Tony Hsieh at Zappos: Structure, Culture and Radical Change SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Tony Hsieh at Zappos: Structure, Culture and Radical Change
After 18 months of attempting to transition the company to holacracy, Tony Hsieh, Zappos' celebrity CEO, decided it was time to make the change happen. In March 2015, he sent an email to all Zappos employees offering them 3 months' severance pay if they felt that self-management was not for them. One month later, 14% of the workforce had quit, including 20% of the tech department, potentially putting at risk a complex transition to a new online platform mandated by parent company Amazon. The case recounts how Tony Hsieh financed, championed, and ultimately became CEO of online shoe retailer Zappos. A passionate entrepreneur who made millions at a young age, Hsieh was known for his penthouse parties, for what he referred to as his "tribe". He brought the same sense of community to Zappos, which he moved from San Francisco to Las Vegas where employees could "be like family". Despite the company's unabashedly weird culture, it had the lowest employee turnover rate in the industry. Widely admired for its outstanding customer service, Zappos was repeatedly listed among Fortune's "Best Places To Work." When in 2009 Amazon acquired Zappos for $1.2 billion, it promised to preserve its management and culture. But Hsieh's decision to implement holacracy - a form of organizational self-management that replaces job titles and hierarchy with "circles" that employees step in and out of according to their preferences and skills - was less popular than hoped. Hence his "rip the Band-Aid" approach, to ensure that only employees committed to the change remained at the company.
Swot Analysis of "Tony Hsieh at Zappos: Structure, Culture and Radical Change" written by Noah Askin, Gianpiero Petriglieri includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zappos Hsieh facing as an external strategic factors. Some of the topics covered in Tony Hsieh at Zappos: Structure, Culture and Radical Change case study are - Strategic Management Strategies, Leadership, Organizational culture, Organizational structure, Technology and Organizational Development.
Some of the macro environment factors that can be used to understand the Tony Hsieh at Zappos: Structure, Culture and Radical Change casestudy better are - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, cloud computing is disrupting traditional business models, geopolitical disruptions, increasing commodity prices, increasing government debt because of Covid-19 spendings,
there is increasing trade war between United States & China, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Tony Hsieh at Zappos: Structure, Culture and Radical Change
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tony Hsieh at Zappos: Structure, Culture and Radical Change case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zappos Hsieh, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zappos Hsieh operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Tony Hsieh at Zappos: Structure, Culture and Radical Change can be done for the following purposes –
1. Strategic planning using facts provided in Tony Hsieh at Zappos: Structure, Culture and Radical Change case study
2. Improving business portfolio management of Zappos Hsieh
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Zappos Hsieh
Strengths Tony Hsieh at Zappos: Structure, Culture and Radical Change | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zappos Hsieh in Tony Hsieh at Zappos: Structure, Culture and Radical Change Harvard Business Review case study are -
Ability to lead change in Organizational Development field
– Zappos Hsieh is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Zappos Hsieh in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Tony Hsieh at Zappos: Structure, Culture and Radical Change Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Zappos Hsieh has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tony Hsieh at Zappos: Structure, Culture and Radical Change Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Organizational Development industry
– Tony Hsieh at Zappos: Structure, Culture and Radical Change firm has clearly differentiated products in the market place. This has enabled Zappos Hsieh to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Zappos Hsieh to invest into research and development (R&D) and innovation.
Analytics focus
– Zappos Hsieh is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Noah Askin, Gianpiero Petriglieri can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– Zappos Hsieh has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Tony Hsieh at Zappos: Structure, Culture and Radical Change HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Zappos Hsieh is present in almost all the verticals within the industry. This has provided firm in Tony Hsieh at Zappos: Structure, Culture and Radical Change case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Zappos Hsieh is one of the leading recruiters in the industry. Managers in the Tony Hsieh at Zappos: Structure, Culture and Radical Change are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Zappos Hsieh is one of the most innovative firm in sector. Manager in Tony Hsieh at Zappos: Structure, Culture and Radical Change Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Zappos Hsieh has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Tony Hsieh at Zappos: Structure, Culture and Radical Change - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Zappos Hsieh are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Organizational Resilience of Zappos Hsieh
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Zappos Hsieh does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Tony Hsieh at Zappos: Structure, Culture and Radical Change | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tony Hsieh at Zappos: Structure, Culture and Radical Change are -
Interest costs
– Compare to the competition, Zappos Hsieh has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– Zappos Hsieh has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tony Hsieh at Zappos: Structure, Culture and Radical Change, is just above the industry average. Zappos Hsieh needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
No frontier risks strategy
– After analyzing the HBR case study Tony Hsieh at Zappos: Structure, Culture and Radical Change, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Low market penetration in new markets
– Outside its home market of Zappos Hsieh, firm in the HBR case study Tony Hsieh at Zappos: Structure, Culture and Radical Change needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Tony Hsieh at Zappos: Structure, Culture and Radical Change, in the dynamic environment Zappos Hsieh has struggled to respond to the nimble upstart competition. Zappos Hsieh has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Zappos Hsieh has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Zappos Hsieh products
– To increase the profitability and margins on the products, Zappos Hsieh needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Zappos Hsieh has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Zappos Hsieh even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Zappos Hsieh has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Tony Hsieh at Zappos: Structure, Culture and Radical Change, it seems that the employees of Zappos Hsieh don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities Tony Hsieh at Zappos: Structure, Culture and Radical Change | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Tony Hsieh at Zappos: Structure, Culture and Radical Change are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Zappos Hsieh in the consumer business. Now Zappos Hsieh can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Zappos Hsieh can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Loyalty marketing
– Zappos Hsieh has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Zappos Hsieh can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Zappos Hsieh can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Zappos Hsieh can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Zappos Hsieh can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Tony Hsieh at Zappos: Structure, Culture and Radical Change suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Zappos Hsieh can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Tony Hsieh at Zappos: Structure, Culture and Radical Change, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Zappos Hsieh has opened avenues for new revenue streams for the organization in the industry. This can help Zappos Hsieh to build a more holistic ecosystem as suggested in the Tony Hsieh at Zappos: Structure, Culture and Radical Change case study. Zappos Hsieh can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Zappos Hsieh to increase its market reach. Zappos Hsieh will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Zappos Hsieh can use these opportunities to build new business models that can help the communities that Zappos Hsieh operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Building a culture of innovation
– managers at Zappos Hsieh can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zappos Hsieh in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Zappos Hsieh can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Tony Hsieh at Zappos: Structure, Culture and Radical Change External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tony Hsieh at Zappos: Structure, Culture and Radical Change are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Zappos Hsieh in the Organizational Development sector and impact the bottomline of the organization.
Consumer confidence and its impact on Zappos Hsieh demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Regulatory challenges
– Zappos Hsieh needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Environmental challenges
– Zappos Hsieh needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Zappos Hsieh can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Technology acceleration in Forth Industrial Revolution
– Zappos Hsieh has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Zappos Hsieh needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Shortening product life cycle
– it is one of the major threat that Zappos Hsieh is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Zappos Hsieh can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Zappos Hsieh can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Zappos Hsieh needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Zappos Hsieh will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Zappos Hsieh.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Zappos Hsieh with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Zappos Hsieh business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Tony Hsieh at Zappos: Structure, Culture and Radical Change Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Tony Hsieh at Zappos: Structure, Culture and Radical Change needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Tony Hsieh at Zappos: Structure, Culture and Radical Change is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Tony Hsieh at Zappos: Structure, Culture and Radical Change is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Tony Hsieh at Zappos: Structure, Culture and Radical Change is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Zappos Hsieh needs to make to build a sustainable competitive advantage.