Why organizational culture is so important and how it changed Zappos’s strategy?
The last decades have been marked by intense focus on people within organizations. However, this was not always true. At the beginning of the capitalist period, in the context of the Industrial Revolution, the businessman was not interested in his employees and his wishes for the future. The employee was just a tool to get through the production and maximize profit. But that has changed, and then organizations realized that focusing on people can be very productive and profitable. The biggest companies of the 21st century are famous for having a specific and individual culture. After all, what is organizational culture and why is it so important?
To be able to answer this question, let us first define culture and organization. Culture is not something completely static or dynamic, it was defined by Cliffort Geertz as the "web of signs and symbols that connects people analyzed in an interpretive perspective". Now on organization, according to Maximiano (1992), "an organization is a combination of individual efforts aimed at achieving collective goals. Through an organization it becomes possible to pursue and achieve goals that would be unattainable to a person." Thus, let us now discuss how these two concepts are correlated.
The first studies on human resource management suggest that firms with sustained superior financial performance typically are characterized by a strong set of core managerial values that define the ways they conduct business. Firms with strong cultures are pointed out as examples and, from this, other firms seek to obtain the same level of performance by duplicating whatever makes a successful firm successful.
Although we understand that culture is a differential for a company, this does not mean that any culture will leverage any organization. In order for a culture to be considered fit to generate the benefits shown above, it needs to follow some criteria.
Classical theory argues that a firm’s culture can be a source of sustainable competitive advantage only if that culture is valuable, rare and imperfectly imitable. Even if a company has a very good culture, if it is easily copied, it will also benefit competitors who will approach the quality level of the original company.
One example of an organization that follows the criteria defined above is Zappos, a huge online shoe and clothing shop. The main objective of the company is to deliver not only shoes to the buyers, but in fact deliver happiness through their products by what they call “WOW Factor”. Nevertheless, it may be very common in other enterprises culture, but the difference between them and Zappos is how their team live this premise day by day.
Zappos is a case of success because they were able to apply what they put on their wall, why they committed to deliver. By putting 10 fundamental values, the leadership of Zappos was clever enough to understand that for the idea to work out, they would need people who thought the same way, people who believed in that cultural proposal.
Furthermore, a point we can’t miss when talking about organizational culture is that the leaders can’t request a posture of their team if themselves are not able to fulfill or live in the day by day culture implemented. A culture is something that must be lived not only during the work time, but also in the life bases of the company staff. How to request hard work and commitment if the employee do not take this characteristics in their personal life and if they can’t see that in their leaders.
Although Zappos had its culture solid, they believed they could do more, and better. So that, in 2015 they came up with a new proposal, the implementation of Holacracy. For the employees that didn’t think they would fit in this new concept of strategy, Zappos offered a good amount of money for them to leave the company. And some actually did. 14% of their team left Zappos because of this new organizational culture implementation.
Zappos’s idea, at this point, was to prevent that culture could be replied by others and that their team could solve problems in a faster way, with confidence, giving them empowerment to do so. Therefore, those who chose to stay in Zappos experienced an environment of self expression, a place where they could show their full capacity, potential by the gain of indepence in the decision-making.
Therefore, Zappos, by applying Holacracy, can say that they are not only an online shoes seller, “Zappos is a place where enthusiasts for shoes can find more people interested in fallow this passion”, delivering a full time experience that makes the site users (the buyers) feel special, feel that they can’t help talking about their time buying with them.
Barney, Jay (1986). Organizational Culture: Can It Be a Source of Sustained Competitive Advantage. University of California, Los Angeles.