Hi,
As I was researching some ideas for this month’s email, I learned of the passing of Zappos CEO Tony Hsieh, aged 46. He was known in the business community for “radical” experimentation in organizational design and has had a lot of impact on me personally and professionally. I want to use this email to explore some of his ideas that you may find useful.
TOC:
[0] HIRED AND FIRED BASED ON VALUES
[1] EXPERIMENTING WITH A SELF-GOVERNING ORGANIZATION
[1] OPTIMIZING FOR CULTURE NOT THE CUSTOMER
[2] NEARLY 20% QUIT & THAT’S A GOOD THING
[3] REGRETS
[5] A STUDENT OF HAPPINESS
[0] HIRED AND FIRED BASED ON VALUES
“For individuals, character is destiny. For organizations, culture is destiny.” Tony
Values are the codified version of what the culture of the organization should be. Tony believed that the most important job of the leadership team is to be the custodians of the culture.
To make the values and culture central to how Zappos operates, Hsieh ran an experiment in 2004. He established the 10 core values, trained everyone on them, and then would hire and fire based on those values.
Some argue that Amazon purchased the Zappos culture for 1.2 million.
“I have never seen a culture like Zappos” Jeff Bezos
[1] OPTIMIZING FOR CULTURE NOT THE CUSTOMER
A culture where employees feel valued and happy is one that guarantees the transfer of value to customers. The leadership of the organization was constantly thinking of ways to “wow” their employees and that transferred to the customer. An employee at Zappos is quoted to have said, “It’s all about the WOW. What can I do to make my customer say, ‘WOW!’ by the end of the call. How can I make you feel special? Customer service—the reason I’m here.”
Zappos competitors copied their website and business model, but couldn’t copy the secret sauce.
[1] EXPERIMENTING WITH A SELF-GOVERNING ORGANIZATION
Holacracy is a decentralized system meant to distribute decision-making throughout the organization through self-organizing teams, and not top-down management. It is a natural progression for an organization that is based on self-organizing teams but completely at odds with traditional hierarchical organizational designs.
One of Hsieh’s biggest and most controversial experiments was the introduction of holacracy at Zappos in 2014. It allowed independently functioning teams to avoid the bureaucratic nature of all expanding firms and maintain the “startup feel” allowing them to remain nimble and effective. Yet they were bound by a “constitution”, a rule book.
[2] NEARLY 20% QUIT & THAT’S A GOOD THING
Following the “radical” introduction of holacracy at Zappos, Hsieh was faced with 18% of his employees calling quits. He was accused of being the cause of a “Zappos Exodus” and criticized for destroying his brand and culture. But he didn’t back down. He followed through with the experiment and hired and fired based on those who backed his vision. Those whose ways of working weren’t compatible with the new approach self-selected out.
“While we have lost a number of folks, it is important to note that we have a significant group of highly talented individuals who will be staying to help move Zappos forward” Arun Rajan (Zappos COO)
[3] REGRETS
“I think that there’s never a good time to make a transition and we probably hesitated too long. So if I could do anything differently, I would actually do it earlier.” Tony Hsieh
This quote impacted me given his passing at such a young age. There are things in my own life that I’m waiting for the right moment. Many of my clients have big bold experiments but are also waiting for the right time. 2020 is on the verge of ending. January is the perfect time to pull the trigger on that experiment we have been holding off on.
[5] A STUDENT OF HAPPINESS
“When I asked Hsieh what he was selling at Zappos, he said “Happiness.” Carmine Gallo
Tony was a student of happiness and studied happiness frameworks to better understand how he can make his employees and customers happier. One such framework that resonated with him was the 3P’s: Pleasure (Or profit), Passion, & Purpose. The first being the most fleeting source of happiness and the last enduring the longest. His purpose of spreading happiness to the world will endure long beyond his passing.
He ends his book with the following quote:
"Thousands of candles can be lit from a single candle, And the life of the candle will not be shortened. Happiness never decreases by being shared.” - Buddha
Stay in touch!
Ahmad