HDAW: Zappos product manager says companies have to take their eyes off the scoreboard and focus on behaviors that drive results

March 1, 2012
IF you walk through Zappos.com's corporate office in Henderson, Nevada, you might see one person sporting a Mohawk, another in pajamas, and still another

IF you walk through Zappos.com's corporate office in Henderson, Nevada, you might see one person sporting a Mohawk, another in pajamas, and still another decked out in fashion couture. There are totally different personalities at Zappos, but the values are the same.

“And we've made sure the values are the same,” said Robert Richman, product manager of Zappos Insights, the Zappos Family company dedicated to helping businesses with their cultures.

Every day before they start work, they get together, congratulate each other on the previous day's successes and do a group cheer.

“I know that sounds a bit hokey, but we take it from the sports perspective,” Richman said. “We want to play our best, have a great day, and make it an amazing day. It's a revolutionary concept in culture. It's the idea that it's possible to look forward to Monday mornings. That's the kind of culture we have created at Zappos.”

In his keynote address, “The Culture of Business: Zappos Style,” Richman provided an inside look at the company that has been rated #1 in customer service in the world in the American Express Customer Choice awards and #6 in Fortune magazine's “Best Places to Work” list for 2011.

Zappos developed the top online shoe store, then expanded into clothes, housewares, accessories, and more.

The service staff takes up to 17,000 calls a day, higher on holidays.

Richman said that any business innovation starts out by being counterintuitive. He said that when turn-of-the-century “slave labor” was

given breaks and time off, it was a bad move in the short term. But in the long term, companies experienced greater retention rates, less sick time, and fewer injuries on the job. Now, it's common sense — but it started out as being counterintuitive.

“In a day and age where call centers have scripts and call times, we don't have any,” he said. “Our longest call on record is 8½ hours for returning shoes. It makes no sense. Can you think of a friend you want to talk to for 8½ hours? But we're creating a different standard for what it means to be in service.”

In 2010, Zappos had 3500 people come through who were not vendors. Last year, it was 15,000. Zappos ultimately created a set of tours, training, and keynote messages to spread its message on how to create cultures where people love to work.

“We did a test where the founders took pictures of shoes at a shoe store, put them online, sold it, went back down to the shoe store and sent out the order. That was our beta test. We realized we had to make it just like a shoe store. Ship it the next day. You can try on as many as you want. Make it free to ship both ways so you can order a ton of shoes but only have a credit-card hit for one of them.

Telling stories, making memories

This from Tony Hsieh, CEO of Zappos: “At Zappos.com, we decided a long time ago that we didn't want our brand to be just about shoes, or clothing, or even online retailing. We decided that we wanted to build our brand to be about the very best customer service and the very best customer experience. We believe that customer service shouldn't be just a department, it should be the entire company.”

“He discovered we're in the story-telling and memory-making business,” Richman said. “It's an entire brand based on that. We empower employees to do whatever they want with callers. No scripts. They're allowed to issue any kind of refund they want — anything to make the customer happy. The percentage of customers (in the overall sales world) who do have a bad experience who are willing to tell the world about it is huge. We decided to minimize that. Even if they're wrong, we make them happy. Our employees are so protective of the culture.

“We call it ‘personal emotional connection.’ PEC. We track everything. But that's the scoreboard. What happens when you're looking at the scoreboard half of the game? You're not playing the game. The scoreboard is for results. But what is it that drives the results? You've got to take your eye off the scoreboard, off the metrics. It's on focusing on behaviors that drive the results. Behaviors are dictated by a mindset. So why not start at the source? Why would you start by going to employees and focus on results by saying, ‘Let's get this result’? How is that going to work if they don't know the right behaviors? And how will they know the right behaviors if they don't have the right mindset? Behind that mindset is what we call culture. It is our biggest asset, to the point where we're willing to protect this over own customers. When we have meetings, we shut down the entire call center.”

He cited a quote from Peter Drucker, a writer, professor, and management consultant who was once hailed by BusinessWeek as “the man who invented management”: “Culture eats strategy for breakfast.”

“That sums it up,” Richman said. “How many times have we seen companies that have a strategy and say, ‘That didn't work,’ and then they shift strategies? And it becomes the Flavor of the Month. But the thing that didn't change was the culture. It's not the strategies that are not working. It's the culture.

“What we've developed is a culture that is entirely service-based, so it's not just a customer-service department. Every single person has to come in and take customer-service training. Our CEO had to do it. Everybody during holiday season has to spend at least 10 hours on the phones. Tony's desk is a cubicle, just like everybody else's. One of our core values is to be humble. The other one is to build relationships for open and honest communication. Rather than an open-door policy, we have a no-door policy.

Richman said the DNA of a company culture is important, and for Zappos, it's family values.

That's based on experience Hsieh had at age 25 when he sold his company to Microsoft for $265 million. The culture started to shift to the point where one day he hit the snooze alarm seven times before went in to work. He thought, I never want to live another day where I don't love going to work. I have to make sure I know the right people are coming in every single day. People are the culture.

“But he also realized through mistakes that he wasn't able to scale the culture,” Richman said. “He could do it if he interviewed every single one. But he realized gut feelings could be wrong. He can't meet with everyone. So he needed a system to make sure we could scale the culture. He had to create en experience, and the way to do that is through values.”

Zappos' values:

  • Deliver “WOW” through service. “Good customer service is like my web server not going down. But ‘wow’ means there's an added surprise there: ‘I didn't expect it to go this far.’ We spend over six figures for a party every year for our vendors.”
  • Embrace and drive change. “We all think we're great with change until there's a change we don't like. In the dotcom world, everything's changing so quickly. It's built into our conversation. Since we're on the same page with values, we'll call each other on these values and use them to stimulate ideas.”
  • Create fun and a little weirdness. “How do we create an environment where we embrace differences and take talents from everybody? It's just your uniqueness.”
  • Be adventurous, creative, and open-minded.
  • Pursue growth and learning. “We have full-time trainers and a full-time life coach. We give free books out. We're constantly investing in the learning of our organization.”
  • Build open and honest relationships with communication.
  • Build a positive team and family spirit. “We're slow to hire and quick to fire. We think about it like a marriage. We invest in people and want them to be there for life. So we take time to get to know them.”
  • Do more with less.
  • Be passionate and determined.
  • Be humble.
About the Author

Rick Weber | Associate Editor

Rick Weber has been an associate editor for Trailer/Body Builders since February 2000. A national award-winning sportswriter, he covered the Miami Dolphins for the Fort Myers News-Press following service with publications in California and Australia. He is a graduate of Penn State University.