Uncommon Service: The Zappos Case Study

An excerpt from the book, Uncommon Service: How to Win by Putting Customers at
the Core of Your Business, by Francis Frei and Anne Morriss.
Reprinted by permission of Harvard Business Review Press.
Clarity: Know Where Youre Going
Zappos will take an order as late as midnight and deliver it to the customers doorstep before
breakfast. It has the worlds largest selection of shoes, and its service includes free returns. If it
doesnt have the shoe you want in stock or in your size, a Zappos call center employee will go to
three competitors sites to try to help you locate what you want to buy. Seventy-ve percent of
its business comes from repeat customers, despite the fact that its prices are far from the
lowest. (Price is an area where Zappos has made a conscious trade-off in its service model in
order to deliver exceptional service.)
Its not surprising, then, that managers from other companiesincluding many from service
and quality leaders like Southwest and Toyotamake regular pilgrimages to Zappos facilities to
learn how the company pulls it off. Everyone wants to know what the heck is going on. A quick
look around reveals that part of its success is the companys IT strategy, including a real-time
inventory management system that is 99 percent accurate, compared with accuracy rates as low
as 40 percent in other areas of retail. But what gets visitors every time are the clues to Zapposs
true competitive advantage: its culture. And no one inside the company is surprised.
The most visible champion of Zapposs culture, naturally enough, is president and CEO Tony
Hsieh (pronounced Shay). Hsieh is crystal clear on the culture he needs to make the company
thrive, and he and his team have broken it down into ten core company 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.

Hsieh embodies these values. He is passionate, positive, fun, humble. And a little weird. As the
fearless leader of a high-prole shoe company, Hsieh unapologetically wore the same pair of
shoes every single day for two years. He then replaced them with the exact same pair. Hsiehs
denition of weird, however, is closer to authentic or real. Hes betting that the real you will
be more valuable to Zappos than the safe, watered-down version that usually shows up in a
work environment. So go ahead, be a little weird.
Early in his career, Hsieh had a breakthrough about how much culture mattered to the
performance and motivation of employees. He sold a software company he had founded when
he realized that even he no longer wanted to come to work, primarily because of the culture.
Now Hsieh does many things youd expect from an enlightened CEO, like taking calls at the call
center on holidays to give his employees a break and staying in direct touch with his customers.
But what really sets Hsieh and his team apart is their deep awareness that culture is the
companys most important asset. Service is a by-product of culture, says former chief
nancial ofcer Alfred Lin, as are things like supplier behavior and employee turnover. In
2005, when the companys call center moved from the Bay Area to Las Vegas, an astonishing
80 percent of its California employees relocatedfor a $13-an-hour job. In 2008, a year in
which the average turnover at call centers was 150 percent, turnover at Zappos was 39 percent
(including turnover owing to promotions). Managers attribute the loyalty to a culture that
cultivates the passion, purpose, and humanity of its employees.
But its not just management that gets it. The conviction that culture is key is embraced
throughout the ranks at Zappos. Its so central to the companys belief system, in fact, that the
company publishes the Zappos Culture Book, which is updated regularly and contains
hundreds of unscripted comments and essays written by Zappos employees and vendors about
the companys culture, why it matters, and how it affects what they do every day. It was
conceived as a training tool for new hires and partners, but consumption of the book has gone
way beyond that internal circle. Ringing in at 348 pages in the 2009 edition, its a moving and
persuasive testament to the power of employee engagement (happiness in Zappos-speak),
and the role of culture in eliciting it. We recommend buying it and just paging through.
Heres a taste, from Abbie Abster M., an employee who had been working at the company for
three-plus years:
The Zappos culture to me is unlike anything Ive ever experienced before. Its always fun and
weird, were all creative and open-minded, passionate and determined, but most of all, were
humble. I think its because most of us have worked in horrible dead-end jobs before and can
cherish our Zappos culture for what it is. Its what makes me want to come to work every day,
even my weekends.

. . . I hear so many horror stories from friends about the places they work and it only makes me
feel that much more fortunate to be a part of the Zappos family. I cant imagine my life without
Zappos, and the amazing people that I work with.
The quote that moved us most was from Ryan A.: At my last job I was afraid to be anything:
right, wrong, smarter, dumber . . . At Zappos being yourself is the best thing you can do.
Perhaps the cultural feature we observe most often is unproductive fear, fear of looking bad or
doing something wrong. If organizations did nothing else but address that part of their
environment, were condent that the creativity and engagement of their people would have a
real chance of being unleashed. Human beings are not at their best in a defensive, selfdistracted crouch.
Hsieh named his book on building Zappos Delivering Happiness, but he and his team didnt
just deliver happiness for its own sake. Like IDEOs relationship with creativity, Zappos
understood that the happiness of its employees, partners, and customers was a deadly serious
endeavor, the most reliable route to sustaining excellence in the industry in which Zappos
chose to compete. Everyone inside Zappos, from the CEO to the front line, understood the link
between its culture of happiness and the companys daily performance.
Whats the cultural analog in your own business?
Whats your version of happy?