As I sat watching live, streaming video from the Word of Mouth Marketing Association Summit and Research Symposium in Vegas last week from the comfort of my cushy office chair in Southlake, TX, it occurred to me that the corporate philosophy being shared by the enigmatic Zappos.com CEO, Tony Hsieh (pronounced "Shay"), echoed something written over 70 years ago.
The video stream was courtesy of Interactive Marketing expert, David Armano, who makes a habit of live streaming from the various high profile marketing conferences and other events he attends. When he announced on Twitter (see my Twitter blog post) that he was about to stream Hsieh’s presentation, my interest was piqued. According to this recent interview, Zappos is on track to better the $840M in gross sales it did in 2007. Hsieh previously founded LinkExchange which he sold for $265M to Microsoft in 1998. I follow him on Twitter. He’s good.
So I clicked on the link and watched Hsieh as he shared some entertaining stories and interesting ideas. It was a good presentation. I made a couple of notes and prepared to turn it off. But then he said something toward the end that struck a chord with me.
He said that Zappos, which is known for being fanatical about customer service, does not hold customer service as its first priority. He and the company are more concerned with its people – hiring great people and fostering an excellent company culture. Hsieh believes that if you hire great people who share your corporate philosophy of great service, then great service will take care of itself.
This sounded to me like more of a partnership than a typical employer to employee relationship. And it reminded me of something I had read in the seminal work of author Napoleon Hill, Think and Grow Rich. In this, perhaps the best selling success book of all time, Hill shares his 13 principles for success in the form of a philosophy of personal achievement.
The book, originally published in 1937 and abridged by Hill himself in 1960, was inspired by Hill’s association with American billionaire Andrew Carnegie, and Hill’s interviewing of over 500 of the most affluent men and women of his time. The chapter on the "sixth step to riches" is entitled Organized Planning, and Hill has a section within called The New Way of Marketing Services-"Jobs" are now "Partnerships". Here is the excerpt:
Men and women who market their services to best advantage in the future must recognize the stupendous change that has taken place in connection in the relationship between employer and employee. In the future, the "Golden Rule," and not the "Rule of Gold" will be the dominating factor in the marketing of merchandise as well as personal services. The future relationship between employers and their employees will be more in the nature of a partnership consisting of:
a. The employer
b. The employee
c. The public they serve
This new way of marketing services is called new for many reasons. First, both the employer and the employee of the future will be considered as fellow-employees whose business it will be to SERVE THE PUBLIC EFFICIENTLY. In times past, employers and employees have bartered among themselves, driving the best bargains they could with one another, not considering that in the final analysis they were, in reality, BARGAINING AT THE EXPENSE OF THE 3RD PARTY, THE PUBLIC THEY SERVED.
In the future, both employers and employees will recognize that they are NO LONGER PRIVILEGED TO DRIVE BARGAINS AT THE EXPENSE OF THOSE WHOM THEY SERVE. The real employer of the future will be the public. This should be kept uppermost in mind by every person seeking to market their services effectively.
"Courtesy" and "Service" are the watch-words of merchandising today. They apply to the person who is marketing their services even more directly than to the employer whom he serves, because, in the final analysis, both the employer and his employee are EMPLOYED BY THE PUBLIC THEY SERVE. If they fail to serve well, they pay by the loss of their privilege of serving.
Tony Hsieh’s approach of carefully hiring great people, and placing the employees and the company culture first is an inspiring means to this end. Everyone is on board and understands that great customer service will be what sets the company apart. And the customer benefits because the whole organization is made to feel they are playing a critical role, plus they like their job and love their company.
This is a partnership based on mutual commitment. Zappos notoriously offers new employees a $1000 bonus to quit after the first week of its four week new hire training. About 10% accept the offer. The rest are committed to the cause. And the company is committed right back.
According to a recent article in the Las Vegas Sun online, Zappos is a tight-knit company that buys its employees lunch each day and has a dodgeball room in its corporate headquarters. And when the company reluctantly laid off 8% of its 1,300-member workforce earlier this month due to the economic downturn, Hsieh said in an email to the employees, that "laid-off employees will be paid through the end of the year, and employees who have been with the company for three or more years will receive additional pay. He also said Zappos will pay for six months of health coverage for all laid-off employees."
"In doing all of this to take care of laid-off employees, we expect that it will actually increase, not decrease, our costs for 2008, but we feel this is the right thing to do for our employees," Hsieh wrote. "It will put us in the position of having a lot more financial flexibility in being able to respond to potential changes in the economy in 2009."
The book, Think and Grow Rich has many more lessons that apply here. But this book was originally compiled over a 10-year period beginning just prior to the Great Depression. No streaming video, no Twitter, no Internet. Hill just found, through exhaustive research, the common qualities that bound hundreds of highly successful people and organizations. And he was undaunted by the financial woes of the time.
In our current struggling economy employers and employees alike can benefit from thinking of our jobs as partnerships. And, like Zappos, we can create a competitive advantage by employing the "Golden Rule," and not the "Rule of Gold" as the dominating factor in the
marketing of merchandise and services.
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It's odd to realize that the employer/employee relationship is thought about in a way OTHER than this. I suppose it's because the employer/employee relationship is an abstraction of money itself.
When you get down to the root of it, this is the basis of a free market, and the moral basis that enables our civilization. You are trading your best efforts in exchange for the efforts of others. You must produce and offer value to your employer, and to your customer to succeed. Likewise, employers must offer equal value to their employees to keep them, and motivate them. Laws and regulation can not foster or create this environment, only the free agreement between two reasonable parties based on their own needs and values.
Tony Hsieh's approach sounds like an excellent way to not only motivate employees, but align them to the overall goal of the company. It's almost goes without saying that if you have employees that are both happy, and aligned, that excellent customer service is a given. Poor customer service occurs when employees to not understand their goals, do not care to reach them, or have internal barricades/regulations within the company that hamper them from achieving what is needed.
These are no great secrets, but often we distract ourselves from what matters. It is easy to get lost in clutter and complexity. It's also easy not to think through what you are doing to see if it is aligned with what really matters. This is just as true for individuals as it is for corporations.
Great post Craig…
"The customer is always right" was the retailing innovation of Wisconsin-born merchant Harry Gordon Selfridge, who founded Selfridge's department store in London in 1909. This traditional business mantra, once thought to ensure good customer service, has lost some of its appeal in a retail era dominated by volume, speed and impersonal mass marketing. But Tony Hsieh has found a way to return to the basics of keeping the customer happy by ocusing on his 1,600 employees (It's actually his number one priority.)
Many of today's retail clerks have minimal product knowledge and even less interest in the success of the companies that employ them. With the rise of online shopping and the increased number of overseas call centers, the challenge of creating a positive experience for the consumer only increases. But Zappos.com refuses to settle for mediocre customer relations.
The remarkable success of the company begins with a month-long training program that indoctrinates new employees into its set of 10 "core values." After a week of training, each employee is offered a "quit-now bonus" – a week's pay, plus a $2,000 bonus to resign. Two to three percent of employees take the offer, and Hsieh considers the expenditure well worth it because he knows that the remaining 90 percent are truly committed to Zappos.com. They are described by pleased customers as friendly, fun, intelligent people who listen more than they talk and go out of their way to personalize the online footwear purchasing experience.
At Zappos.com there's no clear separation between work and play. Hsieh says employees hang out with each other outside the office and a lot of the best ideas happen over drinks or dinner.
And to your point Craig, all of this feel-good company culture has earned major dividends. When Hsieh took over the business in 2000, gross merchandise sales were $1.6 million a year. In 2007 they were $840 million, and the $1-billion goal Zappos.com set for itself in 2008 is in sight.
Pretty fantastic
Last – I saw him share his story at my organization's collaborative innovation summit in October. The video is here: http://tinyurl.com/5srgad Worth the watch.
Cheers – Chris