Zappos is a Phenomenon — Going from $0 in 1999 to over $1 Billion in 2008! In “Delivering Happiness: A path to Profits, Passion, and Purpose,” Tony Hsieh, Zappos CEO, explores Zappos’ journey. The essence of the journey (via Tony Hseih’s Delivering Happiness, Joseph A. Michelli’s The Zappos Experience, and Round Table Companies’ Delivering Happiness (the comic book)) is best described in Chapter 5, “Platform for Growth: Brand, Culture, Pipeline”!
As many organizations are eager to replicate Zappos’ success (but in their own way), they must venture on their own journey and evolve their own platform for success!
Tony explores Zappos’ history and concludes that “Zappos is about delivering happiness to the world” and then briefly shares three frameworks of happiness.
The first happiness framework involves Perceived Control, Perceived Progress, Connectedness (number and depth of your relationships), and Vision/Meaning (being part of something bigger than yourself). Zappos’ notion of Connectedness relates to Engagement and Zappos’ notion of Vision & Meaning relates to Purpose & Meaning.
The second happiness framework involves Chip Conley’s (Peak book) adaptation of Maslow’s Hierarchy of Human Needs to business (Customers: Meets Expectations, Meets Desires, and Meets Unrecognized Needs; Employees: Money, Recognition, and Meaning; and Investors: Transaction Alignment, Relationship Alignment, and Legacy). Zappos’ notion of Meets Desires, Recognition, and Relationship Alignment relate to Engagement and Zappos’ notion of Meets Unrecognized Needs, Meaning, and Legacy relate to Purpose & Meaning.
The third happiness framework involves three types of happiness (Pleasure, Passion, and Higher Purpose). Zappos’ notion of Passion relates to Engagement and Zappos’ notion of Higher Purpose and Meaning relates to Purpose & Meaning.
Artful Transformation (Context, Foundation, and Evolution) is a means to foster a journey to evolve a platform seemingly similar to Zappos’!
Tony emphasizes that “a big reason we hit our goal early was that we decided to invest our time, money, and resources into three key areas: customer service (which would build our brand and drive word of mouth), culture (which would lead to the formation of our core values), and employee training and development (which would eventually lead to the creation of our Pipeline Team)” and “our belief is that our Brand, our Culture, and our Pipeline are the only competitive advantages that we will have in the long run.”
Furthermore, Tony emphasizes that “as we focused more and more on our culture, we ultimately came to the realization that a company’s culture and a company’s brand are really just two sides of the same coin”, “the brand is just a lagging indicator of a company’s culture”, and “if you get the culture right, most of the other stuff — like great customer service, or building a great long-term brand, or passionate employees and customers — will happen naturally on its own.”
Zappos’ notion of Culture is foundational and relates to socialization (Phase I, Context), enactment & elaboration (Phase II, Foundation), and enactment & evolution (Phase III, Evolution).
Edgar Schein, the world-renowned expert on organizational culture, emphasizes that “culture is a pattern of shared tacit and interconnected assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”. Using this definition, we can distill the anatomy of Zappos and Zappos’ journey!
Fundamentally, culture is not simply about identifying or discovering core values, but about living harmoniously with core values (which constitute a worldview via Purpose & Meaning and Engagement) within the context of “external adaptation” and “internal integration”.
Zappos’ notion of Brand is essential and relates to value-creation (Phase II, Foundation). Notice that Brand is the result of value co-creation with customers. Furthermore, it’s this association with brand that allows Zappos to shape its culture based on “external adaptation”. The mere identification of Core Values without the forces of external adaptation does not constitute Culture!
Zappos’ notion of Pipeline is essential and relates to communities (Phase III, Evolution). Notice that pipeline is the result of living communities. Furthermore, it’s this association with pipeline that allows Zappos to shape its culture based on “internal integration”. The mere identification of Core Values without the forces of internal adaptation does not constitute Culture!
While Tony emphasizes that “it was necessary to come up with core values — essentially, a formalized definition of our culture — in order for us to continue to scale and grow”, only appreciating Zappos’ journey more holistically exposes that there is more to Zappos’ culture than merely identifying or discovering core values!