A Cooperative Business Model for Companies

This article is an excerpt from the Shortform book guide to "Delivering Happiness" by Tony Hsieh. Shortform has the world's best summaries and analyses of books you should be reading.

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What is Zappos’s company culture? How is it effective in creating a friendly environment for Zappos’s employees?

According to Tony Hsieh, the founder and former CEO of the online retail store Zappos, a strong and healthy culture is what makes a company successful. In Delivering Happiness, Zappos’s culture can be defined in three major categories: friendship, support, and innovation.

Read on to learn more about Zappos’s culture and its principles.

Zappos’s Company Culture

Zappos sets itself apart from its competitors through a culture devoted to making its employees happy. Hsieh believes that by making its employees happy, Zappos will naturally fulfill its other objectives of great customer service and continued success. 

Zappos began nurturing its culture early in the company’s life. Shaping the culture at this stage was easy, Hsieh explains, because Zappos had a small group of employees who joined the company because they were excited about the project, rather than just looking to make money. Zappos could start nurturing these good qualities from the very beginning.

A Culture of Friendship

The first principle defining Zappos’s culture is friendship, Hsieh explains. Employees who are friends with their coworkers are happier, which inspires them to do better work and makes the office environment more enjoyable. In addition, employees that are friends work better together during difficult times.

How Zappos Encourages Friendship

Zappos doesn’t stop at abstractly encouraging its employees to embody the principle of friendship. It also takes concrete steps to increase friendships among its employees, Hsieh explains. For example, in its early days, Zappos built friendship into the hiring process: When evaluating potential employees, the hiring team considered if they would enjoy spending time with the potential employee outside of work. If the answer was “no,” they wouldn’t hire that individual.

In addition, Hsieh says Zappos designed its building so every employee must funnel through the lobby to enter or exit. This is less convenient for employees than having several exits, but this strategy increases the number of positive interactions employees have with each other as they enter and leave work. Even these brief positive interactions encourage the formation of friendships.

A Culture of Support

The second principle of Zappos’s culture is supporting its employees, Hsieh says. Employees that feel supported by their employers are happier and more motivated to work hard. 

Hsieh explains that support means recognizing what’s best for your employees’ happiness and productivity and providing for that need, even if it means losing money in the short term. For example, your employees might need affordable childcare so they can focus on work instead of worrying about their children. To meet this need, you might institute a program to help parents pay for childcare or even provide childcare in-house. These solutions cause a short-term loss in service of long-term growth fueled by employee happiness and productivity.

How Zappos Provides Support

One of the things employees need to be happy and productive—and that Zappos provides—is trust and empowerment to make decisions, Hsieh argues. The employees on the “front lines” of a department are usually the best equipped to understand and handle that department’s problems. Supporting these employees and their suggestions shows that you respect them and empowers them to solve problems faster.

Supporting Employees Through Financial Security

Another thing employees need to be happy and productive is financial security. Zappos outdoes its competitors in supporting its employees’ financial security in several ways. One of the most well-known examples is its four-week probation period. If employees quit during this time, they receive a $2,000 bonus. This incentive ensures that people stay at Zappos because they want to work there rather than staying out of necessity because they can’t afford to search for another job. This policy inspires and impresses employees, Hsieh explains, and fewer than 1% of employees take the offer.

A Culture of Innovation

The final principle of Zappos’s culture is innovation. Innovation is vital for any company, Hsieh maintains because companies fail when they stop improving. You can’t become comfortable with your current success because others can and will copy your methods. The only way to maintain success is constant evolution.

Innovation also contributes to employee happiness. Following the same patterns and processes at work becomes stifling over time and can lead to employee burnout, Hsieh explains. On the other hand, innovation brings a constant sense of excitement and growth to a company, making people more engaged and happier at work.

How Zappos Encourages Innovation

Zappos’s culture encourages its employees to innovate by supporting their ideas, even unconventional ones, Hsieh says. For example, rather than conducting conventional job interviews, the Zappos hiring team created unconventional “speed interviewing.” Like speed dating, prospective employees only have a few minutes to convince the hiring team that they’re a good fit for the job. While the speed interviewing initially needed some trial-and-error to run smoothly, it lets the hiring team evaluate a lot of candidates quickly and determine who might be a good fit.

Zappos’s Culture: The 3 Major Principles

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Like what you just read? Read the rest of the world's best book summary and analysis of Tony Hsieh's "Delivering Happiness" at Shortform.

Here's what you'll find in our full Delivering Happiness summary:

  • Former Zappos CEO Tony Hsieh's guide to workplace happiness
  • The three principles that turned Zappos into a billion-dollar company in a decade
  • An exploration of the psychology behind happiness and why it leads to success

Katie Doll

Somehow, Katie was able to pull off her childhood dream of creating a career around books after graduating with a degree in English and a concentration in Creative Writing. Her preferred genre of books has changed drastically over the years, from fantasy/dystopian young-adult to moving novels and non-fiction books on the human experience. Katie especially enjoys reading and writing about all things television, good and bad.

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