What Zappos teaches us about business culture, character and nuance

I keep going back to Robert Scoble’s essay about what businesses can learn from Zappos, especially from management, ethics and culture standpoints.  Scoble was lucky enough to spend some time inside the company, including a good discussion with Zappos CEO Tony Hsieh.

This admittedly long post will eventually lead to what gives a company its character and makes it remarkable.  More on that in a second.  For a moment, let me run down a tangent.

The first thing prospective clients ask is what makes us different.  For a great many companies, the response exercise goes like this: give elevator pitch, describe core competencies, use a lot of words to hide the fact that you’re really not saying that much different than your competition.  Unless you’re selling an iPhone or some other dramatically unique product, chances are your differentiators are nuanced.

Nuanced is fine but poses a challenge to how a company characterizes itself.  Nuanced means that because you don’t have a slam-dunk, in-your-face market differentiator (and most businesses don’t), you must demonstrate some delicate shades of differentiation when you answer why clients should choose you over another firm.  Because nuances all start sounding the same without demonstrability and a real dedication to those nuances.

Naturally, our firm faces the same challenge.  Yes, we have tremendous expertise with PeopleSoft (especially in the Utilities/ALM space), Workday (we’re a partner and a customer) and Business Intelligence in the SAP/Business Objects and Oracle BI flavors.  We’ve spent a great deal of energy and money recruiting and hiring the very best resources available in the market.  We have a management team that is responsive, creative and genuinely listens to clients.  We have consultants who could stand up in front of their peers, have their names announced, and receive applause just because they’re that good within their chosen domains.  We can talk all day about our experience, our expertise, the quality of our people at every level in the company.

But the truth is that our competitors are saying largely the same things.  Nobody competes for services business on a platform of no experience, little knowledge and rigid management.

So with the necessary but superfluous window dressing gone, the question remains: why should I choose you?

Let’s get back to Zappos.  Thanks for sticking with me through that aside.

Gleaning what I can from Scoble’s post, Zappos believes in one thing above all else: a fanatic dedication to serving the customer and building a culture that supports this.  They don’t talk incessantly about the quality of shoes and clothing they have, the massive selection, the rapid ship times or even the price.  Instead, they talk about being religious about taking care of customers and having a culture that honors people.  They talk about having a little fun.

Through their everyday practices, they become a company you want to do business with.  You can get clothing and shoes anywhere, but to be treated in a special way when buying something pedestrian is something very few do right.  As Scoble says, “I wish there were more companies like Zappos. The fact that there isn’t tells us something about us. And I don’t like what I’m learning.”

Scoble lists some of the cultural rules that underpin Zappos’ focus on culture and service.  How many companies do you know that operate with these ideals in place?

• Focus on culture and build something for long term. Tony’s first company was sold because it wasn’t fun anymore. That’s why he focused so much on culture when he got involved with Zappos. I see so many companies who focus on growth and get exactly what they want: an unfun fast growing company that falls apart later.
• Get rid of a-holes. Zappos has a filtering system before, during, and after hiring to make sure they get rid of people who “don’t fit the culture.” That is the nice way of saying they get rid of a-holes and they get rid of them quickly. They even pay candidates $2,000 after they go through training if they can admit they don’t fit into the culture.
• Everyone lives by same rules. During the tour we heard of a new hire that was fired during training for not showing up on time and giving some lip. This was a high level technical person that they really could have used. Silicon Valley companies would put up with that kind of behavior. Not at Zappos. Everyone, from executive recruits on down are expected to live to the same rules.
• The CEO’s office isn’t sacrosanct. Tony encouraged us to throw peanut shells on his office floor. Why? That happens every day, we learned, as tours come through. But it’s a subtle message that Tony isn’t above anyone else in the company and that his door isn’t just open, but that you can come in and mess up his work space.
• Create an atmosphere for both goofiness and brilliance.
• Root out hubris and kill it.
• Be religious about taking care of customers.

Our version of Zappos’ cultural dogma, quite simply, is this: do what’s right.  No, we’re not in the clothing/retail business, and yes, we operate in a heavily technical services arena.  Nonetheless, do what’s right, in all its buzzword-free simplicity, operates on several levels and has since we founded the company.

First, everyone here is hired and trained and compensated on their ability to do what’s right for our clients, no matter what.  The right thing is often the hard thing, and more than once the right thing meant telling a client that they don’t need to use us for additional services and to save the money.  We have had incredibly uncomfortable conversations with clients because we needed to do what’s right for them and the project, not what’s easy or convenient (or profitable) for us.  It’s hard and precarious at times, but every single person in this company knows there’s only one way to do things.  And at the end of many engagements, clients thank us for being able to walk in the mud and deal with the tough stuff with them.

The second level is internal, but could easily be viewed as the precursor to what’s above: Before we can do what’s right by our clients, we have to do what’s right by our employees and business partners.  There’s no way we can demonstrate our dedication to doing what’s right by our clients if we can’t first do what’s right by the people we are empowering.  Ask any of our employees what’s said every week on conference calls, and it’s do what’s right.  When in doubt, there’s your answer.  We live it here first, and outwardly second.  It has to be that way to be genuine.

In a blog post, this sounds nice and clean-cut.  In reality, it requires an everyday, constant vigilance.  Saying something esoteric like do what’s right and managing your business to it are two different things.  If you build your culture around such concepts, it doesn’t end with a few cool banners and a rousing speech at the annual company meeting.  It means you struggle to keep your cultural vision in place across every decision you make.  It means that your clients expect you to demonstrate what you say.  It means that decisions aren’t always comfortable or easy.  It means that you stumble.

And that’s OK.  Because if you believe it at your core, there’s no other way to do things.  And suddenly, what some would consider nuance makes its way to character.  Then, one day, to a brand.

Just ask Zappos.