No creature is too small to inspire the culture of online shoe and clothing retailer Zappos. In this case, the company learnt from the behaviour of ants.
Their organisational structure is based around the concept of ‘holacracy’, which is a predefined set of rules, processes and guidelines that an organisation can use to help them become self-managed and self-organised. This is achieved by giving every employee (instead of just management) the power to innovate, make changes, and have a voice. The network theory of holocracy believes that – like an ant colony – systems are self-regulating within the right environment.
Seemingly, it works. Writer Roger D Hodge visited the Zappos HQ in 2015. After spending time with employees, Hodge wrote: “Everywhere I went, I saw signs of creativity, fun, and moderate weirdness.”
Founded in 1999 as ShoeSite.com, the company became “Zappos” shortly afterwards to widen its potential scope. Subsequently the brand took off: in 2009 Amazon bought the company for an estimated $1.2 billion and agreed that Zappos would continue to develop as a separate entity.
Zappos has always placed a high importance on recruitment and environment, which drove the relocation from San Francisco, “where the high cost of living… deterred people from making customer service a career”, to the bright lights of Las Vegas. CEO Tony Hsieh explains that although the company is an online retailer, it handles a lot of phone calls, which it uses to build its reputation for exceptional service. He said: “[Vegas] is an all-night city where employees are used to working at any hour. […] And because so much of the city’s economy is focused on hospitality, Las Vegas has a customer service mentality – employees there are used to thinking of people as guests.”
“Our purpose is to live and deliver WOW!” Zappos’ mission statement gives an idea of its unconventional ethos. The Nevada HQ is overseen by Hsieh, who lives in an Airstreamer in a trailer park nearby, a place where “Zapponians” choose to hang out.
This positive and uplifting sentiment is reflected in its office spaces. Zappos places emphasis on success through customer service and an informal workplace ethos. The call centre in Las Vegas has open plan workspaces and a variety of breakout zones, all designed to create a fun and open culture.
Despite its unconventional outlook, Zappos has built its brand on providing good service for each customer – one of the most traditional business values you can find. Zappos believes this is achieved through a happy and motivated workforce. And unsurprisingly, the company is known for having an employee-first workplace and raft of perks. “Employee benefits are perhaps more valuable than a high salary,” states one of Zappos’ own blog posts.
Comfort is paramount. There’s free food, an on-site restaurant and a dry cleaning service. Staff can use the gym, take yoga classes, play basketball and visit the library. Workers can take a break in one of the napping pods. Zappos even has its own currency, Zollars, given as incentives and which can be exchanged for “cool company apparel and gadgets”.
And behind all this lies the holacratic approach, which is based on devolving decision-making to smaller teams and individuals, with a transparent structure and values that even the CEO has to live by. “Power generally gets in the way of learning”, says Mike Lee from Harvard Business School, commenting that employees grow in a holacratic environment because they feel comfortable to communicate ideas and issues. Not only are the workers engaged, but their shared insights become a valuable resource for the organisation.
Zappos company culture
Because of the emphasis on holacracy, cultural fit and employee comfort, Zappos places a high level of trust on its teams. Unlike most customer service companies, there aren’t tight targets in the call rooms – the longest-recorded call is over 10 hours.
Fitting into the Zappos culture is crucial. Shortlisted candidates come to HQ for an interview and social testing, where they spend time with a number of Zapponians. All interaction is evaluated: even the driver who collects candidates from the airport is not merely making small talk.
Successful candidates then spend around a month working at Zappos. They learn about the role and the culture and spend a week in the Customer Loyalty Team (call centre). After this period, the new employee can accept “The Offer”: to leave with a $3,000 payment and no questions asked. People who value routine and clear structure tend to deselect themselves at this point.
What can we learn from the Zappos culture?
Focus on getting the right organisational fit from the start
While you may not be able to offer “The Offer” itself, think: how else can you install a pragmatic safety net that will reduce potential workplace dissonance? It might be as simple as having regular and honest communication with your employees.
Free food and friendly people can go a long way
Remember that it’s often the small details that make the difference. Even if it’s just a few boxes of cereal and fresh bread – not beyond the reach of most organisations – free breakfast makes employees feel welcomed and appreciated.
The holacratic model empowers employees – and helps drive the business
Because Zappos takes the view that everybody’s ideas are valuable, the company can tap into a vast resource. By creating an informal culture where employees feel able to speak up and share, the organisation can access a wealth of creativity and experience that conventional, hierarchical companies often struggle to emulate.
Experimenting with organisational styles can result in mixed responses
If you want to change up the organisation, think about what will really work before you do it, and ask yourself if it will suit your employees. Informal structure isn’t for everyone; as one employee suggests on Glassdoor, “[Zappos] might need more rules”.
Equally, it’s important to evaluate whether the structure you’ve had in place for years is still applicable. Hodge wrote of “relentless organizational experimentation”, and wondered whether this approach to the workplace is as sustainable as it was when Zappos was a small company. “Maybe he (Hsieh) just gets bored,” Hodge writes. The learning here is to implement a strategic, careful plan for major changes such as structural organisation – and allow enough time to make them happen.