Designing an Organisational Culture: Tony Hsieh Wrapping Zappos' Organisational Culture?

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Themes: Organizational Behaviour
Pub Date : 2009
Countries : Global
Industry : Not Applicable

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Case Code : OB0026
Case Length : 12 Pages
Price: INR 250;

Designing an Organisational Culture: Tony Hsieh Wrapping Zappos' Organisational Culture?

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Designing an Organisational Culture: Tony Hsieh Wrapping Zappos'; Organisational Culture?

 

A Customer's Account, of Zappos “WOW” Service –
We get nice stories about Zappos' customer service all the time, but this one seems to have touched a lot of our readers.
Zaz Lamarr meant to return some shoes to Zappos, but her mom passed away and, naturally, she just didn't have time. Zappos arranged to have UPS come pick up the shoes – and then sent her flowers:
With its dogmatic focus on customer service, Zappos, a billion dollar online shoe retailer has won the hearts of many such customers. By delivering “WOW” through service, the company generates 4 million customers of which an astonishing 75% are repeat customers. Customer-service oriented culture became the priority at Zappos right from the time, Tony Hsieh (Tony), Zappos' Chief Executive Officer (CEO) joined the company. Tony's earlier job experiences, including his button-making business, pizza business at Harvard and his 2-year tenure at Link Exchange, made him realise the significance of preserving the culture and feel of a small company even while growing at a rapid pace.

At the same time he understood the importance of working on what a person is truly passionate about. With such like-minded people and a set of die-hard core values that define all the decisions at Zappos, Tony was successful in building a $1 billion company within a period of 8 years. The company has been ranked 23rd in Fortune's 100 best companies to work for in 2009, becoming the highest-ranking newcomer. BusinessWeek (March 2nd 2009) ranked Zappos No.7 in its ‘customer service champs' survey for 2009. The other six in the list (in the descending order) were, Amazon.com, USAA, Jaguar, Lexus, The Ritz-Carlton and Publix Super Markets. However, while Zappos holds many important lessons on organisational culture, the question is what have been the influencing factors for its culture? Will the same culture work for other businesses? Moreover, will the same culture sustain if Tony leaves?

Tony Hsieh – The Fickle Entrepreneur?

The Chicago-born, son of Taiwanese immigrants, Tony grew up in Marin County, San Francisco, California. Tony did his schooling from The Branson School, California. Wanting to become a robot inventor since childhood, Tony was always very entrepreneurial in nature. He started his first business (button-making business) in the middle school when he was just 13 years old.1 The venture was a small mail order business wherein people would send in photographs in order to convert them into pin-on buttons. A very calm and introvert person by nature, Tony's philosophy was to finish a work he started, entirely by himself. So when he started his button-making business, he took the complete responsibility from advertising about his business to doing the actual job of converting photos into pin-on buttons. For his job, Tony earned $200 a week.2

Before joining Harvard, Tony ran various businesses. In an interview, Tony recalls, “I was either too busy or got bored with the other businesses so I just decided not to run them anymore and move onto something else more interesting. He further said, “You should work only on what you're truly passionate about.”3 (Annexure I). While still in college, Tony ran a pizza business along with his college roommate. While initially they sold hamburgers at Harvard, on customers' demand they switched to pizzas. At Harvard, Tony met interesting people. During his tenure at Harvard, he got acquainted to one of his customers Alfred Lin, (current Chief Finance Officer (CFO)/Chief Operating Officer (COO) of Zappos), who would buy pizzas from Tony and his partner to sell it by slice for a profit. “I think pizza business helped make me a better entrepreneur in some ways”4, Tony fondly reminiscenses.

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1] Vivien Hao, “In His Shoes”, http://www.asianweek.com/2008/12/04/in-his-shoes-zappos-ceo-credits-success-to-having-fun-2/, December 4th 2008
2] “In His Shoes”, op.cit.
3] “Interview conducted with Tony Hsieh by Sravanthi Vemulavada and Priti Krishnan”, IBSCDC, March 23rd 2009
4] Ibid.