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Zappos: A Business Model You Can Learn From

“We wanted to build the company around culture.”

~Tony Hsieh, CEO of Zappos
Zappos is known for shoes and a very liberal return policy, but I think every type of business can learn something from its unique corporate culture.

The company was founded in 1999, and then bought by Amazon in 2009. Though it is hard to find current sales data since Amazon does not report Zappos separately in their financial statements, Zappos’ sales were over $1.2 billion when it was purchased.

Without question, Zappos is a successful company, but what I believe makes them so unique is their zany culture (e.g. anyone showing up at their offices in a tie gets it cut off). They were founded with this culture, and they have a strong commitment to ensuring it continues to flourish.

At the heart of the Zappos company culture are 10 core values:

  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
This corporate culture plays a role in all important company functions, including hiring. Every potential employee must complete two sets of interviews. During the first series of interviews, the hiring team or manager verifies the candidate’s skills and experience. Candidates who make it through this round meet with the HR department, whose object is to see if there is a culture fit.

Once hired, every new employee must go through a four-week training program that stresses both their culture and customer service. At the end of the first week, Zappos offers each trainee $2,000 and reimbursement for the time spent in training to walk away if they do not think it is a good fit. Zappos knows this is far less costly than having an employee who does not fit in or is only after the money.

Last year Zappos had 176 job openings, and 46,000 applied for these positions. Obviously, people want to be a part of this company culture, and others go to great lengths to replicate it.

Zappos has established a program they call Zappos Insights Live, where executives from “normal” companies pay $5,000 to participate in a two-day culture immersion. Participants learn how to create a culture like Zappos’ so they can bring these principles back to their firms.

Zappos is definitely unique, and though not all of its methods will work for every business, every company can—and should—work to make their culture more vibrant and exciting. If you have any doubt that Zappos provides a model worth emulating, check out their culture book at http://www.zapposinsights.com/culture-book. This book is compiled annually with unedited submissions from employees about what the Zappos culture means to them.

Now go out and make sure your company has a culture you are committed to nourishing and maintaining.

You can do this!

Published: August 27, 2014

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Jerry Osteryoung

Jerry Osteryoung is a consultant to businesses—he has directly assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of the Jim Moran Institute and served in that position from 1995 through 2008. His latest book, coauthored with Tim O’Brien, “If You Have Employees, You Really Need This Book,” is a bestseller on Amazon. Email Jerry @ jerry.osteryoung@gmail.com

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