Thursday, June 10, 2010

Stunner from Zappos

Features, functionality, speeds, feeds and, of course, price are all important considerations when a person makes a product or vendor selection.

Yet, most business transactions are ultimately conducted by two people. The personal connection is critical for commerce which is why social media can have such a profound and positive impact on an organization’s success. It makes the process of personal connectivity more scalable.

Zappos is a company I have long admired (and purchased product from) for their ability to align corporate culture with customer and employee satisfaction. I also stand in awe at how this culture has been effectively promoted via social networks.

A recent article in TechCrunch turned me on to an excerpt in Inc. Magazine from Zappos CEO Tony Hsieh’s new book entitled “Delivering Happiness: A Path to Profits, Passion and Purpose.”

(Photo: Tony Hsieh, Zappos CEO. Courtesy of

This is a fascinating read about the pressure on Hsieh induced by Zappos’ board of directors which ultimately led to the decision to sell the company to Amazon. Here a couple of paragraphs which have stuck with me:

As the economy deteriorated, the appraised value of our inventory began to fall, which meant that even if we hit our numbers, we might eventually find ourselves without enough cash to buy inventory.

These issues had nothing to do with the underlying performance of our business, but they increased tensions on our board of directors. Some board members had always viewed our company culture as a pet project — “Tony’s social experiments,” they called it.

I disagreed. I believe that getting the culture right is the most important thing a company can do. But the board took the conventional view — namely, that a business should focus on profitability first and then use the profits to do nice things for its employees.

I do agree with Zappos’ board that a business exists to generate profit and return for its shareholders.

However, I am truly stunned that they failed to recognize that the company’s success in a commoditized market was greatly influenced by its culture, as well as the articulation of that culture via social media.

No comments: