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Ann Morris
This episode is supported by Harvard Business School Executive Education. Their programs create powerful connections for leaders around the world, strengthening both organizations and individuals by deepening existing relationships and fostering new ones. Participants leave with lifelong friends, new potential business partners, and a powerful globe spanning network of fellow change makers. Learn more at HBS Me Learn. That's HBS Me Learn. Could AI help you do more of what you love? Workday is the next gen ERP powered by AI that actually knows your business. We help you handle the have to dos so you can focus on the can't wait to dos. It's a new workday. Francis One problem we continue to observe is that many people, too many people, are still unhappy when they go to work. We are still making each other miserable in the workplace at rates that are far too high. But in our work studying and fixing companies, one organization really stands out for tackling this problem head on, which is Zappos, the famous shoe retailer. We both fell in love with Zappos as both investigators and happy customers. And then as we started writing about service excellence and figuring out what it really takes to get there, the lessons from this company just kept coming to gold mine. And one big lesson in this gold mine is how important internal culture can be in delivering external value to customers everywhere. From the call center to the C suite to interactions with vendors, Zappos made these very intentional choices to make sure that people were happy to come to work every day. And that happiness then played a huge role in making customers happy too. Welcome back to Fixable. I'm Ann Morris.
Frances Fry
I'm Frances Fry.
Ann Morris
Today we want to share exactly how Zappos accomplished this elusive goal of happy people and how you can deliver happiness in your own workplace. Frances, you actually visited Zappos right before it was acquired by Amazon. What were you looking for and what did you find?
Frances Fry
Well, I visited it because I had heard they're doing so well and I was studying service organizations and what I saw when I got there first, I met their founder and CEO Tony Hsieh. And I was, I was expecting this like extravagant, over the top guy. He dressed like me. Like, well, I, the first day I saw, I knew he dresses like that every day because when you know, you know. And he very famously, he owns a shoe company. He very famously, I later learned, wore the same pair of shoes for two years and then replaced it with the same pair of shoes.
Ann Morris
And Shay was the founder and CEO.
Frances Fry
Of the founder and CEO of the company. And so he was the first person who I met and I was just taken by his lack of flamboyance.
Paige Desorbo
Mm.
Frances Fry
And his absolute calm, serene, laser like focus on wanting to design an organization where everyone wanted to come to work. Because the last company he worked at was another company he founded. And he ultimately hated going to work.
Ann Morris
There, even as, you know, the highest status person in every room he walked into.
Frances Fry
So he was not gonna let that happen again. And what he would always say, which was really important to me, he didn't design the organization for Mini Tonys. He designed an organization that very deliberately let you bring you. Yeah. That's what he really craved. Not you bring me.
Ann Morris
Love it. So let's talk about the famous Zappos culture. There are, you know, there were 10 company values. The two most famous ones are deliver wow through service number one. And then you get all the way to 10. And it's be humble.
Frances Fry
Yeah.
Ann Morris
And these on a list of 10, these are the ones that I think really shaped people's experience of both working for this company and interacting with it.
Frances Fry
Yeah. And they were done by design. They would select on them. So let's say you were the best person in the world. They engineered their interview process to reveal whether or not you had humility. And if you didn't, it didn't matter how good you were, they weren't going to hire you. And here's one way they would test for humility, because everybody would do the would join the same intro group and they would go through a few weeks of training to really, like, believe and, you know, undo all the harm that all the other organizations had done to you and get you to really believe in this. And along the way, you had tests that you had to take. Well, at the time, you had to take a typing test because that meant that the high school graduate would be sitting in one place and next to them was the cfo, both taking the same typing test. If the CFO revealed any sort of haughtiness, they didn't get to stay. So they did these things by design. And one of the most famous things they did is after you go through all this and let's say you're like, oh, my God, like, this place is starting to feel a little too weird. At the end of the training, they would make what became known as the offer.
Ann Morris
Capital T, Capital L. That's exactly right.
Frances Fry
And the offer was they would offer at the time, $2,000 to quit, no questions asked. So you went through the training. Here's $2,000. Please leave. And what this did is had everybody who stayed, which was the vast majority of people but not all. Everyone who stayed was opting in. And that was a huge cultural phenomenon, is they gave employees that they trained so well and asked to leave. And so they committed to say they gave them more degrees of freedom than most organizations. So if you're talking to someone and let's say that they mentioned a death in the family or something, you could send them flowers. You didn't have to get approval. You could upgrade them. You didn't have to get approval. So they trusted you because they trained you. And that built commitment from employees that was so outsized.
Ann Morris
So the stat that I never stopped thinking about is the company starts in California, moves to Vegas. 80% of call center employees moved with the company, many of them for a $13 an hour job. And when you ask those employees why they were moving, it was the culture of the company.
Frances Fry
And when you ask Zappos why were they moving to Vegas, like, why leave a successful place? They said, because Vegas is the only 24.7town and we want to be able to serve our customers 24 7.
Ann Morris
I mean, if you don't have ecstatic people jumping out of bed to want to deliver happiness 24 7, it doesn't matter if the fucking lights are on, right? So, like, you know, all of this stuff beautifully comes together and reinforces what this company was up to. So, Francis, let's go deep on the call center, because I think it is illustrative of what's happening in the rest of the business. And it's also this job that is considered so bad in American capitalism that in this era of high job loss anxiety due to AI, we're like, oh, take these jobs.
Frances Fry
Yeah, no problem. So one famous thing is that they didn't give any guidance for how long you should stay on the phone. So if you have people working at a call center, then or now, there will be a metric that's typically called average call handle time. And you want to have that number be quite low is the way to think about it. Zappos didn't have one. And so if you called into Zappos, or as I did when I visited the company, you could ask any employee what their personal record was, and they would respond with a time. 3 hours and 10 minutes, 5 hours and 15 minutes.
Ann Morris
Oh, the person, how long they stayed on the phone, not how quickly they got the pesky customer off and they.
Frances Fry
Were answering with pride, how long they stayed on the phone. They were allowed to explore it with them. Where a father would be calling to get shoes for his son for the first time. The mother was in the military, came to a tragic end, and the person would stay on the phone with him and help him for as long as it took. Or someone is buying shoes for their mother who's with a diabetes diagnosis, the size of her foot is changing. And they just gave people extraordinary license. And you could think, well, this is frivolous. This is actually the humanity at the center of the organization that made it enormously profitable.
Ann Morris
So not only is the humanity of the people doing this job not being destroyed, it is being so centered that they are able to center the humanity of the people who call in. Because that's not the feeling that most of us get when we, you know, when we call the dreaded 1, 800 number. So what are the choices that this company is making that allows those moments to happen?
Frances Fry
So, for example, hiring at a call center where they paid competitive wages, maybe a little bit above average, but not a lot above average, you would have a skills based interview and a culture based interview. Everyone who came in into the organization, whether you were a call center employee or the new cfo, all went through the same training in the organization. So they had a shared development process. It wasn't that this is like some bad job they have to do over here. The executives would answer the phones during holidays, which is really a signature of pretty awesome organizations like UPS and Vanguard and other organizations. So you were judged on how much the customers were delighted and how often they came back. And so very quickly their sales, for example, became 75% repeat customers, unprecedented for the industry. You paid a little extra for the shoes, by the way. You could always find the shoes for less somewhere else, but you didn't bother because you wanted to go here. But let's say you called and they didn't have your shoes shoe in stock. They had licensed the employees to go to up to three competitors websites and help you find the shoes. Now today, you know, we're all equipped to do that and pretty soon AI will do it for us. But back in the day, no, we were not equipped to do it. So it was all of these things. It was as if they designed it. What if you really wanted to put your customer at the center of the organization and design for them and you wanted to be as helpful as possible, what would it look like? That's what they did.
Ann Morris
Got it. And then the job they're asking me to do as an employee of this company and the CEO, may he rest in peace, Tony Hsiehe wrote a book about his experience building this company. He called it Delivering happiness. So there's a piece of delivering happiness that is, let's design an experience that's going to spark joy for the customers that come through the door. But then there's also this component of how do you set employees to reliably deliver that joy as a casual part of their job, not as a heroic part of their job. So what did they do to make that possible?
Frances Fry
At the time, when we went and visited and we would look at the call center employees and I had been to loads of call centers. And one thing that you would have noticed when you went to call centers back in the day is that they had so many screens. Like a typical call center employee might be looking at five different screens. It just was crazy. At Zappos, they had far fewer screens. The screens were less chaotic. They had simplified the back end so much that they were setting the employees up for success. It was as if the same way they were designing for the customers, they were designing for the employees. Here's one example. The inventory management system, which you'd think like, who cares? It had 99% reliability. The average reliability of an inventory management system at the time was 40%. 4 out of 10. You would have accurate stock. This had accurate stock for everyone. You know how much easier your job is when you have accurate information. Do you know how hard it was for them to create accurate information for this? Because they had more shoes, more SKUs, different sizes, different SKUs than anyone else by far, which means they should have had worse. So they really poured in the investment in places where it really mattered. How did they know they mattered? It was setting their employees up for success and it was setting their customers up to be delighted. They had another technological innovation at the time. Amazon had two day delivery and their whole, all of their warehouses and everything was optimized for two day delivery. Zappos, you could place an order up until midnight and get the shoes by breakfast. They had overnight delivery. Now, the only way they could pull that off is if they had better technology than Amazon. And they did. They had an unbelievable use of robots, which were these little flat, like looking like Roombas, but bigger. And they would go underneath pallets, lift up the pallets and bring them all. So the workers in the organization would be at their place and these robots would bring them all of the different things to put into a box. Back in 2009, it was incredible. And when Amazon said, well, we're gonna, we tried to beat them at their own game, you know what Amazon did? They went and bought the robot. Company they used after they bought apples, they were like, we wanted to. We want now to be. And I think one of the reasons that Amazon can now do overnight delivery all comes back because Zappos was doing it. So what I love about it is both the heart and the soft part of it. It's both the design and the culture of it.
Ann Morris
So all this sounds very expensive. And you just told me that they only charged a little bit more than the Foot Locker in my local dying mall, which is my other alternative in 2009. So how did they fund this?
Frances Fry
Yeah, the biggest way that they funded it is that they didn't really spend money on marketing. Their philosophy was, if I have to get customers through spending money on marketing, that is a drug I will never get off. I spend $100 on marketing this year. I don't get any better. I just get some customers, and then I have to spend $100 next year. And I have to spend $100 next year. They said, what if instead of putting the $100 into marketing, we put the $100 into service? Now, next year, I'm better than I was this year. But then you're like, well, how do you tell the people, what if your service was so good, customers were compelled to tell one another? So they shifted marketing dollars to service dollars, and word of mouth took care of it.
Ann Morris
And they talked about this quite these two investments as essentially fungible.
Frances Fry
Totally fungible. And I would say they're even better than fungible. As somebody who loves service organizations, if you can get your customers to talk about you, there is no ad in the world that's as good as a personal endorsement as, like, listen to me talk about Farmer's Dog. Farmer's Dog is never doing a commercial that can replace that.
Ann Morris
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Frances Fry
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Ann Morris
Really? I can get super specific with dealer listings and see cars based on my budget.
Frances Fry
You can really have it delivered or pick it up. I think kid is walking up the slide.
Ann Morris
Really. Autotrader, Buy your car online. Really?
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Ann Morris
Another big thing that Zappos did to differentiate its service was the investment they made in their relationship with vendors. Vendors are technically not a part of the organization, of course, but it's impossible to do work without them, particularly in retail. So Zappos sought out ways to spark vendor joy too, and treated them like they were essential, which was not the industry norm. Frances, walk us through how vendors were impacted by the positive culture at Zappos.
Frances Fry
Well, most people have an antagonistic relationship with their vendors. They feel like it's a fixed piece of and if I give you a bigger piece, I get a smaller piece. Right. And so it's really antagonistic. Zappos thought, if we can grow the pie together, we're all going to be better off. So remember, Zappos didn't sell a thing that everyone else couldn't sell. It was 100% reliant on vendors. And so it thought, how can we differentiate our service experience to the vendors? The same way it differentiates a service experience to customers and to employees. And it worked.
Ann Morris
Another fun fact I loved was that every year they would throw a blowout vendor appreciation party on the famed Vegas strip.
Frances Fry
And usually it's the other way around, right? Yeah, but the vendors were vital and they treated them like they were vital. And if a vendor called Zappos returned their call so quickly, you just get the sense that these other organizations, they would put them in line, they would put them at the very end of the line because you were in service to me. But at Zappos, Zappos was in service to its vendors. You know, in an organization where now everybody is selling the same shoes, doesn't matter what the company is, which means you all have the same vendors. Zappos treated the vendors a thousand times better than everyone else. Maybe a hundred thousand times because the bar was so low from everyone else. So for example, a vendor would fly in to Zappos. Zappos employees would pick them up at the airport. Like a VIP. Like the VIPs they were. You know, usually vendors have to like crawl in through the back door and like, oh, no, they'd bring them in through the front door. And this meant, let's say you're a vendor and you don't have enough shoes one day to send to all of your B2B clients. Well, who are you sending them to first? You're sending them to Zappos.
Ann Morris
And Zappos put up the team that showed you the night of your life on the Vegas strip, and the team.
Frances Fry
That shared data with you. And no one else would share data with them, but they shared data with them so that they could co produce better outcomes. So are you going to share it with someone who is honoring your humanity just as much as they're honoring the customer's humanity? That's who you're going to.
Paige Desorbo
Yeah.
Ann Morris
I also think is a powerful indicator.
Frances Fry
It's a powerful indicator. And you can imagine how long or if at all that call. Because when you, when you're like dehumanize someone there, you're just not at the top of their to do list. Yeah, this was a very special relationship. And, you know, you could say it, but when I went to write the case and I spent a few days there, I got there and we were doing it and they had a parade. And I was like, wow. I mean, I knew I was, you know, maybe Harvard's name is bigger than I thought. But they're throwing, they're throwing me a parade.
Ann Morris
They're all out here in Vegas. Oh my God.
Frances Fry
And then when the vendors came, there was a parade. And then when Toyota came to visit the company to learn its secrets, they threw a parade. They had like 10 or 15 parades a day. And it would just meant you're at your cubicle. You know, you're in finance and you're at your cubicle doing your stuff. And the parade comes by and you're. The finance people had cowbells. So they did go ring, ring, ring. And then someone else has like. And all of the various. So There were many parades. Joy was sparked all day long.
Ann Morris
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Ann Morris
All right, so now we have a bunch of happy people that are whose job is to deliver happiness and we've set them up for success and we're taking care of everybody and we've figured out how to pay for it. They also seem to supercharge this whole thing with this extraordinary culture. Yes. And it is actually kind of hard to pull the culture out from these other elements by design. We work with a lot of teams and a lot of even, even people at the very top of the hierarchy with Cs in their title who feel like culture is something that happens to them.
Frances Fry
Yeah.
Ann Morris
That they must endure and they have no power over changing it. And to me, one of the incredible lessons of this whole story is what can happen when you pair strategy and service model and culture and you make sure that they are all incredibly aligned. So I want to take some action around these ideas. Where would you advise people to even begin?
Frances Fry
I would begin with an anthropological audit and pick your favorite constituent customer, employee, supplier, I actually don't care who it is. If you're in a not for profit people that you serve, the people, the funders, whoever it is, pick a constituent and do an audit of what delights them, what theoretically would delight them and how are we performing relative to others. And from that, are there places where we can spike? Not a lot of places. If we spiked on a few of those metrics, what would be different? And so that's where I might start with it, because everything comes around to the few things that mattered most to the customers, the few things that mattered most to the employees, to the vendors, et cetera.
Ann Morris
Yeah, I love that. I mean, if I think about it in the context of customers, like, what would it look like to take customer delight deadly seriously?
Frances Fry
Deadly seriously.
Ann Morris
And then, you know, on the employee. And what would it take to bring that same level of seriousness and curiosity to what would it take to delight our employees? This type of conversation, we sometimes call it Monday morning questions. And it is part the framework that our listeners have heard before of really figuring out what problem you're solving. Because in most organizations, we're solving symptoms problems. And so Monday morning questions are a way to get to the root cause. I love this as one of your Monday morning questions, what would it really take to make our employees happy? Because you gotta go find out.
Frances Fry
And you need it with specificity.
Ann Morris
And you have to have the humility to Shay's point, to start with the assumption that you do not know the answer. You do not know the answer in 2026.
Frances Fry
And the answer is almost surely different than it was in 2023 and in 2020.
Ann Morris
Right. Even if you knew the answer in the past, you don't know it. And a simple version of that question that we use a lot is, what do people like most and least about working here? And that's a question that most organizations cannot confidently answer in this moment.
Frances Fry
And so that's the first thing I would do is putting the constituent group at the center, and where should I spike? And to your point, what are the pain points I could overcome? Or as our friends Bob Sutton and Huggy Rao would say, where's the friction that we want to remove? That's what I would do first. The second thing I would do is I would look hard at the culture. And you always say to me, organizations are perfectly designed for the results that they get. And I find it to be so humbling. And so I would take a look at the results we're getting with Brace myself and what are we doing to get Those results, like, with honesty, what are we doing to get those results? And then any of the results we want to change, what can we do different?
Ann Morris
Yeah. And this is in the category of culture as a very designable, very creatable asset in your organization because it is the, you know, what are the behaviors we're rewarding? Where is informal status going? What happens when the CEO isn't in the room, which is, of course, most of the time, how are things really done around here? All of that stuff is within your control. So to me, that's the other jumping off point on this inquiry is let's go find out what's driving the mindsets and behaviors that we want to change and get them closer, aligned with our strategy.
Frances Fry
And here I think we really have to be honest. I go to organizations that are number three in the market, but to hear them talk, you'd think they were number one. Like, you really have to take an honest look in the mirror or else it doesn't work. Be super intentional. And your customer is the beating heart of this. Your employee is the beating heart of this. And you don't have to beat your competition on every dimension, but please pick the dimensions you are going to beat them on and be pretty unapologetic about how you do it.
Ann Morris
So what's maybe a subset of that for me, Frances, is. Is still. What are we, almost 20 years later? The radical power of designing for the happiness of your employees. Seriously, I think it's one of the most underrated emotions in the workplace. And this idea that it's this kind of soft in this era of muscular leadership, to take the joy of your employees seriously as a. As an input into your competitive equation. It is absurd, I know, in some corners of this planet, but there's no looking away from what happens when we really do design for Joy in this deeply intentional way at work, where we are spending so much of our time. I mean, I really do feel like that is the lesson that Shay came to teach us. And we have still not listened.
Frances Fry
And I think one of the reasons is because we think joy is lazy. We think it's frivolous, we think it's filled with underperformance. And yet, if we can unlock the positive, virtuous cycle that comes from feeling great at work, well, we're the little guy in our performance. Thumps Amazon.
Ann Morris
I know.
Frances Fry
Yeah.
Ann Morris
Let's see how far. See how far we can take this. My lord.
Frances Fry
If you want to be on Fixable, please call us at 2, 3, 4. FIXABLE. That's 234-349-2253 or email us@fixableed.com.
Ann Morris
Fixable is brought to you by the TED Audio Collective and Pushkin Industries. It's hosted by me, Anne Morris and me, Frances Frey. This episode was produced by Rahima Nassa from Pushkin Industries. Our team includes Constanza Gallardo, Banban Chang, Daniela Baloro and Roxanne Hylash and our.
Frances Fry
Show was mixed by Louis at Storyyard. When everything is moving all at once, your workforce, your tech stack, your business.
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Really? Autotrader? Buy your car online?
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Date: February 9, 2026
Hosts: Anne Morriss & Frances Frei
Guest Appearances: N/A
Main Theme:
This episode explores how Zappos developed a revolutionary workplace and customer service culture that enabled it not only to thrive but to outperform even Amazon in key areas prior to its acquisition. The hosts break down Zappos’ unique approaches to culture, employee happiness, vendor relationships, and service innovation, and offer actionable lessons for other organizations.
Anne Morriss and Frances Frei, renowned leadership coaches, dissect the success of Zappos – the famed online shoe retailer. They discuss how a relentlessly intentional approach to employee happiness, organizational culture, and customer delight allowed Zappos to build outsized value and even force industry giants like Amazon to adapt. The episode is packed with practical tools and frameworks for listeners seeking to boost their own workplace cultures and performance.
“The offer was they would offer at the time, $2,000 to quit, no questions asked.” (Frances, 05:51)
“Zappos didn’t have [average handle time]. So if you called into Zappos...they would respond with a time. 3 hours and 10 minutes, 5 hours and 15 minutes.” (Frances, 09:07)
“Their philosophy was, if I have to get customers through spending money on marketing, that is a drug I will never get off. … What if instead of putting the $100 into marketing, we put the $100 into service?” (Frances, 15:34)
“At Zappos, Zappos was in service to its vendors.” (Frances, 20:18)
“To take the joy of your employees seriously as an input into your competitive equation...there’s no looking away from what happens when we really do design for joy in this deeply intentional way at work.” (Anne, 30:17)
“If we spiked on a few of those metrics, what would be different? That’s where I might start.” (Frances, 25:46)
“Organizations are perfectly designed for the results that they get.” (Anne, 29:07)
“He very famously wore the same pair of shoes for two years and then replaced it with the same pair of shoes.”
– Frances on Tony Hsieh’s humility (03:02)
“At the end of the training, they would make what became known as The Offer. ... $2,000. Please leave.”
– Frances (05:51)
“You could always find the shoes for less somewhere else, but you didn’t bother because you wanted to go here."
– Frances (10:13)
“Zappos treated the vendors a thousand times better than everyone else. Maybe a hundred thousand times because the bar was so low from everyone else.”
– Frances (20:18)
“The radical power of designing for the happiness of your employees...one of the most underrated emotions in the workplace.”
– Anne (30:17)
| Segment | Timestamp | |-----------------------------------------------------|:-----------:| | Introduction to Zappos culture and Tony Hsieh | 02:09–03:58 | | Humility in hiring, The Offer | 04:15–05:51 | | Call center innovation and humanity | 08:17–10:13 | | Supporting employees via better tech/process | 12:36–15:19 | | Service > Marketing: Funding the model | 15:19–16:44 | | Vendor partnerships and joy | 19:04–21:50 | | Building a joy-driven, high-performing workplace | 24:43–31:23 | | Applying the lessons: audits and Monday questions | 25:46–29:47 |
Whether you run a small team or a global corporation, Zappos offers a blueprint: design a culture where people want to come to work, and the rest—service, loyalty, even industry leadership—follows.