The Power of WOW

1. Zappos' success is built on a culture of exceptional customer service

We're a service company that just happens to sell shoes.

Customer-centric approach. Zappos prioritizes delivering happiness to customers, employees, and stakeholders. This philosophy extends beyond traditional customer service, encompassing every aspect of the business. The company invests heavily in employee training, empowering staff to make decisions that benefit customers without seeking managerial approval.

WOW experiences. Zappos encourages employees to go above and beyond in their interactions with customers. This includes:

• Sending personalized gifts or flowers to customers in need
• Offering free overnight shipping upgrades
• Providing full refunds for products that don't meet expectations
• Maintaining a 365-day return policy

By consistently exceeding customer expectations, Zappos has built a loyal customer base and a strong brand reputation.

2. Core values drive decision-making and shape company culture

At Zappos, our core values are an honest part of everything we do. They are guardrails that guide our way.

Ten Core Values. Zappos' culture is built around ten core values that guide decision-making and behavior:

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

Culture fit. The company places a strong emphasis on hiring individuals who align with these core values. This includes an extensive onboarding process and even offering new hires money to quit if they feel the culture isn't a good fit. By prioritizing culture fit, Zappos ensures that employees are committed to the company's mission and values.

3. Empowering employees leads to innovation and growth

We want our employees to bring their whole selves to work, and being human means that you have ups and downs.

Autonomy and trust. Zappos cultivates an environment where employees are encouraged to take risks, make decisions, and pursue their passions. This approach has led to numerous innovations and improvements within the company, such as:

• The creation of new roles and departments based on employee interests
• The development of internal business ventures
• Improvements in customer service processes

Personal growth. The company supports employee development through:

• Internal job transfers and role creation
• Funding for personal projects and side businesses
• Encouragement to pursue learning opportunities

By investing in its employees' growth and empowering them to make decisions, Zappos fosters a culture of innovation and continuous improvement.

4. Self-organization and holacracy foster adaptability and resilience

Self-organization is a system in which there are rules but no rulers.

Holacracy implementation. In 2014, Zappos began transitioning to a holacratic organizational structure, which aims to distribute authority and decision-making throughout the company. Key aspects of this system include:

• Replacing traditional job titles with roles and circles
• Implementing a governance process for creating and modifying roles
• Encouraging employees to take on multiple roles across different teams

Adaptive organization. The shift to self-organization has allowed Zappos to become more adaptable and resilient in the face of change. By eliminating traditional hierarchies and empowering employees to make decisions, the company can respond more quickly to market changes and customer needs.

5. Market-Based Dynamics enable internal entrepreneurship

If we can achieve this act of establishing a self-organized system that acts very much like a successful city, then productivity will go up, as will innovation, as will our resilient ability to stand the test of time.

Internal economy. Zappos has implemented Market-Based Dynamics (MBD) to create an internal economy within the company. This system allows employees to:

• Create and run their own micro-businesses within Zappos
• Offer services to other teams and departments
• Generate revenue and manage their own budgets

Customer-Generated Budgeting. To support MBD, Zappos introduced Customer-Generated Budgeting (CGB), which allows teams to:

• Quickly adapt to customer needs
• Increase feedback loops
• Fund new ideas and innovations internally

By creating an internal market economy, Zappos encourages entrepreneurship and innovation while maintaining alignment with the company's overall goals and values.

6. Embracing change and experimentation drives long-term success

If it's not broken, break it. See if and how you can break it . . . That's when change happens. That's when growth happens.

Culture of experimentation. Zappos encourages employees to take risks and embrace failure as a learning opportunity. This approach has led to:

• Rapid prototyping of new ideas
• Continuous improvement of existing processes
• The development of innovative products and services

Long-term thinking. The company prioritizes long-term success over short-term gains by:

• Investing in employee development and well-being
• Focusing on customer satisfaction rather than immediate profits
• Continuously evolving its organizational structure and processes

By fostering a culture of experimentation and long-term thinking, Zappos positions itself to adapt to changing market conditions and customer needs.

7. Zappos Adaptive: A case study in employee-driven innovation

There wasn't an online company that specialized in shoes and clothing for people who had similar needs as Gabriel.

Identifying a need. The Zappos Adaptive program began when an employee recognized the lack of fashionable, functional clothing options for people with disabilities. This led to:

• Research into the adaptive clothing market
• Partnerships with brands like Nike to develop adaptive products
• The creation of a dedicated Zappos Adaptive team and website

Impact and growth. The success of Zappos Adaptive demonstrates the power of employee-driven innovation:

• Expanded product offerings for people with disabilities
• Increased awareness of adaptive fashion needs
• New partnerships with adaptive clothing brands and designers

This case study illustrates how Zappos' culture of empowerment and innovation can lead to meaningful business opportunities and positive social impact.

Last updated: September 11, 2024