GERGEN & VANOUREK: Zappos culture sows spirit

By By Christopher Gergen and Gregg Vanourek | Wednesday, July 16, 2008

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In today's challenging economy, business and social entrepreneurs are becoming reacquainted with the importance of "culture," of addressing the spirit of the place and not just the numbers. Developing a culture of excellence and engagement is notoriously difficult - yet critical for organizational performance.

One jaw-dropping example - with salient lessons for organizations across the sectors - comes from Zappos.com, the leading online shoe retailer. There, all new corporate employees receive four weeks of customer loyalty training - answering phones in the call center - before starting their actual job, whatever that may be.

After the training, they are offered $2,000 to leave the company - no questions asked. This "quit now" bonus, which started at $100, is designed to ensure employees are there for the right reasons. About 97 percent of trainees decline what the company calls "the Offer."

Zappos.com also maintains an extensive array of community engagements and publishes a "Culture Book" annually, with employees describing what the company culture means to them. Among the company's 10 core values are the following: "Create fun and a little weirdness" (No. 3), "Be adventurous, creative and open-minded" (No. 4), and "Build a positive team and family spirit" (No. 7).

CEO Tony Hsieh, 34, says, "Our number one focus is our company culture." For Zappos.com, a great culture translates into great service. "We interview people for culture fit," Mr. Hsieh says. "We want people who are passionate about what Zappos is about - service. I don't care if they're passionate about shoes."

The company runs its warehouse around the clock to ensure 24/7 service, offers a 365-day return policy with free shipping, and operates a call center with no scripts or time limits: Employees are empowered to use their judgment to delight the customer. The results? The company has gone from almost nothing in gross merchandise in 1999 to $840 million in 2007 (projecting more than $1 billion this year) and became profitable last year.

Culture matters - whether in attracting great people to begin with, motivating them to continue giving their best or retaining them. Recognizing this, forward-thinking organizations across the sectors are emphasizing culture as a strategic imperative.

Another example is Clif Bar & Co., which offers flex time, sabbaticals and a wellness program, including an in-house gym, four full-time trainers and more than 30 fitness classes per week - during working hours. An employee band holds weekly jam sessions in the company theater. Clif Bar also offers financial incentives for energy-efficient home improvements, bicycle commuting, alternative transportation and the purchase of a hybrid or biodiesel vehicle.

Notably, Google also has recognized the cultural imperative. At Google, all engineers may devote 20 percent of their time - essentially a day a week - to any project they choose.

According to Google spokeswoman Claire Stapleton, "People are more productive when they're working on projects that really excite them. ... When you give people the chance to apply their passion to the company, they can do amazing things. It's the same idea with our perks - organic cafes, lecture series, yoga classes - great things are more likely to happen in the right culture and environment."

Many high-profile products have origins in the 20 percent rule, including Google News, Gmail, Orkut, Google Sky and Google Grants.

The company famously outlined the "Top Ten Reasons to Work at Google," including, "Life is beautiful. Being a part of something that matters and working on products in which you can believe is remarkably fulfilling" (No. 2), and "Work and play are not mutually exclusive. It is possible to code and pass the puck at the same time" (No. 4).

Business and social entrepreneurs must create a dynamic and authentic culture to gain a beachhead in the war for talent. They must foster a work environment where people can not only thrive professionally and actually enjoy their work - gasp! - but also find meaning. That can come through lasting interpersonal connections or through significant contributions to the organization, community or a cause.

Entrepreneurs can begin by creating a culture of authenticity, integrity and trust at work - and then stepping back and watching their people soar. In doing so, they will be transforming our notions of work and creating new kinds of community tailor-made for our lives and times.

Christopher Gergen and Gregg Vanourek are the co-authors of "Life Entrepreneurs: Ordinary People Creating Extraordinary Lives" and the founding partners of New Mountain Ventures, an entrepreneurial leadership development company. E-mail: authors@lifeentrepreneurs.com.

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