By Verne Harnish “Growth Guy”

No company better exemplifies the power of a strong corporate culture than Zappos, the online shoe and clothing retailer acquired by Amazon last November for $1.2 billion.  Just over a decade old, its corporate culture is the critical glue that helps this rapidly growing company deliver on its promise of providing exceptional customer service – and delivering happiness!

To witness this culture firsthand, I organized a private tour of Zappos corporate headquarters in Henderson, NV for 120 CEOs and executives of growth companies.  We also invited their well known CEO, Tony Hsieh, to share his personal insights into corporate culture with a broader audience of growth company executives the following day.

FAILED CULTURE

Hsieh’s obsession with corporate culture dates back to his first company, LinkExchange, which he sold to Microsoft for $265 million when he was 24 years old.  He decided to sell the company the morning he found himself hitting the snooze button on his alarm clock multiple times, dreading the thought of having to go into work.  And he wondered how many other employees felt the same way.

He vowed if he launched another company he would focus on maintaining a strong corporate culture rather than one that haphazardly drifted and shifted as new employees were added to the firm.

CULTURE DRIFT

This cultural drift begins around 70 employees – when the senior executives no longer know everyone’s name in the company.  This drift accelerates when the company moves to a second floor in a building or opens a second location.  The physical separation makes it that much harder to keep the corporate culture tight and aligned.

The key to maintaining a cohesive culture is discovering a set of core values that accurately reflect the nuances of the organization’s personality.  Hsieh led this discovery exercise during Zappos’ fifth year in business.  This is about the right timing.  Like a child, the corporate culture or personality isn’t fully revealed until the company is five years old, being shaped through early experiences and the collective values of the people involved.

DISCOVERY PROCESS

I’ve seen firms spend tens of thousands of dollars and months going through a laborious process that often generates a generic list of core values.  And this generic list often fails to represent the uniqueness and power of the existing culture.  Alternatively, there is a way to get at your core values that’s fun and amazingly fast.  It’s an approach outlined in Jim Collins’s and Jerry Porras’s article “Building Your Company’s Vision.”  You can download the article from www.hbr.com for $6 or Collins has some

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By: Victoria Barret

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By Seth Godin

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This week’s Webcast includes:

EO Arizona’s Jim Bailey on creating a winning company culture
EO Portland member Jill Nelson on making strict budget cuts
Tip of the week from Kaihan Krippendorff: The strategy of sacrifice
Member Spotlite on EO Idaho’s Erik Bolinder

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By Julie Ziegler

June 10 (Bloomberg) — Zipcar Inc., the world’s largest car-sharing company, is gearing up to publicly sell shares in 2010 as it fends off rivals such as Hertz Global Holdings Inc.

The company, which has grown from a single lime-green VW Bug to a fleet of 6,500 autos, will post its first profit in the third quarter, Chief Executive Officer Scott Griffith said. Zipcar’s success has prompted Hertz to announce its own sharing service with 1,000 vehicles in New York City by year’s end, up from 100 in May.

Zipcar, conceived nine years ago at a café in Cambridge, Massachusetts, is aiming for an initial public offering at a time when smaller companies have been shut out of the market by the industry’s worst drought in at least 38 years. The number of venture-backed IPOs this year is down about 90 percent from the same period in 2007, the last year before the slump began, according to the National Venture Capital Association.

“We’re succeeding and we’re growing in a year where flat is the new up,” said Griffith, 50, referring to the global economic recession. Sales will reach $120 million this year and grow to $1 billion within a decade, he said.

Car-sharing differs from conventional automobile rentals. Zipcar customers pay an annual membership fee, currently $50. Reservations, pickups and returns are self-serve through the Internet or by telephone. The reservation system tracks where a Zipcar is left by the last user and can even lock out a driver who’s kept the auto past the agreed time.

Keys Stay Inside

Users swipe an access card over a reader in the windshield to unlock the Zipcar through a wireless data link. The keys are inside, attached by a cord to the dashboard. The cars can be rented by the hour or day, and fees include gasoline and insurance. The service is available in 28 U.S. states and Canadian provinces, as well as in London, Zipcar said.

Griffith joined as CEO in 2003, when Zipcar had 5,000 members. There are now 300,000. The company acquired competitor Flexcar in 2007 and this year started licensing Zipcar’s proprietary software to city governments to reduce costs.

David Brook, who in 1998 launched CarSharing Portland Inc. in Portland, Oregon, the first such for-profit service in the U.S., said it wasn’t long ago that car-sharing was viewed as a “wacky idea.”

“The car-rental companies were sitting on the sidelines for years, watching” to see who’d survive, Brook said.

While Zipcar hasn’t talked to bankers yet, the company’s growth makes it an IPO contender, said Paul Bard, an analyst at Greenwich, Connecticut-based Renaissance Capital.

‘Fresh Ideas’

“It sounds like a candidate for an IPO as the market recovers,” Bard said in an interview. “People are always looking for fresh ideas.”

OpenTable Inc., the restaurant-reservation service based in San Francisco that went public in May, was smaller and less profitable than ZipCar, according to regulatory disclosures. OpenTable commanded $20 a share, above its pre-IPO target range. The shares fell 28 cents to $27.70 at 4 p.m. New York time in Nasdaq Stock Market composite trading.

For Robin Chase, who co-founded the company with Antje Danielson, the once “fringe” notion of using the Internet to rent cars by the hour has been validated as Enterprise Rent-A- Car Co., Hertz and others started to vie with Zipcar.

“This isn’t niche, this isn’t fringe,” said Chase, 50, who holds a master’s degree in business administration from the Massachusetts Institute of Technology. She says her stake in the company is now “insignificant.”

The potential market for car-sharing worldwide may amount to 37 million customers and yield $10 billion a year in revenue, Zipcar said, citing a June 3 report it commissioned from the Economist Intelligence Unit. It didn’t specify a timeframe.

Whimsical Style

Zipcar underscores its whimsical style by calling members Zipsters and giving each car a name (at least one was called Betsy). The quest for profitability has disappointed some customers.

David Frey, 36, of New York, said he’s less enamored with Zipcar after the company raised his annual membership to $50 from a promotional rate of $25. Frey, who owns culturehall.com, a Web site that showcases emerging artists, said he might consider other options such as Hertz.

When he started using Zipcar in 2003, “it felt much more like a movement,” Frey said.

An IPO may benefit Zipcar’s largest investors, venture capital firms Greylock Partners, Benchmark Capital and Revolution LLC, the fund started by America Online Inc. co- founder Steve Case.

IPO ‘an Exit’

An IPO is “a way for our shareholders to get an exit,” Griffith said. Selling shares would also help the company expand in Europe and the U.S., he said.

“It’s a cool technology. My two sons use Zipcar,” Hertz Chief Executive Officer Mark Frissora said. “They said, ‘Dad, you have to get into this.’”

Hertz, the second-largest U.S. rental car company, slipped 8 cents to $7.08 at 4:04 p.m. in New York Stock Exchange composite trading. The Park Ridge, New Jersey-based company has gained 40 percent this year. Closely held Enterprise, based in St. Louis, is the largest rental car company.

Enterprise started offering car-sharing in 2007, spokeswoman Lisa Martini said, in a partnership with Google Inc., owner of the world’s most popular search engine. Hertz announced a car-sharing venture last year and in April acquired Paris-based Eileo SA to compete with Zipcar’s reservation system.

Zipcar also faces competition from local non-profit operators such as PhillyCarShare.org and Chicago-based I-GO. Griffith is banking on customers such as Alice Speck, who says neither price nor competition could pry her away from a Zipcar.

Speck, 31, used Zipcar for her 2006 honeymoon when she was a student in Washington, D.C. Unable to afford a fancy getaway, the couple checked out a Mazda Miata convertible and headed to Annapolis, Maryland, for two days.

“We are absolute loyal Zipcar customers,” Speck said. “It’s like being a Red Sox fan.”

To contact the reporter on this story: Julie Ziegler in Boston at jziegler@bloomberg.net.

Last Updated: June 10, 2009 16:12 EDT
http://www.bloomberg.com/apps/news?pid=20601109&sid=apHgEWdo65Mg#

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This week’s Webcast includes:
Balancing business operations and customer satisfaction
Tip of the week from author and EO Idaho member Dave Lakhani
On the phone with Henry Rischitelli
Member spotlight on EO Cleveland’s Louis Licata

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Posted by Mary Ellen Slayterfor SmartBlog

Today’s guest post is by Charles Garcia, a former White House Fellow and author of “Leadership Lessons of the White House Fellows: Learn How to Inspire Others, Achieve Greatness, and Find Success in Any Organization.”

Never has it been more obvious that people are the heart and soul of any business. As a leader, making sure they know that is your key to success. If you put your people first, the payback is unbelievable. Not only will they be more motivated, but they’ll remain loyal to your company even when you can’t always financially reward them for their great work.

No organization is better than the people who run it. No matter whether you’re a manager, CEO, or an HR professional you are in the people business — the business of hiring, training, and managing people to deliver the product or service your company provides. If the people are the engine of your success, to be a great leader you need to attend to your people with a laserlike focus.

Mitchell Reiss (WHF 88-89) has seen firsthand that a leader’s focus on his or her people is an incredibly powerful tool. He learned that valuable lesson during his White House Fellowship from his principal, former National Security Advisor, former secretary of state and former White House Fellow Colin Powell.

“Two weeks after I started my Fellowship, there was a picnic over the weekend for the National Security Council staff and their families,” Reiss recalled. “We got there promptly, but Gen. Powell was already there helping set up, helping cook the burgers and hot dogs, and personally greeting every single person, not just on the staff but their families. He came over to me and knew not only my name but introduced himself to my wife, Elisabeth, and thanked her for allowing me to work the hours that I worked at the NSC. He told her she should feel that she is part of the NSC family as well.

“That very brief but very personal interaction with Powell had an extraordinary impact on her. After he left, she turned to me and said, ‘You better do a good job for that man. If you need to stay late at work, I will never complain.’ That’s the sort of transformative impact that leadership can have, and I was able to see it up close and personal with Colin Powell.”

Powell’s leadership style is proof that no matter how busy and important you are there is much gratitude to be shown to those working for and with you. Show it to them and they will want to do great work for you.

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Posted by Bruce Temkin in Customer experience.
Tags: Eduardo Castro-Wright, Wal-Mart
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Many companies that have gone bust didn’t die because of the recession. They failed for one reason: They treated customers poorly

From: Inc. Magazine, May 2009 | By: Joel Spolsky

Truth be told, I don’t think I ever bought anything from Circuit City anyway. On weekends, I would occasionally wander into the local branch, attracted like a moth to the bright wall of plasma TVs. When I actually needed a new TV, however, I found the Circuit City salesperson to be so aggressively unknowledgeable and remarkably useless that I fled to Best Buy, where I was helped by a cheerful, 20-year-old twerp who knew everything. I later learned that in 2007, Circuit City had fired the chain’s 3,400 most experienced salespeople and replaced them with generic, untrained, near-minimum-wage workers.

So it was no surprise to me that Circuit City failed. The chain’s CEO, in an e-mail, blamed the demise on “poor macroeconomic conditions” — an assertion that was repeated by The Associated Press, which cited “the expanding financial crisis” for the liquidation.

You know what? I don’t buy the argument that the economy caused Circuit City’s failure. Take one look at its competitors, and you know that the market for consumer electronics and computer equipment remains strong, even in this economy. You can walk into any Apple Store and see large crowds of people lining up to buy computers and iPods. But enough has been said about how wonderful Apple is. I want to tell you about another first-class consumer electronics retailer — a much smaller business you probably haven’t been to, unless you live in New York City or are a professional photographer or an avid hobbyist. It’s called B&H.

B&H opened in 1973, and it’s an amazing place. If you are in Manhattan, you should visit the store, on Ninth Avenue at 34th Street. The first thing you will notice? The place is humming. Originally a camera store, B&H has grown to carry more than 250,000 items, including all kinds of pro audio, pro video, and computer gear. The company is closely held and somewhat press shy, so it’s hard to know how successful it is. “Our business remains strong, particularly considering the overall economic climate,” a spokesperson says. I suspect that’s an understatement. The store is always packed with customers, browsing through hundreds of varieties of camera bags with every possible combination of lens compartments; the room full of telescopes; and, of course, enough lenses to burn all the ants in the Sahara to a crisp. The electronic superstores in Tokyo’s Akihabara district are the only other places where I have seen so much gear under one roof.

And what a roof it is: The whole operation is a crazy Willy Wonka factory. If you want to check out a product that’s not on display, a salesperson orders it by computer terminal from a vast stockroom in the basement. Moments later, as if by magic, the product arrives at the retail counter, via an elaborate system of conveyor belts and dumbwaiters. You can try out the gear, see if you like it, and, if you do, the salesperson puts it in a green plastic box and places it on another conveyor belt, which runs, above your head, to the pickup counter. There, an employee bags your purchase. Meanwhile, your salesperson gives you a ticket, which you take to a payment counter. After you have paid, you get a different ticket that you take to the pickup counter to get your merchandise.

At first, this all seemed like incredible overkill to me. But then, as I thought about it more, I developed a theory as to why B&H operates this way. With all the expensive electronics and cameras and lenses and laptops floating around the store, the system creates a series of checks and balances — typically, five employees are involved in every purchase — in order to reduce shoplifting and employee theft. That it works at all is not the most amazing thing about B&H, however. The most amazing thing is that the prices are so low that I don’t even bother to comparison-shop anymore.

No, wait: The most amazing thing is that the salespeople at B&H really know their stuff. When I recently bought a portable digital recorder, the salesperson knew that some gear was not compatible with flash memory cards larger than 2GB and spent a few minutes surfing the Web to make sure that the 8GB card I wanted would work with it.

No, wait: The most amazing thing is that I have often gone into B&H to purchase a specific product, only to be talked into something cheaper. For example, once I went in to buy a field video monitor to use for some interviews I was conducting. I expected to pay $600 until the salesperson said, “Why don’t you just get one of these cheap consumer portable DVD players? They have video inputs, they work just as well, and they’re under $100.” This was no accident. “The entire premise of our store is based upon your ability to come in, touch, feel, experiment, ask, and discuss your needs without sales pressure,” B&H’s website says.

But wait: The conveyer belts, the prices, the smart salespeople, the fact that they recommend cheaper products almost as a rule — none of these is actually the most amazing thing about B&H. Really, the most amazing thing is that because the owners of B&H are Orthodox Jews — Hasidim, in fact — the store closes every Friday afternoon for the Jewish Sabbath, and on Jewish holidays. Moreover, B&H’s website, which reportedly accounts for 70 percent of sales, shuts down, too. Bhphotovideo.com is, to my knowledge, the only major online retailer that closes for 25 hours every weekend.

Even as competitors like Circuit City go bust, B&H remains packed with loyal customers. And that makes me very happy. For a business owner, there’s nothing more satisfying than watching honest dealers expand their operations while the schmucks, with their going-out-of-business markups, go down the drain. It’s inspiring to know that starting with the premise of treating your customers well really does pay off.

Joel Spolsky is the co-founder and CEO of Fog Creek Software and the host of the popular blog Joel on Software.

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Growing a List of Opportunities

Service Becomes a Priority for Craigslist Founder After Computer Career

By ELIZABETH GARONE

Craig Newmark

First job: Systems programmer at International Business Machines Corp.

Current position: Customer-service representative and community organizer

How I got here in 10 words or less: Following through with my commitment to shared values.

Most people might think they don’t know Craig Newmark, but you’ve probably crossed paths with him online when looking to buy a used couch or car, get a job, find a date, or rent an apartment. Mr. Newmark, 56 years old, is the “Craig” behind Craigslist, the behemoth classified site that advertises in 560 cities world-wide and boasts more than12 billion page views per month.

Mr. Newmark spoke with Elizabeth Garone about his current “customer service rep” position, his political blogging, and the future of Craigslist. Edited excerpts follow.

Some people know the story of Craigslist’s origins, but refresh our memories.

In 1994 I was at Charles Schwab. On my own initiative, I started evangelizing the Net as the basis for all kinds of brokerages, via lunchtime classes and demonstrations. I saw a lot of people helping one another, and in early 1995, I decided to give back a little, via a simple email list for arts and technology events in the San Francisco Bay Area.

The list grew, and when it came time to give it a name, I was going to go with “sf-events,” but friends told me everyone was calling it “craigslist,” so I went with that.

It was a risky move to leave a steady job to start a Web site. Do you recommend that type of move, even in today’s rough economy?

Actually, I left because my job area, systems security, was deemed a low priority. Instead of sticking with a mediocre job, I decided to take advantage of the consulting opportunities available in the local market. I couldn’t recommend that today.

You’ve described Craigslist as a “happy accident.”

I never intended to create a business, and I’m not a skilled entrepreneur. However, Jim Buckmaster (Craiglist’s current chief executive officer) is, and he is a rather good manager. And our success since Jim took over in 2000 has been anything but accidental.

Is Craigslist where it needs to be?

As long as we’re serving our community well, that’s where we need to be.

Most chosen career trajectories go from customer-service rep to founding another company. But in your case, you went from founder to customer-service rep. Why?

As a manager, my skills are limited, and Jim’s a far superior CEO. Service to community, public or private, is a good thing to do.

Politics seems to be on your front burner these days. Why the sudden interest? Should we expect a political run in your future?

I’m not really interested in politics in the conventional sense. However, we’re in a pivotal point in history. Representative democracy is being complemented by serious, large-scale grassroots democracy, and it feels right to help accelerate that process. I already have a job. I’m committed to Craigslist customer service, but only as long as I live. And it’s too humid in Washington, D.C.

Where does Craigslist go from here?

Continue serving the community, perhaps more cities, countries, and languages.

With the way the Internet has evolved over the years, is another Craigslist-type phenomenon still possible?

We’re already seeing sites in the spirit of Craigslist, like a culture of trust and cooperation. For example, there’s DonorsChoose.org, where teachers get classroom projects funded, and Kiva.org, which helps entrepreneurs get funding for microfinance loans world-wide. People are also using IAVA.org, the site for the Iraq and Afghanistan Veterans of America, to help veterans and their families.

All this inspires me to think about the metaphor “a craigslist for America” in the Obama platform and to think how to make that real — and soon.

What advice do you have for anyone who wants to run a successful business?

Treat people like you want to be treated, including providing good customer service. Listening (skills) and effective communication are essential.

Write to Elizabeth Garone at cjeditor@dowjones.com

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