Jaypee Business School

Jaypee Institute Of Information Technology

ORGANIZATION DEVELOPMENT AND CHANGE REPORT ON-

TONY HSIEH AT ZAPPOS:

Structure, Culture and Change

Project report submitted for partial completion of course respect to:

Masters of Business Administration 2021-2023

SUBMITTED BY-

PIYUSH KANDWAL (21609012)

ANKIT SHARMA (21609001)
YASHIKA GARG (21609002)

SUBMITTED TO-

PROF. RUBY SANGAR

DATE OF SUBMISSION-

25th March,2023
 ANALYSIS OF CASE

This case is simply showing how “CULTURE” plays an important role in

shaping an environment. Leader of an organization plays an important part in
creating and maintaining the environment of the organization.
Tony Hsieh’s was a son of typical Asian American parents with having amazing
academic background and always having a zeel to start his new venture . At his
initials days he started various small businesses like- breeding and selling
earthworms, garage sales, etc.
In his early life he met his business partner who was Alferd Lin and started their
first venture which was Link Exchange ( a network of banner ads on websites
which later was unsuccessful and after that Venture Frogs came into the picture ,
here Tony along with his closed ones which he called his tribe invested in the
company around $5,00,000 in order to be no 1 company of customised shoes
and personalised services.
Customer centric strategies were adopted in order to provide high customer
satisfaction but culture in Zappos was little weird and focused on employee
happiness, customer satisfaction, While the results were impressive until Tony
started following “Holacracy”.
Eventually the company lost its value and employees part ways, a need of
structure arises.
Lets find out what went wrong and how it can be resolved.
CHARACTERS AND THEIR RESPECTIVE DESIGNATIONS IN THIS
CASE

1. Tony Hsieh ( CEO OF ZAPPOS)

2. Alfred Lin ( Business Partner & CFO of Link Exchange)
3. Sanjay Madan (Co-founder of Link Exchange)
4. Nick Swimmurn (Chairman at Zappos)
5. Fred Mossler ( NordstromSales Associate)

PROBLEMS IN THE CASE

1. Holacracy can be considered to be one of the major problem in this case.

Zappos was leading towards Holacracy, let us understand what it is-

What Is Holacracy ?
- Self managed organization
- Flexible self- governing structure, no fixed jobs instead temporary
functional roles.
- Decision- making no pushed upward
- Conflict resolution is responsibility of employees.

2. Second problem was at Zappos there were no clear lines of who does
what.
3. At Zappos this shift cause 14% loss of employees
4. At Zappos the management offer compensation to leave.
5. Question raised on THE FORTUNE BEST CMPANIES TO WORK
6. System was depicted in small cells of people called “CIRCLES”
7. People step in and out of roles continuously.
8. Meetings start running under strict guidelines
9. Problems were not directly reported to the top but with the peers first.
10.Salary structure was not defined.
 ALTERNATIVE SOLUTIONS TO THE PROBLEM

1. FORM A STONG COHESSIVENESS :- Unity between the departments should

be there and everyone should be clear about their roles that they are
performing.

2. Create MISSION & VISION :- A company should know “where they

are heading up to”, Zappos can also create small missions and vision
and on achieving them Missions & Visions can be changed.

3. DEVELOP MECHANISM TO IMPROVE COMMUNICATION :-

Communication should be from Top to Bottom, it can be via mail, whatsaap
groups , so that there is complete transparencey and if an employee have
something to say to the management, then proper communication mechanism
should also be there.

4. EMPOWERING OTHERS TO WORK ON THE VISION :- When everyone is

clear on their job roles and about the company vision, it becomes easier to
achieve organization roles.

5. PROPER CORPORATE GOVERNANCE SHOULD BE THERE:- Corporate

governance govern the strategy formulation, organizations functions and it
acts as a body that govern company instead of going Haywire. Like proper
salary structures, reporting authorities, feedback mechanism etc.
 BEST SOLUTION

According to this case study as per my understanding the best solution to this
problem is “CORPORATE GOVERNANCE”. Organisations with strong
corporate governance may be more successful than those without it. Effective
corporate governance offers many benefits to organisations. It plays a
significant role in ensuring that any corporation has strong internal controls,
which increases the consistency of the decisions that key figures within that
organisation make and improve the company's external brand. Corporate
governance offers important benefits, including increased transparency,
accountability and strategic planning, which are essential for most organisations
operating in competitive markets. As the things are going haywire in Zappos ,
as we can see that the employees have to research by themselves about their
salary pay and Tony has also removed the managerial line responsibility and
converted to three roles – lead link, mentor and compensation appraiser.
Corporate Governance will help Zappos by-
1. Mitigates Risk
2. Encourages positive behavior
3. Boosts corporate reputation
4. Improves decision making
5. Improves reporting
6. Assures internal control
7. Attracts talented employees