zappos facing competitive challenges case study pdf

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Zappos and the Connection Between Structure and Strategy

• Juan Pablo Vazquez Sampere

When it comes to holacracy, you don’t know the whole story.

Leaders of large enterprises struggle to balance the need to make their core business more efficient with the need to move nimbly to new processes and business models, particularly in the face of threats from disruptive startups. This is a fact we know, and know well.

• Juan Pablo Vazquez Sampere is a professor of business administration at IE Business School.

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TEACHING MATERIALS

Blue ocean pedagogical materials, used in nearly 3,000 universities and in almost every country in the world, go beyond the standard case-based method. Our multimedia cases and interactive exercises are designed to help you build a deeper​ understanding of key blue ocean concepts, from blue ocean strategy to nondisruptive creation, developed by world-renowned professors   Chan Kim and Renée Mauborgne . Currently, with over 20 Harvard bestselling cases .

CASES BY TOPIC

TEACHING GUIDE

Bring the Shoe Store to Your Home (Part A)

Author(s):  KIM, W. Chan, MAUBORGNE, Renée, KOO, Oh Young

Case study trailer

This is the first part of two case series of Zappos’s  blue ocean strategic move  as an innovative online shoe retailer. Part A focuses on how Zappos reconstructed the existing boundaries of the online footwear retail industry. It describes Zappos’s distinctive value proposition that is neither an offline nor online shoe store in the conventional sense. The case also introduces how Zappos broke the value-cost trade-off of the conventional online shoe store. The case comes with a theory-based video case, which can be requested below.

Strategy Powered by Culture and People (Part B)

Author(s):   KIM, W. Chan, MAUBORGNE, Renée, KOO, Oh Young

The second part of Zappos case focuses on Zappos’s people proposition, which led to high performance and raised barriers to imitation. It demonstrates the importance of   Fair Process   that builds deep trust and commitment in the company, making it difficult for competitors to imitate Zappos.

Case Study: A

HBSP   |   Case Centre   |   INSEAD

Case Study: B

HBSP  |  Case Centre  |  INSEAD

Teaching Note: A

Teaching Note: B

English: Available to download for free in the Educators’ Space

Lecture Slides

Business Case Study: Zappos, A Success Story of Customer Service, Culture & Holocracy

Zappos: a case study in building a successful business, introduction:.

Zappos, an online shoe retailer, has become a household name in the world of e-commerce. Founded in 1999, the company has gone on to achieve great success, attracting attention from business experts and industry leaders alike. This case study will examine Zappos’ journey from its early days to its current status as one of the most successful e-commerce companies in the world.

Market Condition and Opportunities:

When Zappos first entered the market, the e-commerce industry was still in its infancy. Despite this, the company saw a huge opportunity in the online retail sector, particularly for shoes. At the time, most online retailers were still focused on books, music, and electronics. Zappos saw an opportunity to differentiate itself by focusing solely on shoes, offering a vast selection and outstanding customer service.

Early Wins:

Zappos' first few wins were a result of its focus on customer service and its unique company culture. The company's commitment to providing the best possible customer experience, combined with its willingness to take risks and try new things, helped it stand out in a crowded market. For example, Zappos was one of the first companies to offer free shipping and free returns, which helped to build customer loyalty. Additionally, the company's focus on employee happiness and well-being helped to create a positive working environment and contributed to its success.

Management Decisions:

Zappos' management team made a number of key decisions that helped the company achieve its early wins and reach new heights. One of the most important was its decision to focus on customer service and create a unique company culture. The company also made strategic investments in technology and marketing, which helped to build its brand and reach new customers. Additionally, Zappos was able to attract top talent by offering competitive salaries and benefits, as well as creating a positive and supportive work environment.

Secret Sauce:

Zappos' secret sauce for early success was its focus on customer service and its unique company culture. The company's commitment to providing the best possible customer experience, combined with its willingness to take risks and try new things, helped it stand out in a crowded market. Additionally, Zappos' focus on employee happiness and well-being helped to create a positive working environment and contributed to its success.

One famous story that showcases Zappos' commitment to customer service is when a customer called in to purchase a pair of shoes for her wedding, but the shoes did not arrive in time for the event. The customer service representative she spoke with went above and beyond and overnighted her a new pair of shoes, at no extra charge, so that she would have them in time for her wedding. The customer was so impressed with the level of service she received that she shared her story online, and it quickly went viral, bringing a lot of positive attention to the company.

Another example of Zappos' commitment to customer service is their "WOW" philosophy, which states that employees should do whatever it takes to make the customer happy, even if that means going above and beyond what is expected. This philosophy has led to many memorable moments for customers, such as a customer service representative spending over two hours on the phone with a customer, helping them find the perfect pair of shoes.

Capitalizing on Early Wins:

Zappos was able to capitalize on its early wins by expanding its product offerings and improving its website. The company also made strategic investments in technology and marketing, which helped to build its brand and reach new customers. Additionally, Zappos continued to focus on customer service and employee happiness, which helped to maintain its competitive advantage.

Scaling the Company:

Zappos was able to scale its business by expanding its product offerings and improving its website. The company also made strategic investments in technology and marketing, which helped to build its brand and reach new customers. Additionally, Zappos continued to focus on customer service and employee happiness, which helped to maintain its competitive advantage.

Sustaining Competition and Economic Times:

Zappos faced intense competition from established players in the online retail space such as Amazon, but the company found its unique selling proposition in its company culture and customer service. Zappos focused on providing an exceptional customer experience through fast and free shipping, a 365-day return policy, and 24/7 customer service. This differentiation strategy allowed Zappos to stand out in a crowded marketplace and to continue to grow despite the 2008 economic downturn.

In 2009, Zappos was acquired by Amazon for $1.2 billion, but the company continued to operate as an independent subsidiary. The acquisition allowed Zappos to leverage Amazon's resources to further expand its reach, but the company remained true to its roots and continued to prioritize its unique company culture and customer-focused approach.

Unique Approach to Management and Organizational Structure

Zappos adopted a unique management style called Holocracy in 2013, which aimed to eliminate traditional hierarchical structures and promote self-governance. This innovative approach aimed to empower employees and encourage them to take ownership of their work. Instead of traditional job titles, employees were organized into autonomous teams and given the freedom to make decisions that impacted their work. This allowed Zappos to foster a culture of creativity and innovation, where employees were encouraged to think outside the box and come up with new and innovative solutions. The results were significant, with increased employee engagement, improved productivity, and a more streamlined decision-making process. Holocracy also helped Zappos stay true to its core values of putting the customer first and promoting a fun, quirky and engaging workplace culture. To this day, Zappos continues to be a leader in adopting alternative management styles and continues to be a case study for businesses looking to promote employee engagement and organizational efficiency.

The Fundraising Journey of Zappos:

Zappos is known for its quirky and unique approach to business, and that extends to the way they raised funds for the company. In the early days, Nick Swinmurn, the founder of Zappos, had a tough time raising funds for his startup. But he eventually found success by approaching Tony Hsieh, a successful entrepreneur, who invested in Zappos in 1999. Hsieh was impressed with Swinmurn's vision and the potential of the company, and he saw the opportunity to apply his own experience in online marketing to help grow the business.

Zappos continued to raise funds through later rounds, including a Series C round led by Sequoia Capital, which brought in $35 million in 2004. This funding allowed the company to invest in infrastructure, marketing, and growth initiatives.

One interesting story about Zappos' fundraising efforts is the company's decision to turn down a $200 million offer from Amazon in 2000. Zappos' leadership team saw the potential for the company to become much bigger than what Amazon was offering, and they decided to go it alone. This decision proved to be a wise one, as Zappos continued to grow and eventually sold to Amazon in 2009 for a whopping $1.2 billion.

This story highlights the importance of vision and the willingness to take calculated risks in business. Zappos' leadership team believed in their vision and took a bold move by turning down a large sum of money in order to achieve their long-term goals. This decision was a testament to the company's commitment to building a unique and successful brand, and it helped lay the foundation for Zappos' success as a company.

Actionable Takeaways:

• Prioritize company culture and customer experience to create a sustainable competitive advantage.
• Leverage technology and resources to expand reach, but remain true to company values and approach.
• Continuously innovate and experiment to stay ahead of the curve.
• In conclusion, Zappos' success story serves as a shining example of what can be achieved through a customer-focused, culture-driven approach. By following in the footsteps of Zappos, companies can position themselves for long-term success and create a positive impact on their customers and employees.

"10 Things Every Business Student Should Learn From Zappos"

Zappos, the online shoe and clothing retailer, has become a leader in the e-commerce industry through its innovative and customer-centric approach to business. As a former advisor at Y Combinator, I have seen firsthand how Zappos’ success can be a valuable source of inspiration and learning for business students. Here are 10 things that every business student should learn from Zappos:

• Customer Service is KeyZappos’ commitment to providing exceptional customer service sets it apart from its competitors. The company’s approach to customer service is so unique that it is often cited as the primary reason for its success. For example, Zappos’ call center employees are empowered to do whatever it takes to satisfy customers, even if that means spending hours on the phone with a single customer.
• Embrace Culture and ValuesZappos’ company culture and values are central to its success. The company places a strong emphasis on creating a positive and enjoyable work environment, and it encourages employees to be themselves and have fun at work. This has resulted in a team of highly motivated and engaged employees who are committed to delivering exceptional customer service.
• Prioritize Employee HappinessZappos recognizes the importance of employee happiness in driving business success. The company has implemented a number of programs and initiatives designed to promote employee wellbeing, including a “Paid Time Off” program, which allows employees to take paid time off whenever they need it. This has resulted in a highly motivated and engaged workforce that is committed to delivering outstanding customer service.
• Innovate ContinuouslyZappos has a culture of innovation and is always looking for ways to improve its products and services. The company regularly launches new initiatives and experiments with new business models, which has allowed it to stay ahead of its competitors and maintain its position as an industry leader.
• Focus on People, Not Just ProductsZappos’ success is built on its focus on people, not just products. The company places a strong emphasis on building relationships with its customers, employees, and partners, which has helped it to create a loyal and engaged customer base.
• Encourage Employee EmpowermentZappos empowers its employees to make decisions and take risks, which has helped to foster a culture of innovation and creativity. The company encourages its employees to share their ideas and provides them with the resources and support they need to bring their ideas to life.
• Foster a Sense of CommunityZappos has a strong sense of community and encourages its employees, customers, and partners to engage with one another. This has helped to create a loyal customer base and a positive company culture, which are key to its success.
• Lead with PurposeZappos is driven by a clear sense of purpose, which is to deliver happiness to its customers, employees, and partners. This purpose guides all of the company’s decision-making and helps to keep it focused on its goals.
• Embrace FailureZappos recognizes the value of failure and encourages its employees to take risks and embrace failure as a learning opportunity. This has helped the company to innovate and continuously improve its products and services.
• Focus on Long-Term GrowthZappos is focused on long-term growth and has a long-term perspective on its business. This has helped it to weather economic downturns and remain competitive in a rapidly changing industry.

In conclusion, Zappos success is a result of its innovative and customer-centric approach to business. From its commitment to exceptional customer service, to its focus on employee happiness and empowerment, to its continuous innovation, Zappos is a valuable source of inspiration for business students. By incorporating these lessons into their own approach to business, students can build successful companies that are driven by purpose, innovation, and a focus on people.

“The author generated this text in part with GPT-3, OpenAI’s large-scale language-generation model. Upon generating draft language, the author reviewed, edited, and revised the language to their own liking and takes ultimate responsibility for the content of this publication.”

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Zappos: Formulating Effective Human Resource Management Strategies

• By: Arpita Agnihotri & Saurabh Bhattacharya
• Publisher: SAGE Publications: SAGE Business Cases Originals
• Publication year: 2023
• Online pub date: January 13, 2023
• Discipline: Human Resource Management (general)
• DOI: https:// doi. org/10.4135/9781529607505
• Keywords: customers , decision making , human resource management , human resource strategy , learning organizations , organizations , person-organization fit , recruitment , staff training , talent Show all Show less
• Contains: Teaching Notes Region: Northern America Industry: Retail trade, except of motor vehicles and motorcycles Organization: Zappos Organization Size: Large info Online ISBN: 9781529607505 Copyright: © Arpita Agnihotri and Saurabh Bhattacharya 2023 More information Less information

Teaching Notes

The case focuses on different human resource management (HRM) practices adopted by Zappos.com Inc. (Zappos), an online apparel and footwear retailer based in Nevada, under the leadership of Tony Hsieh. In order to reinforce a customer-centric corporate culture, Zappos adopted several talent acquisition practices intended to ensure person–organization fit. To further empower employees to resolve customer problems and reinforce its customer-centric culture, Zappos adopted a holacracy structure, which led to higher than usual attrition rates. Hsieh even participated in new employee training programs to reinforce work policies and practices at Zappos. By 2019, Zappos also introduced several other employee benefits, such as offering music lessons at the workplace, though a recent study shows that employees generally prefer flexible work hours to other benefits. How can Zappos make holacracy work? Are employees likely to value the new benefits that Zappos provided? Can a CEO’s participation in training programs positively influence employees?

Learning Outcomes

By the end of the case study discussion, students should be able to:

• Critically analyze talent acquisition practices available to organizations.
• Explore the role of music in employee welfare programs.
• Examine the benefits and drawbacks with a holacracy-based organization structure.
• Explore the role of CEOs in employee training programs.

Introduction

Zappos.com Inc. (Zappos) is an online apparel and footwear retailer based in Nevada in the United States. The company offers “sneakers, boots, sandals, slippers, shirts, trousers, skirts, jackets, coats, swimsuits, bags, belts, gloves, scarves, ties, and socks” (Bloomberg, 2021). Zappos consciously created and reinforced a customer-centric and corporate culture by ensuring that only those employees who fit Zappos’ culture stayed with the company (Foley, 2018). This was ensured through a thorough recruitment process, where, apart from skills, fit with Zappos’ culture was also tested. Zappos offered new employees a courtship period after which they were free to leave the company with a month’s salary (Christoffersen, 2019). This way, Zappos focused on person–organization fit (Heathfield, 2021). As Zappos was a customer-centric organization, Tony Hsieh (CEO of Zappos between 1999 to 2020) wanted to give employees autonomy to resolve customer issues and adopted a more decentralized holacracy structure (Christoffersen, 2019; Foley, 2018; Heathfield, 2021). A customer-centric focus “is a business strategy that’s based on putting your customer first and at the core of your business in order to provide a positive experience and build long-term relationships” (MacDonald, 2021).

Not all Zappos employees were happy with these changes, and within a couple of years several had left the organization (Lam, 2016). Hsieh stated, “In terms of what we would have done differently, I think that there’s never a good time to make a transition and we probably hesitated too long” (Guzman, 2016). Hsieh added, “So if I could do anything differently, I would actually do it earlier.” By 2016, Zappos fell off Fortune’s “Best place to work for” list (Guzman, 2016).

By 2019, Zappos introduced several other employee benefits practices, such as offering music lessons at the workplace (Hroncich, 2019). However, surveys suggested that employees in general prefer flexible schedules and telecommuting as workplace benefits (Lahiri et al., 2018). Hsieh also remained committed to the new employee training program by becoming a part of the training program offered to new employees (AMA Staff, 2019). How can the company make holacracy work? Are employees likely to value the unique benefits that Zappos provided them?

Zappos was formed in 1999 by Nick Swinmurn. Seeing potential in the company, Hsieh, founder of Venture Frogs, an investment company, joined Swinmurn as a cofounder (Eng, 2012). By 2002, Zappos had formed a partnership with United Parcel Service to expedite the delivery of shoes (Christoffersen, 2019). As a part of its customer-centric culture, Zappos offered customers a free return policy of shoes over a year from purchase as long as they were in “almost new” condition (Christoffersen, 2019). Zappos also expanded the working hours of its call center to 24 hours a day, 365 days a year (Christoffersen, 2019). By 2005, the retailer also instituted policies such as “New hire boot camp,” wherein after receiving complete training for Zappos’ work processes, new hires were given a choice of quitting the organization with a USD 100 check (Christoffersen, 2019). In 2009, Zappos was bought by Amazon.com Inc (Amazon) for USD 880 million (Lacy, 2009). Hsieh continued as the company’s CEO. In 2019, Zappos’ net sales were approximately USD 540 million, a 9% growth over 2015 net sales and a 0.50% growth over 2018 (Eden et al., 2019). In 2018, apparel and footwear contributed 20% and 60%, respectively, of net sales (Eden et al., 2019).

Holacracy at Zappos

Zappos believed in empowering its employees to be customer-centric and, in 2014, announced the holacracy structure. According to Zappos, “Holacracy is like an operating system for your organization. It is a predefined set of rules and processes, checks and balances, and guidelines that an organization can use to help them become self-managed and self-organized by giving every employee (instead of just management) the power to innovate, make changes, and have a voice” (“Holacracy and Self-Organization,” n.d., para. 3). For example, Zappos’ call center executives, who made up the majority of the workforce, were empowered to deal with customer issues. Thus, they were not given any fixed script to deal with customers’ problems and had the autonomy to resolve the issue in their own creative way (Heathfield, 2021).

The company experienced several struggles and challenges with the structure (“Holacracy and Self-Organization,” n.d.). Holacracy is a self-managed and self-organized structure wherein Zappos employees had the autonomy to innovate and make changes (“Holacracy and Self-Organization,” n.d.). Zappos required holacracy as, with an increase in size, it was becoming slower in responding to consumer needs. Hsieh found holacracy to be a solution to this challenge (“Holacracy and Self-Organization,” n.d.). Zappos’ objective was to increase collaboration among the workforce by eliminating hierarchical levels at the workplace. Hsieh eliminated all job titles, and no one at Zappos was entitled as boss. Zappos expected its employees to track their strategic decisions and their outcomes in a web-based app called Glass Frog (Lam, 2016). Under holacracy, Zappos had a hierarchy of teams or “circles,” where employees could belong to multiple circles (Silverman, 2015). By 2018, Zappos had approximately 1,500 employees and about 300 circles (Silverman, 2015).

Zappos also believed in a hierarchy of purpose. For instance, the overall company purpose was to deliver the “wow” factor to customers (Peters, 2019). Within the large circles, employees had sub-circles and sub-purposes depending on their task. Zappos expected each circle to behave like a mini start-up or small business. However, resource allocation at Zappos was managed through a top-down approach only and not through any circular processes (Peters, 2019), so it was not a complete holacracy.

This self-governance came at a cost, as not all employees were comfortable with this kind of empowerment. For example, payroll management employees found it difficult to determine employees’ salaries after Zappos abolished their titles. Some employees felt the need for a boss for consultation when making important decisions (Lam, 2016). Studies have also indicated that employees preferred hierarchical structures rather than egalitarian work structures. A hierarchy was more predictable and psychologically comforting, whereas egalitarianism was bewildering (Lam, 2016).

Consequently, with the implementation of holacracy, turnover of employees in the company in 2015 increased to 30% from the average of 10% (Lam, 2016). This was an above average attrition rate. Soon, Hsieh realized that holacracy was not for everyone. In a 4,700-word memo, he gave an option to employees to leave the organization with three months’ pay if they found holacracy uncomfortable (Lam, 2016).

Talent Acquisition

At Zappos, recruitment focused on behavioral-based questions (Delaney, 2019). The moment recruiters at Zappos began interacting with candidates over the phone or e-mail to several rounds of interviews, they checked on the core values that the candidates would bring to the organization and how aligned those values were with Zappos’s values (Delaney, 2019). For example, during the interview process the company evaluated aspects such as understanding change, being humble, and taking risks and chances (Delaney, 2019). During the final decision phase, candidates spent a day or even several days at Zappos to get to know the entire company. The company organized campus tours and candidates joined lunches and after-work happy hours to judge how they interacted with Zappos employees (Delaney, 2019).

As for getting a job at Zappos, mere experience and work skills were not sufficient, and the cultural fit was important (Kero, 2019). Hsieh was himself involved in the recruitment process. Hsieh believed that even the most skilled employees could not succeed if they were a misfit with company culture (Kero, 2019). During the interviews, he would generally ask candidates to rate how weird were they, on a scale of 1 to 10 (Kero, 2019). Hsieh believed he was 8 or 8.5 on this scale (Peters, 2019). In an interview, Hsieh stated, “Our whole belief is that everyone is a little weird somehow.” He further added, “It’s really more just a fun way of saying that we really recognize and celebrate each person’s individuality, and we want their true personalities to shine in the workplace” (Kero, 2019). Amanda Augustine, a career expert, commenting on the recruitment approach, stated, “Once you have a better idea of what traits the company values in its employees, you can determine if this is a good match for you, and anticipate what questions they might ask to assess your cultural fit” (Kero, 2019).

Even after candidates were hired, Zappos put them through extensive new hire training for four weeks, where so-called new Zapponians received a chance to dwell even more in the history and core values of the company. In these four weeks of training, Hsieh was also actively involved (AMA Staff, 2019). This helped him have first-hand information on how new employees were being groomed and molded to fit into the company’s culture (AMA Staff, 2019).

During this four-week process, both Zappos and the recruits judged the fit with the company. If Zappos, after four weeks, decided that the candidate was not a good fit, they let the candidate go. At the same time, recruits were also encouraged to ask themselves, “Is this really what I want? Did I sign up for the right thing? Is working at Zappos really going to make me happy?” (Delaney, 2019). This was to avoid employees leaving the company after eight months or a year, making Zappos begin the recruitment cycle again. To promote this thinking at the right time, Zappos gave new candidates an offer to quit at the end of training with a month’s salary in hand. To begin with, Zappos gave USD 100 to new employees on leaving the job. Later, Zappos offered a USD 2,000 stipend at the start of a job (Lam, 2016). By 2019 Zappos revised this to giving one month’s salary instead of a fixed stipend (Christoffersen, 2019). The company believed that this was an expensive but cost-efficient way of hiring the right employees, as some new hires decided to quit after four weeks (Delaney, 2019). As Zappos’ objective was not to just hire talent but to hire the right talent—i.e. those who had a service mindset—the process helped them to retain only service-oriented employees (Delaney, 2019).

Music and Other Workplace Benefits

In 2019, to further improve on the work culture, Zappos offered employees access to online acoustic and electric guitars, bass, and ukulele lessons, by a partnership with Fender Play. The company, through its app, offered a step-by-step guide for learning different instruments (Hroncich, 2019). Zappos called the program ”Strum for the Sole,” and it permitted workers to play these instruments in the company’s jam room. Access to the Fender Play app was free in this jam room, and Zappos gave discounts if an employee wanted to sign up for Fender Play without using the jam room (Hroncich, 2019). Through this initiative, Zappos aimed to enhance employees’ physical, mental, social, and financial wellness (Hroncich, 2019). Bhawna Provenzano, director of employee benefits and diversity at Zappos, commenting on the need for music classes, stated, “It helps people exercise their brains and develop more concentration skills,” and helps increase employee productivity (Hroncich, 2019). Provenzano added, “It helps build new bonds and helps people get closer to one another.” Provenzano also mentioned: “Often times at Zappos that’s where new ideas are born.”

Zappos offered a number of other workplace benefits as well. If an employee rescued an animal from a local animal shelter, Zappos reimbursed the employee’s pet adoption fees, up to USD 250 (“Wellness Benefits That Keep,” 2019). Zappos also offered pain management therapy named active release techniques (ART), a form of chiropractic. Then there were free sessions of Weight Watchers, onsite gym, etc. (“Wellness Benefits That Keep,” 2019). The start-up also offered an adoption assistance program that extended parental benefits to qualified employees (“Wellness Benefits That Keep,” 2019). However, these other work benefits were not unique to Zappos and were also offered by other corporations (Mayer, 2019).

A study conducted by Willis Towers Watson, a global advisory company, indicated that 32% of employees in general suffered from depression, anxiety, or stress at the workplace. Only 23% of employees reported the issues through employers’ wellbeing programs (Hroncich, 2019). According to a 2019 study by the Society for Human Resource Management, mental health disorders cost the United States between USD 483 billion and USD 605 billion per annum due to lost productivity (Hroncich, 2019). In fact, the corporate wellness market—usually including healthcare programs and education and app-based programs—is a nearly USD 8 billion market in the United States alone (Lahiri et al., 2018). Still, a gap remained between what employees expected and what companies offered (see Figure 1 ). These findings have implications for how Zappos could design its wellness programs, such as identifying the wellness needs of their employees or offering programs based on trends such as educational apps or healthcare programs.

The horizontal axis is labeled Factors. The vertical axis is labeled with a percentage sign and lists the values from 0 to 100 in increments of 10. The data from the graph are tabulated below.

Figure 1. What Employees Value Versus What Employees Offer (Deloitte 2018 Study, Sample Size: 11,070)

Source : Lahiri et al., 2018

The Road Ahead

In 2019, Zappos continued to use holacracy and had no intentions of changing that (“Holacracy and Self-Organization,” n.d.). One of the spokespersons at Zappos mentioned that they expected an exponential relationship between growth and productivity (Groth, 2015). Despite challenges with holacracy, Zappos was determined to make employees more productive and happier (Tomasian, 2019). Hsieh believed that the future of Zappos was not necessarily limited to shoes or clothing, or even e-commerce (Peters, 2019). With holacracy, Hsieh wanted Zappos to cater to different product lines that the circles or teams believed to have potential (Peters, 2019). The task of each team was to find their customers at the intersection of what the team was passionate about, what they believed they are good at, and what created value (Peters, 2019). Hsieh stated, “A lot of our growth and innovation moving forward will be based on thinking about what we’re in the business of differently” (Bell, 2019). He further added, “We used to say we’re a service company that just happens to sell shoes, and now it’s turned into: We’re a service company that just happens to sell blank,” with the blank implying selling no particular product. Whether Zappos’ HRM practices aid its growth strategies remains to be seen.

Discussion Questions

• 1. Critically analyze the talent acquisition practices at Zappos.
• 2. Discuss the benefits and drawbacks of Zappos’ ”Strum for the Sole” as part of its employee wellness program. Comment on other wellness programs as well.
• 3. What are the challenges with Holacracy? How can Zappos achieve success with it?
• 4. How does the CEO’s involvement in new hiring training affect the organization? Explain.

Further Reading

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Zappos Facing Competitive Challenges

Introduction.

The introduction part mainly focuses on the different challenges that have been faced by Zappos which is staying in Las Vegas as well as he is an online retailer. Through this section, it will be perfectly highlighted whether Zappos has a high level of employee engagement or not. This part also sheds light on the different training and development sessions by which Zappos may be able to mitigate all challenges that he has faced.One of the best information systems for ensuring effective data storage and circulation is employed by Zappos. Clients may monitor their purchases and even find out whether the goods they desire are still in stock. Alerts, statistics, and recommendations are offered to workers to help them handle orders effectively. Data systems and hr are two major basic managerial procedures that are required to complete an order at Zappos. One of the most impressive features of the Zappos coding challenge that places a high priority on job enrichment is its hrm. Employees are instructed and urged to use creativity while interacting with customers. They are free to "wow" new or current clients since they are not bound by protocols or set call lengths. Operations managers carry out a variety of tasks that have an impact on how businesses market and promote their goods and services. Designing service encounters is one of the most important OM operations at Zappos. Services are Zappos' main source of competitive strength, thus this sector is given careful consideration. Employees are instructed on how to meet client demands creatively and are encouraged to do so. The great bulk of the customers are returning, which is evidence that this method is working.

There are different essential challenges that have been faced by Zappos and which can derail its attempt for being the best and largest online retailer. Different challenges are:

• Attracting and retaining the consumers’ attention by providing different budget-friendly as well as high quality based products along with converting those consumers into loyal shoppers (Berman, Bowman, West & Van Wart, 2019)
• Other challenges that have been optimized by him to deliver different goods in a speedy manner to the existing as well as new customers
• A vital challenge that has been faced by Zappos is to prosecute the smooth online buying and selling system as well as the different information access of their online offers along with various packages (Hughes et al . 2019)

Through the appropriate training and development plan, Zappos may be able to mitigate all the challenges in an effective manner. Though the perfect training and development phase he may be able to consider a good leadership strategy over the employees’ working process. Therefore, business strategy will be developed by the help of a stronger leadership process on different employees to make them understand the working process and this can build up product making scenes for them (as stated by Nankervis, Baird, Coffey & Shields, 2019). Training and development can increase the personal skills and knowledge of Zappos and other employees to meet all the identified workplace goals and objectives. Different competitive advantages may be gained by providing training and development sessions to the workers therefore they are able to use the information to flourish the online business.

Yes, as per my personal opinion I believe that employees at Zappos have a very high level of engagement as through providing training and development Zappos always motivates their employees to get high levels of positive based customer feedback as well as increase productivity. This engagement structure also enhances their contribution towards an extraordinary high performance, which has also led to this online retail association winning several awards (Berman, Bowman, West & Van Wart, 2019). Zappos mainly believes in helping their workers understand what inspired the association culture as well as help them in putting into different practices the cultural needs along with values.

Training and development phase can have an essential positive influence on the person Zappos’ core values in order to build honest along with open relationships with appropriate communication that also can build a positive team as well as a family sprit (Hughes et al. 2019). Building an open along with a positive relationship with the employees can give some valuable advantages to Zappos for understanding the core values of their business that can also influence the training and development process towards employees.

Berman, E. M., Bowman, J. S., West, J. P., & Van Wart, M. R. (2019).  Human resource management in public service: Paradoxes, processes, and problems . CQ Press.

Hughes, C., Robert, L., Frady, K., Arroyos, A., Hughes, C., Robert, L., ... & Arroyos, A. (2019). Designing and Managing Technology, Innovation Training, and Development for Middle-skill, Low-skill, and Disadvantaged Workers', Managing Technology and Middle-and Low-skilled Employees (The Changing Context of Managing People).

Nankervis, A., Baird, M., Coffey, J., & Shields, J. (2019).  Human resource management . Cengage AU.

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