No. 1 best e-retailer. For those of you who have shopped on Zappos.com, that number one ranking probably isn’t a surprise.28 For those of you who haven’t shopped on Zappos.com, it wouldn’t take long for you to see why Zappos deserves that accolade. And it’s more than the fact that Zappos has a great selection of products, super-fast shipping, and free returns. The real secret to its success is its people who make the Zappos shopping experience truly unique and outstanding. The company, which began selling shoes and other products online in 1999, has put “extraordinary effort into building a desirable organizational culture, which has provided a sure path to business success.“ As part of its culture, Zappos espouses 10 corporate values. At the top of that list is “Deliver WOW through service.“ And do they ever deliver the WOW! Even through the recent economic challenges, Zappos has continued to thrive—a sure sign its emphasis on organizational culture is paying off.
Zappos . . . delivering the WOW through service…
Not only is Zappos the No. 1 e-Retailer, but it also is ranked the eleventh best company to work for in Fortune magazine’s most current annual survey. Okay—so what is it really that makes Zappos’ culture so great? Let’s take a closer look.
Zappos began selling shoes and other products online in 1999. Four years later, it was profitable and reached more than $1 billion in sales by 2009. Also, in 2009, Zappos was named Business Week’s Customer Service Champ and was given an A+ rating by the Better Business Bureau. Also, that year, Amazon (yeah, that Amazon) purchased Zappos for 10 million Amazon shares, worth almost $928 million at the time. Zappos’s employees divided up $40 million in cash and restricted stock and were assured that Zappos’s management would remain in place.The person who was determined to “build a culture that applauds such things as weirdness and humility“ was Tony Hsieh (pronounced Shay) who became CEO of Zappos in 2000. And Tony is the epitome of weirdness and humility. For instance, on April Fools’ Day 2010, he issued a press release announcing that “Zappos was suing Walt Disney Company in a class action suit claiming that Disney was misleading the public by saying that Disneyland is ’the happiest place on earth’ because clearly“ Hsieh argued, Zappos is.Before joining Zappos, Hsieh had been co-founder of the Internet advertising network LinkExchange and had seen firsthand the “dysfunction that can arise from building a company in which technical skill is all that matters.“ He was determined to do it differently at Zappos. Hsieh first invited Zappos’s 300 employees to list the core values that the culture should be based on. That process led to the 10 values that continue to drive the organization, which now employs about 1,400 people.Another thing that distinguishes Zappos’s culture is the recognition that organizational culture is more than a list of written values. The culture has to be “lived.“ And Zappos does this by maintaining a “complex web of human interactions.“ At Zappos, social media is used liberally to link employees with one another and with the
company’s customers. For instance, one recent tweet said, “Hey. Did anyone bring a hairdryer to the office today?“ This kind of camaraderie can maintain and sustain employee commitment to the company.
Also, at Zappos, the company’s “pulse“ or “health“ of the culture is surveyed monthly. In these happiness surveys, employees answer such “unlikely questions as whether they believe that the company has a higher purpose than profits, whether their own role has meaning, whether they feel in control of their career path, whether they consider their coworkers to be like family and friends, and whether they are happy in their jobs.“ Survey results are broken down by department and opportunities for “development“ are identified and acted on. For example, when one month’s survey showed that a particular department had “veered off course and felt isolated from the rest of the organization,“ actions were taken to show employees how integral their work was to the rest of the company.
Oh . . . and one other thing about Zappos. Every year, to celebrate its accomplishments, it publishes a Culture Book, a testimonial to the power of its culture. “Zappos has a belief that the right culture with the right values will always produce the best organizational performance, and this belief trumps everything else.“
After a couple of years of slight attendance increases, competitors in the movie theater industry had hoped the threats they faced were behind them.29 Then along came the economic downturn. Ticket sales revenue in 2011 fell 4 percent from the previous year and attendance was down 4.8 percent. The numbers of people going to see a movie were the smallest since 1995. The industry tried to pump up revenue with high-profile movies, higher ticket prices, and premium amenities. In 2012, ticket sales rose for the first time in three years due to the successful debut of the much-anticipated The Hunger Games and to other strong films including The Hobbit, The Avengers, and Skyfall.
What WILL get customers into movie theaters?
The number of movie screens in the United States totals a little more than 39,000. Together, the four largest movie theater chains in the United States have almost 19,000 screens— and a lot of seats to fill. The largest, Regal Entertainment Group (based in Knoxville, Tennessee), has more than 6,800 screens. AMC Entertainment (based in Kansas City, Missouri) has some 5,400 screens. The other two major competitors are Cinemark (based in Plano, Texas—about 3,800 screens) and Carmike Cinemas (based in Columbus, Georgia—about 2,300 screens). The challenge for these companies is getting people to watch movies on all those screens, a decision that encompasses many factors.
One important factor, according to industry analysts, is the uncertainty over how people want their movies delivered, which is largely a trade-off between convenience and quality (or what the experts call fidelity experience). Will consumers choose convenience over quality and use mobile devices such as iPads? Will they trade some quality for convenience and watch at home on surround-sound, flat-screen, high-definition home theater systems? Or will they go to a movie theater with wide screens, high-quality sound systems, and the social experience of being with other moviegoers and enjoy the highest fidelity experience—even with the inconveniences? Movie theater managers believe that mobile devices aren’t much of a threat, even though they may be convenient. On the other hand, home theater systems may be more of a threat as they’ve become more affordable and have “acceptable“ quality. Although not likely to replace any of these higher-quality offerings, drive-in theaters, analysts note, are experiencing a resurgence, especially in geographic locations where they can be open year-round.
Another factor managers need to wrestle with is the impression consumers have of the movie-going experience. A consumer lifestyle poll showed that the major dislike about going to the movies was the cost, a drawback cited by 36 percent of the respondents. Other factors noted included the noise, uncomfortable seats, the inconvenience, the crowds, and too many previews/commercials before the movie.
A final question facing the movie theater industry and the major film studios is how to be proactive in avoiding the problems that the recorded music industry faced with the illegal downloading of songs. The amount of entertainment sold online (which includes both music and video) continues to experience doubledigit growth. The biggest threat so far has been YouTube, which has become a powerful force in the media world with owner Google’s backing. To counter that threat, industry executives have asked for filtering mechanisms to keep unlawful material off the site and to develop some type of licensing arrangements whereby the industry has some protection over its copyrighted film content.
The Radio Flyer little red wagon.30 Ahhhh . . . memories of childhood. That classic red metal wagon has been a popular child’s toy for over 70 years. In addition, Radio Flyer (the company) also makes plastic wagons, bikes and trikes, scooters, and pedal-powered cars. Based in Chicago, Radio Flyer was founded in 1933 by an Italian immigrant named Antonio Pasin. Its initial name, Liberty Coaster, was named after the Statue of Liberty. When Pasin opened the factory in Chicago, he named the first steel wagon Radio Flyer, and chose the name because he thought it sounded “futuristic,“ given this was a time of the newly invented radio and the beginning of air travel. Pasin’s grandchildren, who run Radio Flyer today, have managed to ensure its future by recognizing the importance of understanding both the external and internal constraints.
In these days of virtual, online, and networked possibilities for just about everything we do, the idea of hands-on play with an actual physical object may seem old-fashioned and outdated. However, Radio Flyer has managed to build a long-lasting brand name by doing what it does best: developing new products that can be efficiently manufactured. But the ride hasn’t always been smooth. In the early 1990s, a competitor came out with a new wagon—one made out of plastic. And, it was an instant hit with consumers. Talk about a shock to Radio Flyer! The company’s CEO, Robert Pasin, says that the hardest part to accept was that his company wasn’t even capable of coming up with a comparable product. “We were a manufacturer, a steel stamper, and that’s what we were really good at.“ Radio Flyer’s approach to product development had always been looking at what they could make in the factory and then figuring out a way to sell it. Pasin says that his company wasn’t as aware of what was happening in the external environment as it needed to be. That plastic wagon was a wake-up call for the company. Pasin and his management team needed to find a way to meet the challenges of a changing industry.
Pasin’s first step was being upfront and honest with the company’s employees about the challenges facing the company. He also took a long, hard look at the company’s mission, vision, and values since those elements would play a big role in the company’s approach to moving forward. In a companywide discussion, employees were asked “What was the company like on the first day you started?“ Surprisingly, the managers got vastly different answers from those employees who had been with Radio Flyer for 40 years and those who had been there for months. But three recurring themes or values stood out: integrity, passion, and excellence. Pasin said that his company had a great cultural foundation with the potential to be a powerful force in guiding employee decisions and actions. As the leader, it was Pasin’s responsibility to find a way to tap into that culture and build on it. Today, the company’s “little Red Flyer code“ embodies its vision, mission, and corporate values. Employees are challenged to create entertaining and cool experiences for customers, to be ethical and responsible in their decisions and actions, to conscientiously work to get things done, and to be personally responsible for doing their jobs using sustainable business approaches. The company’s vice president of human resources says that employees love their jobs and don’t want to leave. Twenty years after that jolting plastic wagon wake-up call, Radio Flyer is rolling along. And sales, which were about $20 million in 1992, topped $100 million in 2012. The 70-employee company also has minimal debt.
Using this list of corporate values and Exhibit 2–4, describe Zappos’s organizational culture. In which areas would you say that Zappos’s culture is very high (or typical)? Explain.
View Less >>