Culture Capital

There are many forms of capital for any business enterprise. Of course, there is the bottom line in the financial report which is essential if you are to remain in business, where you’re a for-profit or non-profit. However, a focus exclusively on the financial bottom line in all instances may not be the source of long-term success for a company. The long-term success may really lie in the human capital: the quality of those who work for the company, and their knowledge, skills and ability. It may also lie in the social competency, including the bonding and bridging ability of those in the company with those of significant influence and power who can generate the external support and advocacy that leads to new opportunities.

Another, often ignored, factor is the “culture capital” of the organization. Every organization has a culture that can be felt as soon as one enters the doors of the facility, interacts with the staff, and looks at the level of staff involvement with and treatment of each other and customers. It is highly important, but most often ignored by boards of directors who are fond of looking at the financial bottom line but never look at the impact a new CEO might have on the culture of the organization.

In the non-profit arena, much has been written on company culture in the last decade. It has addressed an absence of specificity of an organization’s reason for being, purpose and mission. In addition, the rigor with which these have been translated into specific goals and outcomes, the activities or outputs intended to achieve those outcomes, and relentless evaluation of what takes place is also lacking. Although the best of this analysis mandates the involvement of many in an organization during the reassessment and redesign of this planning process, there is the feel that this process is pretty cold and impersonal, as if those involved were little more than mechanical robots.

Tony Hsieh (“Shay”) is the CEO of Zappos, a company that in the process of 9 years grew from a start up to a two billion dollar business and the world’s undisputed leader in the online shoe business. His book, Delivering Happiness: A Path to Profits, Passion, and Purpose is his personal story about his life and the growth of Zappos. It is also the story of the centrality of cultural capital in building a great organization.

The key players in Tony’s prior business successes, Link Exchange and an investment firm named Venture Frogs, were mostly friends that he had met at Harvard and with whom he had been involved in a college pizza business and other ventures. They had worked together, socialized together, and adventured together. They had deep personal ties and connection. Just before Tony and his partners sold Link Exchange for $250 million, he mused about how the flood of new hires had changed the culture of the company that had made it exciting to be part of. Instead of a sense of passion and connectedness to the company, new hires were in it to make money and/or build a resume.

Thus throughout the development of Zappos, the company’s culture would remain one of three central foci that also included the brand (superlative customer service) and the pipeline (the investment and development of staff). In fact, it is the culture that shaped both the brand and the pipeline. The Zappos culture values, the process through which they were developed, and the procedures through which they were maintained is highly instructive.

There are ten values that make up the Zappos culture:

1. Deliver WOW Through Service.

2. Embrace and Drive Change.

3. Create Fun and a Little Weirdness.

4. Be Adventurous, Creative, and Open-Minded.

5. Pursue Growth and Learning.

6. Build Open and Honest Relationships with Communication.

7. Build a Positive Team and Family Spirit.

8. Do More with Less.

9. Be Passionate and Determined.

10. Be Humble.

The “top ten” culture sign posts developed out of a bar discussion between employees who were part of the move of the central offices from San Francisco to Las Vegas. They wanted to be sure that the culture that had prevailed would be maintained in the new location. At this after-hour meeting, it was decided to ask all employees to help in the development of a culture book by submitting whatever they thought represented the company’s culture. The 245-page Culture Book is a composite of the statements, pictures, and drawings that represent what the employees and, later, vendors and customers see the Zappos culture to be.

The themes that emerged from the culture submission were: “Culture is Everything, WOW Service, Trust and Faith, Idealism, Company Growth, Long Term, Personal Growth and Stretching, Achieving the Impossible, Team, Family/Relationships, Emotional Connections, Developing Your Gut, Empowerment, Ownership, Taking Initiative, Doing Whatever It Takes, Not Being Afraid to Make Mistakes, Unconventional, Bottom Up (Meets To Down), Partnerships, Listening, Overcommunicate, Operational Excellence, Built of Change, Continuous Incremental Improvement, Doing More with Less, Innovation, Word of Mouth, Lucky, Passion and Positivity, Personality, Openness and Honesty, Fun, Inspirational, A Little Weird, Willing to Laugh at Ourselves, Quiet Confidence and Respect.” These led to the top ten.

The Culture Book led to an employee newsletter called Ask Anything. The employees were encouraged to send an email and “ask anything.” The anonymous questions and answers were then sent out to the entire staff.

So central is the Zappos culture that extraordinary efforts are made to get a buy-in from new employees. Potential employees go through two sets of interviews, the first to determine their technical skill and ability, the second to determine their cultural fit in the organization. The cultural fit is usually the determining factor. New hires sign a pledge to support the Zappos culture, as well as go through a four-week training process on the company business, its history, culture and philosophy, and taking customer calls. After the first week, they are offered $2,000 plus pay for their time in training to quit at any time during the training. The plan is to eliminate anyone just in it for the money.

Periodically, the strength of the culture is tested by asking employees whether they agree or disagree with the following statements:

  1. I believe that the company has a higher purpose beyond its profits.

  2. My role at Zappos has a real purpose—it is more than just a job.

  3. I feel that I am in control of my career path and that I am progressing in my personal and professional development at Zappos.

  4. I consider my co-workers to be like my family and friends.

  5. I am happy in my job.

Finally, the cultural value of “Pursue Learning and Growth” is supported by a very strong personal and professional development program. These include internal courses that include: Zappos Culture and History, Communication, Coaching, Science of Happiness, Tribal Leadership, One Week Boot Camp in Kentucky, HR 101, Grammar and Writing, Public Speaking, Stress Management, WOWing through Tours, and more.

Consultants Myers and Briggs are famous for their delineation of the two principal foci of any business: Task and People. Tony Hsieh has demonstrated that attention to the human dimension of culture is as vitally important as the development of a business plan that takes into account only the trajectory of the path from purpose to evaluation. It is the personal ties of human connectedness culture that enable an underdog team like the NBA’s Dallas Mavericks to defeat a superior Los Angeles team for the NBA championship in 2011. It is that cultural connectedness that was referred to by a person who was part of the organization that was targeted with the recent terrorist mass shootings in San Bernardino. She said, “We will move past this. We are very close. The employees here consider each person a member of their own family.”

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