The 3Ps: How it all comes together


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I had high expectations when I received my free advance copy of Delivering Happiness, A Path to Profits, Passion and Purpose by Tony Hsieh, CEO of Zappos. I admire Tony Hseih and Zappos tremendously.  Zappos gets so much right because Tony Hseih understands the profound importance of motivation and alignment in building a company. I was very curious how this all came about as I knew really nothing of Tony beyond his role as CEO of Zappos.

Tony started one business after the other from an early age, from selling worms to photo buttons to magic tricks, learning many lessons along the way. Like many of this new generation of entrepreneurs, like Lyle Fong and Gurbaksh Chahal, Tony accepted his parents’ high expectations but rejected their narrow definition of success, pursing what he was passionate about, not just accepting that he should become an engineer, a doctor or a lawyer.

Tony’s story about his first job out of Harvard with Oracle is a wake-up call for the typical big-company recruiting process.  Tony is very understated about his accomplishments in his book, but this was a guy who had racked up a lot of achievements for a new college grad. Yet when he joins Oracle,  “They didn’t really know who I was, and I didn’t really know who they were. I actually had no idea what I would be doing or what to expect.”  An experience far too many new employees can relate to.

At this point in Tony’s journey, he starts to understand that Purpose matters. Purpose is illustrated by a story told by Erik Berggren of SuccessFactors about two workers, each pushing a rock up a hill. The first worker is grimly going about the task; the second is whistling and is clearly energized. When asked what they are doing, the first worker replies, “I am pushing a rock up a hill.” The second replies, “I am building a castle.”  Despite the fact that “motivated employees who care about their company goals aren’t 10% or 20% more productive, they can do 10x more. It’s not just the hours they work, they are also more effective” few companies articulate a purpose to their employees. Most employees see rocks instead of castles.

Tony’s first huge success was LinkExchange, sold to Microsoft for $265M in 1998. Tony and his co-founders started the company in 1996 because they were bored pushing rocks in their day jobs. The company quickly took off – they had caught the internet wave just right. They caught the wave because they were in the game, pursuing their passion.

Tony was an early investor and advisor to Zappos, and joined as CEO just before the dot com crash. The first years were spent in survival mode and in the search for a profitable business model. Even with Tony’s huge payout from the LinkExchange exit, the VCs wouldn’t invest in Zappos at this stage.

It is clear from the book that Tony is someone who stays true to himself, and he wanted to do work he was passionate about. But the LinkExchange experience taught him the hard lesson that building a business where he would like to work takes something more.  “We loved the idea of owning and running our own business, but the reality ended up being a lot less fun than the fantasy.” He called the LinkExchange culture “death by a thousand paper cuts.” He asked himself, “How did we go from an ‘all-for-one, one-for-all’ team environment to one that was now all about politics, positioning and rumors?”

Mindful of this experience, Tony wanted to build a business that continued to share his purpose and passion beyond the early stages. Of LinkExchange Tony wrote, “During the first year, we’d hired our friends and people who wanted to be part of building something fun and exciting. Without realizing it, we had together created a company culture that we all enjoyed being part of.  Then, as we grew beyond twenty-five people, we made the mistake of hiring people who were joining the company for other reasons.”

LinkExchange grew to a mix of people with different motivations and different agendas. For Tony, working at LinkExchange went from building a castle back to just hauling rocks. Like NetApp, Linkshare found that when a company grows to the point where all the employees can no longer fit around a table or in the lunch room, without a shared passion and purpose, agendas diverge and motivations narrow. A company culture happens – for better or for worse.

When Zappos moved from San Francisco to Las Vegas, Tony didn’t want the worst to happen, so he set about capturing the culture that made Zappos’ special.  “We thought that if we got the culture right, then building our brand to be about the very best customer service would happen naturally on its own.”  Tony insightfully calls this chapter of the book “Platform for Growth” because “our Brand, our Culture and our Pipeline are the only competitive advantages that we will have in the long run.” If you only have time to read one chapter of the book, I recommend Platform for Growth.

Delivering Happiness doesn’t end with the great financial success of the Amazon acquisition of Zappos as you might expect. Tony’s $100M/year in value creation since 1996 is extremely impressive but Tony’s story doesn’t stop there. Tony’s mission is to help others “defy conventional wisdom and create their own paths to success.” Tony has figured out that profits and a great working environment aren’t mutually exclusive. In fact Tony has replaced the traditional four P’s of Product, Price, Place and Promotion with the three P’s of Profits, Passion and Purpose.

Profits, passion and purpose are reflected in the core values that Zappos captured in their Culture Book. These are the simple rules that Jane Young describes so eloquently in Complexity & Humanity 2.o. Simple rules support complex, adaptive behavior. Core values matter because you can’t foresee every circumstance, or script every decision for every employee of your company. Core values are a touchstone, empowering your growing team to make the right decisions that keep everyone moving in the right direction.  Core values are built from the ground up, and are constantly modeled by the leadership team.

Zappos isn’t a poster child for startup business execution. Few startups have the runway that Zappos had thanks to Tony continuing to invest to keep the company afloat . But Zappos got key things right, like their early focus on the customer and the hard earned lesson of never outsource your core competency. Tony’s focus on capturing and now cultivating the unique Zappos culture keeps his team building a castle.

Tony’s story, written in his own words, is honest and genuine and there are many take-aways from the book for education, for business and for life; that we can be mindful of the narrow definitions of success that were handed down to us, and be an agent to change that.

Let’s start with our kids – over scheduled and buried in homework, with no time and space to find and pursue their passion.  Tony is clearly very bright and probably underestimates how much leeway this afforded him. He did a great job of managing external expectations of success while pursuing his own goals. But most kids don’t have this leeway. It’s up to us as adults to be their advocates, to push back on a system run amok.

And let’s revisit our assumptions of what motivates people.  To quote Daniel Pink, author of Drive: The Surprising Truth About What Motivates Us, “too many organizations are making their decisions, their policies about talent and people, based on assumptions that are outdated, unexamined, and rooted more in folklore than in science.”

CEO’s that put happiness “at the core of their business models” understand what Tony describes as “the parallels between what the research has found makes people happy (pleasure, passion, purpose) and what the research has found makes for great long-term companies (profits, passion, purpose).”

I’m in.

Republished with author's permission from original post.

Meri Gruber
Meri Gruber is the VP of Business Development at Decision Management Solutions. Decision Management Solutions provides consulting services in all aspects of Decision Management, predictive analytics and business rules. Meri blogs on the intersection of business execution and innovation at Competing on Execution.


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