For our final presentation we analyzed the performance gaps and current problem analysis of Zappos.

1. A presentation prepared by:
Nina Atkinson, Mingfeng Cai, Yi Dong, Jebril Fayyad,
Alicia Kinert, Heng Zhang, Zubin Zhang.

2. Presentation Agenda
1. Company Background
2. Problem Identification
3. Diagnosis & Analysis
4. Change Recommendations
5. Conclusion

3. The History of Zappos
● Founded in 1999 by Nick Swinmurn
● Original business model:
o Specialize in footwear E-tailing
o Capture the online marketplace
o Boast the best selection
o Offer impeccable customer service

4. Ceo- Tony Hsieh
● San Francisco native
● Successful entrepreneur
● Led Zappos to Amazon Acquisition
“Personally I cringe at the word ‘LEADER.’ Its more about getting
people to do what they are passionate about and putting them in the
right context or setting. They’re the ones doing the hard work.”

5. Structural Change
On March 24th, 2015 Tony Hsieh made the bold
move to email his 1,500 employees letting them
know that Zappos would be transitioning to a
Holacracy.
● Manager free operating structure
● Equally privileged employees
● Overlapping work & responsibilities

6. Structural Change

7. Problem Identification
● Transition process takes a long time - Christa said 6-8 months just for an
employee to understand how holacracy works - they may be losing serious
efficiencies (including customer service) trying to get this off the ground
● Loss of 15% of their employees due to the transition - Losing valuable
employees can hurt the company morale and will mean they need to take
time to retrain new employees which takes time and money

8. Diagnosis & Analysis
Performance Gaps:
Great Performance,
● $97 million operating profit
● 77.9% increased since 2014
● $54.5 Million in 2014
Holacracy
Results
(AUG 2015)
● Five Years to
complete
● 6-8 months for
current employees
to understand
● Only 40% of
Zappos introduced
● 15% left Zappos

9. SWOT-TOWS
SWOT-TOWS
Internal Strengths (S)
1. Customer focused
2. Amazon partnership
3. Company culture
4. Product selection
5. Strong brand
6. Loyal customer base
Internal Weaknesses (W)
1. Lack of onsite shopping
2. Many competitors
3. Long holacracy transition
4. Website security issues
5. High shipping costs
6. Extensive inventory costs
External Threats (T)
1. Security breach
2. Increasing competitors
3. Losing customers crisis
4. Extending Credit
S3 + T2:
Leverage strong company culture to
stand out from competitors
W1 + T1:
Lack of onsite shopping means an
online security breach can affect every
single customer;
use onsite shopping to navigate around
this issue
S2 + O2:
Leverage their Amazon partnership to
accelerate growth through their
resources by offering international
shipping
W1 + O1:
Lack of onsite shopping gives
consumers less purchasing options; use
mobile apps help to alleviate browser-
only shopping
External Opportunities (O)
1. Mobile app
2. Offer international shipping
3. Accept luxury brand business
4. Grow other product lines
5. Offer shoe/clothing rental programs

10. Congruence Model

11. Transition Change Model
Present State Transition Future State

12. Beckhard and Harris Model
Dissatisfaction X Vision X First Steps > Resistance to change
Doubled the size
of employees,
Increase Sales
Filtering
employees,
hiring more
coaches
Self-manager,
self-decision
making,
>
Fear of Unknown, Bad
Timing

13. Force Field Analysis

14. Our Recommendations
● Continue to check in with employees
during the holacracy transition to
insure retention.
● Capitalize on international shipping to
increase sales (Amazon)
● Actively pursue and gain new
customers through enhanced
marketing efforts (Midwest)
● Using different sites of social media

15. Conclusion
● Zappos has projected an
operating profit of $97 million for
2015
● which is up 77.9% from their
reported 2014 operating profit.
● Zappos the first company on a
large scale to change to holacracy
● It will be a long, and hard path for
zappos