WEBVTT

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PAUL MICHELMAN: Hello.

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I'm Paul Michelman from Harvard
Business Digital.

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And I'm delighted to be joined
today by Bill Taylor.

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Bill writes the Game Changer
blog for HarvardBusiness.org.

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Bill, welcome.

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BILL TAYLOR: Great to be here.

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PAUL MICHELMAN: Great.

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Bill, the subject of our
chat today is online

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shoe retailer Zappos.

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And among other things, Zappos
is known for providing some

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rather extraordinary
customer service.

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And for engendering a really
deep level of commitment and

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engagement from its customers.

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So Bill, one of the tried and
true principles of management

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is you can't have deeply engaged
customers without

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deeply engaged employees.

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And yet in your post on Zappos,
you write about a

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rather unusual policy Zappos
has of actually trying to

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bribe its employees to quit.

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Can you connect the
dots for us here?

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BILL TAYLOR: Well it's unusual,
but if you think

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about it it makes
a lot of sense.

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Zappos, they're growing fast.

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They're up to 1,600
people now.

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Just a huge employment
growth rate.

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And they're really committed
to filling the company with

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employees who are equally
committed to engaging with

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their customers.

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And it's one thing when you
recruit and you evaluate and

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you interview.

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And you try to educate people
about what they're signing up

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for, but they don't really
know until they arrive.

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So on the first day at
Zappos, you begin a

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four week deep immersion.

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Not just in how to talk to
customers, but in terms of the

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company's culture, its values,
its incredibly high energy.

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And about a week into it, Zappos
stops the training and

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says to everybody in the room,
basically we'll pay you for

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the time you've been here.

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And if you agree to quit
today, we'll give

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you a $1,000 bonus.

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No questions asked.

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And the idea is to allow some
number of people who are

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probably sitting in that room
saying, my goodness, I kind of

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like it here but I had no idea
what I've signed up for.

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And I'm just not ready to step
into the kind of intensity and

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energy that Zappos
is expecting.

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And it gives people a low
stress and low risk and

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actually kind of rewarding way
to opt out at that point.

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And about 10 percent of the
new recruits to the call

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centers take them
up on that deal.

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And Zappos thinks that's money
very well spent, because

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they're really trying to fill
the organization with the

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cream of the crop.

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Not that there's anything
somehow wrong with people who

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choose to leave, but
it's simply not the

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right fit for them.

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And so rather than trying to get
people not to admit that,

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hey, it turns out this is
more than I expected.

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They give them the opportunity
without a lot of guilt, and

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actually with a little change
in their pocket to opt out.

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It's worked very
well for them.

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PAUL MICHELMAN: So it's really
the first stage to developing

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the kind of engaged employees
they need to be the

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breakthrough company
that they are.

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BILL TAYLOR: Well it's
actually kind

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of the second stage.

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Because they really think hard
and very creatively about the

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interview process.

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The Zappos job application
is kind of entertaining.

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You begin with actually
completing a crossword puzzle,

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believe it or not.

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And there's no great social
science research behind it.

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It's just a signal to people
that this is not your run of

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the mill company kind of deal.

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They've got 10 very well
developed values.

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They ask questions that are
probing quite specifically

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into do the values of the people
they're evaluating sync

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up with the values of
the company itself.

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And I think they do a very
careful and very creative job

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of doing that.

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But even with that you're going
to hire people, you're

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going to invite people
in where the

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fit isn't quite right.

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And that's where the $1,000
bonus comes in.

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By the way, it started
at $100.

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Then they raised it to 500.

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It's now 1,000.

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And as the company continues to
grow, they're thinking of

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raising it again.

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Because they say you know,
we're willing to spend--

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One of the things that happens
as companies get bigger and

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bigger is that they tend to
bland themselves out.

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And the hunger to just get
more warm bodies in here

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because we have so much work to
do overcomes the commitment

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to having only the right
kind of people.

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So one way to try to keep that
quality up is to keep raising

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the size of the bonus.

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PAUL MICHELMAN: So Zappos
employees aren't just engaged.

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They're deeply empowered.

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And I think if I read between
the lines of your post, one of

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the reasons they've been able
to grow so successfully is

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they push so much responsibility
to the front

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lines of their work force.

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How do they do that?

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BILL TAYLOR: Well first
of all, I'd say

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they're not just empowered.

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They're borderline insane.

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I mean that only in the best
sense of the word.

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I was out there a few weeks ago
to sit down with the CEO

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Tony Hsieh, and do a tour.

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And they have 1,500 vendors.

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And so the vendors are
coming through.

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All the shoe companies, all
the fashion companies.

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So they're coming through
all the time.

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So they're very systematic
even about

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giving a company tour.

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And I did the tour with
the CEO, but other

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people do the tours.

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And they walk through the office
with this giant flag,

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which is the tour flag.

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Which lets you know if you're
sitting in the various

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departments a tour is
coming through.

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And each department has
its own crazy cheer.

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You know, shish boom
bah, or somebody

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runs up with pom poms.

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Or they do clapping.

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It's really kind of
a wild scene.

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And again, this is now with
vendors and visitors.

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And they're trying as a group of
individual people, to make

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an impression on you, and to
make Zappos be a memorable

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company to experience whether
you're buying something from

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them, selling something to them,
or just coming to see

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the company.

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In terms of empowerment, I mean
basically the biggest

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form of empowerment certainly
on the customer service side

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is no scripts, no time limits.

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You are basically authorized
to do what it takes to make

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the customer happy
and satisfied.

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And there are lots of legendary
stories about Zappos

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employees who go way beyond the
call of duty to meet the

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needs of their customers.

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PAUL MICHELMAN: Can you tell
us one of those stories?

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BILL TAYLOR: Well, it became a
real internet sensation about

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a year ago when a fairly
prominent blogger who was a

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Zappos customer bought a bunch
of shoes for her mother, who

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it turns out was
terminally ill.

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And so she bought 10, 12 pairs,
something like that.

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And the Zappos return policy
is at that point

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you had free delivery.

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You had 15 days to figure out,
do I really want the shoes.

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And if not, you've got
to return them.

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Free return as well.

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So the 15 days have passed and
she hadn't returned the shoes.

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And so she got a pretty standard
email from somebody

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at Zappos saying hey,
it's been 15 days.

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Is there anything wrong?

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Or are you planning to
return the shoes?

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And after a long day at the
hospital with her mother, she

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sent an email back saying,
on I'm sorry.

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My mother is terminally ill.

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I'm going to try my best.

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And by the way, part of the deal
is you've got to go to a

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UPS store to actually
return the shoes.

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So Zappos emailed back
immediately and said, oh my

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goodness, we had no idea.

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We'll send a UPS truck to your
house to pick up the shoes.

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We would never expect
you to go anywhere.

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So they did that the next day.

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She returned the shoes.

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Then the day after that, she
got a knock on her door.

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It was a UPS driver with a
beautiful bouquet of flowers

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from Zappos saying,
we're so sorry to

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hear about your mother.

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We just want you to know
that we at Zappos

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are thinking of you.

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And she was-- as you might
expect-- pretty

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overwhelmed by this.

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She went her blog.

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She wrote a post called I heart
Zappos, told the story.

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And oh my goodness.

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It just was viral
beyond belief.

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To the point where the week or
so after that happened if you

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Googled Zappos, one of the
absolute top hits you would

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get is the story of this
woman and her thing.

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And again brilliant PR,
good viral marketing--

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It was nothing like that.

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It was just human beings acting
humanly with the people

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are doing business
with Zappos.

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And you know, they're theory is
if you encourage people to

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do that, it's going to cost
you a few bucks, but the

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benefits you get over the long
term are really quite

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tremendous.

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And oh, by the way, also it
becomes the kind of place that

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people want to work.

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I mean it's not a very glamorous
job, answering

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phones eight hours a
day from customers.

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It's not the most exciting
work in the world.

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So if you give people more of a
sense of fun and meaning and

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connection, I think it pays big
dividends as you recruit

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employees, not just as you
recruit customers.

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PAUL MICHELMAN: So, that's one I
think great takeaway for any

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manager who is watching this
or listening to us today.

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Make things fun.

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It will transfer to the
customer experience.

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This is a pretty crazy
company though.

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They're in Las Vegas.

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They're an online company.

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They've got a CEO who blogs.

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They all Twitter.

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Are there other things from this
culture that the rest of

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us who work in more mundane
organizations can apply?

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BILL TAYLOR: Well I think the
first big insight is they're

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not a technology company, even
though they'll do a billion

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dollars in sales this year.

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They do understand that
fundamentally they are a

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customer service company.

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So Zappos was actually started
in San Francisco.

00:08:15.410 --> 00:08:18.120 align:middle line:84%
But they moved it to Las Vegas
because they felt the culture

00:08:18.120 --> 00:08:21.330 align:middle line:84%
of San Francisco was way too
focused on technology per se

00:08:21.330 --> 00:08:22.980 align:middle line:84%
as opposed to customer
service per se.

00:08:22.980 --> 00:08:26.545 align:middle line:84%
And Las Vegas with folks from
the hospitality industry if

00:08:26.545 --> 00:08:28.090 align:middle line:84%
you say it mystically
as well as a

00:08:28.090 --> 00:08:29.980 align:middle line:90%
big call center operation.

00:08:29.980 --> 00:08:33.940 align:middle line:84%
So everybody who walks in the
door understands from day one,

00:08:33.940 --> 00:08:36.270 align:middle line:90%
we sell shoes today.

00:08:36.270 --> 00:08:37.674 align:middle line:90%
We sell handbags now.

00:08:37.674 --> 00:08:39.750 align:middle line:84%
In fact they're going to be
selling consumer electronics.

00:08:39.750 --> 00:08:43.130 align:middle line:84%
They are building a customer
service platform.

00:08:43.130 --> 00:08:46.630 align:middle line:84%
And everybody understands that
job one there is to connect

00:08:46.630 --> 00:08:47.070 align:middle line:90%
with customers.

00:08:47.070 --> 00:08:49.210 align:middle line:84%
To the point where if you're
hired as a very senior

00:08:49.210 --> 00:08:53.910 align:middle line:84%
executive or a very nerdy
computer programmer, you take

00:08:53.910 --> 00:08:56.570 align:middle line:84%
a short class, the short form
of the four week customer

00:08:56.570 --> 00:08:57.250 align:middle line:90%
service training.

00:08:57.250 --> 00:09:00.060 align:middle line:84%
And you spend a week, everybody
spends a week

00:09:00.060 --> 00:09:03.020 align:middle line:84%
working in the warehouse
in Kentucky

00:09:03.020 --> 00:09:03.980 align:middle line:90%
shipping out the product.

00:09:03.980 --> 00:09:05.930 align:middle line:84%
Because they don't want you to
then become a marketing person

00:09:05.930 --> 00:09:07.870 align:middle line:84%
or an operation person
and forget one thing.

00:09:07.870 --> 00:09:10.420 align:middle line:90%
So that's insight number one.

00:09:10.420 --> 00:09:14.360 align:middle line:84%
Number two is a customer service
culture is only as

00:09:14.360 --> 00:09:16.560 align:middle line:84%
strong as the employees
who own it.

00:09:16.560 --> 00:09:22.000 align:middle line:84%
So Zappos every year puts out
a 300 page employee manual

00:09:22.000 --> 00:09:25.300 align:middle line:84%
culture book written by the
employees themselves.

00:09:25.300 --> 00:09:27.530 align:middle line:84%
And you can actually
buy it on the site.

00:09:27.530 --> 00:09:29.170 align:middle line:84%
They sell it to other people
to explain the company.

00:09:29.170 --> 00:09:32.630 align:middle line:84%
And so the sense of the
employees really own the

00:09:32.630 --> 00:09:35.010 align:middle line:84%
culture, whatever form that
culture may take, is another

00:09:35.010 --> 00:09:36.520 align:middle line:90%
important takeaway.

00:09:36.520 --> 00:09:37.870 align:middle line:84%
PAUL MICHELMAN: Bill Taylor,
thank you very much.

00:09:37.870 --> 00:09:38.330 align:middle line:90%
BILL TAYLOR: Great, thanks.

00:09:38.330 --> 00:09:39.065 align:middle line:90%
It was fun.

00:09:39.065 --> 00:09:41.570 align:middle line:84%
PAUL MICHELMAN: To read more
about Zappos and other

00:09:41.570 --> 00:09:44.670 align:middle line:84%
innovative companies, you can
visit Bill's blog, The Game

00:09:44.670 --> 00:09:45.940 align:middle line:84%
Changer, at
Blogs.HarvardBusiness.org.

00:09:45.940 --> 00:09:55.094 align:middle line:90%