Innovation at Zappos.com: It’s the Culture

Last week, a friend of mine handed me an article from the current issue of Psychology Today Magazine; this is an article that I wish would be in all the major business journals. The article, entitled, “Paid to Smile,” is about internet retailer Zappos.com. Zappos.com specializes in shoes, but the real innovation—and I’m almost embarrassed to call it an innovation—is the culture. According to Psychology Today (1):

Cultivating happiness is (Zappos.com CEO Tony) Hsieh’s ultimate business goal. Back when he started and sold a tech firm in the ’90s, he formed a theory: If you create a work culture that fosters well-being, good practices and (eventually) good profits will naturally flow out of the operation…

When Hsieh was put in charge of the fledgling Zappos in 1999, he vowed to organize the business around ten “core values”—by which every single employee would be hired and fired…

Although the article doesn’t list all ten core values, it didn’t take much for me to find them at the Zappos website (2). They are:

1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and A Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More With Less
9. Be Passionate and Determined
10. Be Humble

So for all you business types out there, how does Zappos measure up? In 2008, gross sales were 1 billion. This is up from 1.63 million when Hsieh took over the company in 1999. And Zappos was recently acquired by Amazon, to the tune of some $900 million. I’d say the numbers are awfully good, for creating fun and a little weirdness.

So why am I embarrassed to call this innovation? Because, in my not-so-humble opinion, so much of this is just plain common sense. I wrote several months back how Corporate America is so focused on short-term profits that they have almost completely lost sight of creating value. Zappos is a company who gets it right.

According to the Psychology Today article, Zappos attributes their success to their customer service. Phone reps are “trusted to connect with customers however they see fit” rather than the usual model: “Phone reps follow scripts, fill out call logs, and adhere to time limits.”

Rebecca Ratner, Zappos director of HR, is quoted as saying, “The better we treat each other, the better we’ll all be able to treat our customers.”

So for all you business types, how about taking the Zappos challenge? Put some thought into innovating your culture, articulating your values, and creating well-being. I’d be willing to wager that—like Zappos—the profits will follow.

–Joel Kleinbaum

(1) “Paid to Smile” Carlin Flora, Psychology Today September 2009 (article not available online)
(2) Zappos.com website www.about.zappos.com