doing things that would get you fired at other companies.

For example when a Zappos employee spends 30 minutes helping a customer search for a shoe on a competitor’s website because Zappos doesn’t have the shoe in stock. Management shares that story around the company because it exemplifies Zappos’s number one core value: deliver WOW through service.

Other examples include staying on the phone with the customer for 10 hours, answering a customer’s questions about living in Las Vegas where Zappos is headquartered or helping a customer order pizza when her hotel has stopped offering room servers for the night.

When you define and uphold your company’s core values so that everyone in your company is keenly aware of them and makes decisions based on them, the team acts in unison and feels more like a family.

Start defining your company’s core values by defining the characteristics of three types of people.

First people you’d want to go for drinks with after work.
People you’d want to work evenings and weekends with if you were trying to meet an important deadline.
People you hate working with: list their characteristics and invert them. So if you hate greedy arrogant people, then you probably value generosity and humility.

Your goal is to define values that make your culture distinct: like being fun and a little weird–which is Zappos’s third core value.

You want a list of values you are willing to hire, promote, and fire based on.

Once you have a list of possible core values, consolidate the list by combining similar values and only leaving core values that are meaningful and memorable.

You want everyone at your company to easily recite them. Then make interview questions based on those core values.

Create performance review metrics to gauge if your employee’s actions align with your values and then filter all major decisions through your core values, what you invest in and who you let go if you suffer a downturn.

2. Create a culture book

The second pivotal decision that Tony Hsieh made to create a remarkable culture at Zappos was creating a culture book.

Most leaders say they want a good culture, but aren’t willing to hold themselves accountable if their culture falls apart.

Tony Hsieh ensured that he and his leadership team were held accountable for the culture by creating a culture book every year.

Each year the leadership team asked employees to anonymously submit their answers to the question: What is the Zappos culture to you?

Then the team gathered all the submissions and published them uncensored and unedited, except for typos, on the company website and in a physical culture book.

If a submission was negative, like a Zappos employee complaining about how the company was not giving her opportunities to learn and grow, violating Zappos’s core value number 5, that negative comment was available for all to see.

The leaders at Zappos were highly motivated to take corrective action and invest more in getting their culture aligned with their core values so that they can improve next year’s culture book.

The Zappos culture book is also a way for employees to remember all the wonderful things they did as a team in the last 12 months.

A culture book team at Zappos gathers photos from events in the past year and creates a colorful memory book.

When employees flip through the culture book, they’re able to relive the experiences they had together and are incentivized to plan bigger and better team events and make next year’s culture book even better.

Start your company’s culture book by gathering photos of team experiences during the year and then ask your employees two questions:

How would you define the company culture?
What’s different about it compared to other company cultures?

Gather the submissions and publish them uncensored and unedited except for typos.

When you read all the submissions, do they read true to your company’s core values and is there uniformity among the different voices?

If not you have some work to do before next year’s culture book.

3. Onboard everyone with customer service

The third pivotal decision that made Zappo’s culture great was to onboard everyone with customer service.

"Everyone that is hired into our headquarters goes through the same training that our Customer Loyalty Team (the call center) reps go through, regardless of department or title."

-Tony Hsieh

You might be an accountant or a lawyer or a software developer–doesn’t matter–you’re put on the phone for two weeks taking calls from customers.

If your first experience at a company is in the customer service department, you go back to the job you were hired to do with a sense of purpose.

If you’re a software engineer and in the first few weeks at the company you helped Sally from New York find a pair of shoes on the website, you go back to your job that you’re hired to do thinking of how your work will help customers like Sally and you end up writing better code to make Sally’s checkout experience just a little bit smoother.

Since the success of every company depends on creating happy customers, it makes sense that every person that comes into your company has a direct connection with the customer they’re ultimately helping.

In that way everyone is unified around a common mission of helping the customer have the best possible experience.

If you want a great culture:

Define your core values and then hire and fire based on those values
Then create a culture book to gauge the pulse of your culture and capture memories that strengthen the bonds between team members
Lastly onboard new hires in a customer service role so that they understand who they are helping when they start the job they were hired to do.

When you invest in your culture you get happy employees and happy employees deliver happiness to customers, which means more sales and accelerated growth.

Joe