December 11, 2019
Zappos sometimes feels more like a college than a company, given the friendships, the activities, and the learning. Even though I’m no longer there, I consider Zappos my alma mater of the corporate world. And part of the fun was always being part of something so relevant.
While Zappos hasn’t been the the media lately, I believe they’re about to rock the corporate culture world, again.
The Market-Based Dynamics system isn’t very public, but it’s out there.
Here’s a brief explanation:
In other words, there’s a whole Monopoly game going on inside.
Each department has a budget, and they spend it on services within the company. It’s a dynamic system where each department is serving each other in a highly accountable way, that also helps people think about how to be more efficient. So efficient that departments may go to outside service companies if there’s a better deal. There’s an entire software platform to run it.
Any department can sell its services outside the company as well. For example, the AV team (audio/video) has been contracted by Nike to shoot a commercial for them.
What’s game changing about this is that departments are incentivized to “Do More with Less” (core value #8), because if they get above their operating costs, then they can choose how to use the profits. For example, the AV team can use the profit to get new equipment, or to hire a new editor.
It’s a game. And it can be won.
Zappos has always been great about creating games, rather than “motivating” people. For example, no one gives speeches on being accountable. Why? Because in training, to win the game (get into the company), you have to show up every day at 7am for four weeks or you’re cut. People who win that game are defacto trained in being accountable.
All that said, the company has definitely not figured everything out when it comes to market based dynamics and turning cost centers to profit centers. There are a lot of open questions.
What if market based dynamics creates tense competition?
What if the internal money system does not accurately reflect the value being provided?
What if something goes wrong with those outside services that end up hurting the brand?
Disruption is risky, and courageous.
But if anyone has a history of coming out alive and creating shockwaves in the business world, it’s Zappos.
