Thursday, June 17, 2010

Living and Dying by the Zappo's Values Sword


Lots of great feedback from many of you!  Thanks and keep it coming!  I know I've got to tell you the rest of the Budget story -- and I promise that I will -- but the values conversation is something I find gripping at the moment...  Trust me, there's relevance to Budget and it will all tie nicely together in the end.

I'd like to start where I ended the last post with another great doozy from Tony Hsieh, Zappo's founder:

"Many companies say they have core values but they don't really commit to them.  We believe that it's important to come up with core values that you can commit to.  And by commit, we mean that you're willing to hire and fire based on them.  If you're willing to do that, then you're well on your way to building a company culture that is in-line with the brand you want to build."

Theoretically, all companies hire and fire based on core values but practically that doesn't always happen.  We have all worked with "so and so's" who don't live up to some (or any) corporate value or other.  Yet, these people survive because of other "value" they bring to the corporation which really makes one question the sincerity of corporate values in the first place.  If you don't know what I'm talking about, I congratulate you!  For everyone else, I feel your pain.  I've been there, too.

So, for me, saying that Zappo's is willing to fire based on values is a "walking the talk" manifesto.  It shows that despite obligations to keep shareholders happy in the near term, you'll likely make them very happy in the long term if you're hyper disciplined when you set and maintain your corporate identity.

What are these Zappo's values that mean so much to them that they're willing to fire if violated?  They are: deliver "wow" through service; embrace and drive change; create fun and a little weirdness; be adventurous, creative and open-minded; pursue growth and learning; build open and honest relationships with communication; build a positive team and family spirit; do more with less; be passionate and determined; be humble.

What's significant about these ten values?  Well, like my view on JetBlue's Jetitude: everything!  What particularly resonates with me is identical to my view on Jetitude as well.  If you look at the verbs in the values, you quickly see that Zappo's is about accountability.  Is about responsibility.  Is about ownership.  Is about the setting and achieving of goals.  Every single Zappo's employee has permission to be better than they already are and deliver service beyond the expectation of the customer.  These are encouraged and rewarded behaviors.  And everyone from the top to the bottom understands this.

This would never be an environment where Budget's "The machine did it" would be a reasonable answer let alone an answer that would pop into someone's mind.  The reason is that "The machine did it" is antithetical to those values that they clearly screen people for during hiring and also reinforce during training.  "The machine did it" is beneath them -- and probably worthy of being fired if someone were to utter those words!

I (most serendipitously) came upon a great blog post by Rosabeth Moss Kanter about corporate values the other day thanks to our friends at HBR.  It's a quick read but here's a good excerpt:

"'s not the words that make a difference; it's the conversation.  Frequent discussion about organizational values can be engaging and empowering.  The organization becomes a community united by shared purpose, which reinforces teamwork and collaboration.  People can be more readily relied on to do the right thing, and to guide their colleagues to do the same, once they buy into and internalize core principles."

Zappo's hasn't just delivered the core values and left it at that.  Zappo's has constant dialogue all the way through training and clearly beyond such that it becomes part of every employee's corporate DNA.  It's not an easy thing.  It's not a cheap thing.  But to them, it's a vital thing.

It's vital not only for the touchy feely employee aspect of it but consider some hard facts, too.  By employing what Tony Hsieh call "high touch" versus "high tech" they've accomplished the following (read the rest here here):
  • Amazon purchased Zappo's for about $1.2B. 
  • 75% of daily orders come (on average) from repeat business.
  • In the first quarter of this year, Zappo's saw 50% growth from one year earlier.
  • People pay $5K each for Zappo's Insights, a two day workshop on corporate culture and customer experience.

The funny thing about Zappo's?  They are sometimes more expensive than online competitors.  And yet, they are surviving and thriving.  All in all, a great lesson how the "Golden Rule" can actually be sustainable and profitable!  I'll talk about Budget in my next post...  In the meantime, I'd love to hear your thoughts!  Send them my way!


Parissa Behnia
Idea Chef

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