Did we fire anybody?

Photo by Mykl Roventine


I never bought anything from Zappos. I actually haven’t heard about it until last year. I came to learn more about it when it was bought by Amazon a while ago and we had an interesting debate among my classmates at AGSM MBA 2010 class about whether it was a smart move or not. But the more I hear about the company (and I wrote about it before: 1, 2) the more I come to appreciate it.

It turns out that a few days ago, Zappos had a little problem with pricing in one of their sister websites. The pricing issue meant that many products were sold for a small percentage of their original price for about six hours. This meant a loss of … wait for it… $1.6 million (gasp!).

Now, mistakes happen. Even big ones. The question is as managers and leaders, how do we cope with mistakes and prevent them in the future. Look what Zappos CEO, Tony Hsieh, writes about the incident:

To those of you asking if anybody was fired, the answer is no, nobody was fired – this was a learning experience for all of us. Even though our terms and conditions state that we do not need to fulfill orders that are placed due to pricing mistakes, and even though this mistake cost us over $1.6 million, we felt that the right thing to do for our customers was to eat the loss and fulfill all the orders that had been placed before we discovered the problem.

I see two amazing things here. First, a company that understands that values and a belief in something means difficult tradeoffs. Zappos is built around customer service and customer satisfaction. It is not always about going with the letter of the law or the contract. It is about acting right according to the principles that the company is built upon. They decided to fulfill the orders basically saying to the customers – “good for you!”

Second, they decided not to play the blaming game. Yes, there was a mistake. Somebody made it. Maybe even a number of people were responsible. But, that is in the past. The question is what do we do in the future. Susan Scott writes in Fierce Leadership that people should Model accountability and hold people able:

… Accountability begins (and in this case, ends) with you. You being accountable in front of everybody else. Not talking about it, not bragging about it, just modeling it. Doing what you said you’d do. Taking responsibility for disappointing results. Focusing on taking action. Asking, given this result what will I do about it? And if things go wrong with others, asking the same question. Given this result what are you going to do? And you must give up blaming.

Zappos decided to look at this as a learning opportunity. I am sure this kind of mistake will never happen again. Will we never see other mistakes? Not likely. And I ask you, what does that do to the confidence of employees? To their willingness and ability to take risks? And their willingness to make sure nothing like this ever happens. To go the extra mile to make share it will never happened. I think it will be a lot bigger than if heads would have rolled. Not only because it is the right and human thing to do. But also because it fits so well with the entire culture of Zappos.

Employee engagement does not start over night. It is about being consistent with every action and decision. Especially the hard ones. I agree with every word Paul Hebert writes about this:

The company decided that the process was the problem – not the people. From what I can read into this they started by deciding the people were competent, the people didn’t do this because they were stupid, lazy, disengaged, or malicious. They started with a positive view of the people.

I’ll ask you this… in your organization would this happen?  Would a $1.6 million error be handled the same way? That my dear readers is a quality organization.  If you want to know what a role model looks like – this is a role model.


Like This!

Managerial attention

Photo by Andrew Turner


I am a person who is usually on time. I am just wired like that. I don’t know if it something I picked up at home (my Father is like that, my brother isn’t though). I am also quite a nerd when it comes to school. It is rare for me to miss a class. So to many times in my life I have experienced “the talk”. The professor stands there, usually a few minutes after the class begun and starts preaching about the importance of being on time or of being there at all. And I am left there sitting and thinking to myself: “hey, but I am here! I came on time!”. It is not only that I feel disrespected because I am being lectured about something that I have done correctly, I also get angry because the professor is wasting my valuable time.

I was thinking of this situation today when I was reading Andrew J. Hoffman post on HBR.org Firing Someone: What They Don’t Teach You in B-School. Hoffman tells a story from his early career where he had to fire a number of people in a short period of time. Even thought the actions were justified, Hoffman felt guilty because of how he affected those peoples’ lives. When he confided in a peer and asked him what he thought about it, the friend told him he was totally right. When Hoffman continued to doubt himself the conversation came to this:

“Now wait a minute, Andy,” cautioned Benjamin. “You’re making it sound like your decisions were arbitrary. Were they?”


“Right, you made these decisions for a reason. Don’t you think the guys that got fired know that? And,” he paused, “Don’t you think the guys that are still on the job know that too?”

“Yeah, I guess so. But I wonder what they see?”

“They see someone who’s trying to hold a high standard of work. Stop thinking about the guys you fired and start thinking about the guys you still employ. They’re the ones who deserve your attention.”

In the last few months I wrote a number of times about the idea, explained in detail in the book Switch: How to Change Things When Change Is Hard, that sometimes, we need to focus on what is working and not on what is not working. Focusing on the positive. In this case – the people who are on time and present. Or the people who do a great job and are not fired.

I wrote about the bigger phenomenon in the past:

I think this is true not only in the business setting, but also in other settings. So much attention goes to weak students, the troublesome soldiers, for those who fail that we forget those who succeeded, those who do everything right and those who are on the verge of excelling. I think, for example, that in any school, there should be at least an equal number of hours and resources spent on the most excellent students as those who go into those who struggle. How many times did you sit in class and felt that you are not being challenged because the teacher was going slower so the weak students could catch up. Now what would have happened if you were challenged?

As managers, parents, teachers, coaches or friends we all have one resource that is scared. Attention time. We have to make choices everyday about who to spend our time with and what to focus our attention on. Human have a tendency to see more of a negative than a positive (from an evolution stand point it makes sense – negative things used to eat us!). So we need to be careful with our intuitive tendencies and make sure we deliberately spend attention on what works. Here is another short paragraph I wrote about this in the past:

Godin got it just right. We ignore those who fit the mold. We let them stay in their mediocrity and put our efforts somewhere else. If you are a cog doing its job, I, the manager, can ignore you. I want peace and quiet. And when employees only get management attention when they are out of line, they start doing everything they can to not be noticed by management – that means no risks, not extraordinary thing. Mediocrity. Management failure.


Re-visiting priorities

Photo by Jonas B


Yesterday I was reading a blog post on HBR.org by Alexandra Samuel about the five unsolved problems of social media. Here is a quote describing one these problems:

Information overload: RSS started as a way to aggregate all the streams of content we found online, but today we’re more likely to be drowned in a river of feeds — not to mention e-mail, texts, updates, voicemail transcriptions….need I go on? We’ve got great tools for creating, finding, organizing and viewing content, but very little to help us thin out and manage the volume of information that now flows online. The challenge of information overload and attention management isn’t just a technical problem, but some better tools would sure help.

As far as I see it, there is no tool which will make priorities for you. We can have an endless amount of tools to help us organize, filter and present information, but I personally don’t see a tool that will replace human judgment and ability, but more importantly, need, to prioritize. One blog post after that, I read another HBR.org blog post, this time by Ron Ashkenas called, The Problem with Priorities:

Despite the realization that they had too much on their plates (and too many cards on the wall), this leadership team still struggled with narrowing their focus. Many felt that everything was important and nothing could be dropped without serious consequences. But if everything is called a priority, then nothing is. In fact, what’s worse is that people at lower levels, faced with the impossible task of trying to respond to everything, end up deciding what is important based on their more limited sense of the company’s strategy and their ability to get things done. By not clarifying the few key priorities, leadership teams unintentionally delegate priority-setting to their people. And then they wonder why everyone isn’t on the same page.

Here is what I wrote a while back:

Every time I gave that workshop there was a least one person who would come up to me and tell me: “Look, I am swamped. I just have too many things to do and not enough time”. I always gave those people the same response: “You don’t have a time problem, you have a priorities problem”.

Because time-management is about choosing your priorities, being consistent with them over time and accepting that this process will inherently include some tradeoffs. There will be things you will not be able to do. But until you get your priorities straight you will face problems.

Yes, we have more information than we ever had. Yes, our workloads are bigger. Yes, due to the recession we are doing a job that two people did before. It does not matter. Time is limited. We can only spend it every day on certain things.  The question is, do we want to make an impact on a few things or create mediocrity in a lot of things.

Priorities are a risk. There is a chance that our choice will be the wrong one. We think that if we do a little of everything, we will mitigate that risk. But as the risk of a making a bad choice goes down, the risk of being unfocused goes up.  Guess which one is more important?

And if you are a manager of people I ask you – where are your people in your priorities? What are you trading off in order to be a great manager for them? Because you cannot be that great manager without putting time and effort into the process. No online digital tool will ever take away that piece of judgment from you.


Kill it!

Photo by Rocketraccoon


I was reading a post by Auren Hoffman on the Summation Blog yesterday. Here is a short excerpt:

The hardest thing to do at a company is to kill things. Companies are all about building things, not destroying them. When your company is growing, you add lots of things to build the company: employees, investors, products, features, meetings, benefits, processes, reports, code, and more. While it does not come natural for a company (or any organization) to toss things out, every so often you need to look at everything and focus on getting rid of things that are no longer needed, important, or helping the company grow.

So true. You need to kill things (and early) because business (and life) is about tradeoffs. You cannot do everything. You cannot serve everybody. You cannot make everybody happy. You can try, but it is a futile attempt. Trying to focus on a few important products that serve specific customers makes much more sense and is much easier to accomplish. Not killing things leads to mediocrity which is the most poisonous concept for every business. It is a great idea to try a lot of new things, but the trick is to choose those that align with you core values, message, strategy or goal (choose one of the above).

What was a great idea yesterday is not always still a good idea. We know that but we still stand there and look at it and have fuzzy nostalgic feelings about it. I have seen it happen many times. In my work in the Israeli Air-force courses for commanders I helped introduce many new ideas and processes along the years. We would come up with a new way to do an exercise or a new activity that gave the participants an understanding of their role as managers and leaders. And then we went and made that part of the regular process of the course. However, after a few courses, suddenly, this novelty, which worked so well in the beginning, stopped working.

It stopped working for many reasons. It was not new anymore. People got used to it. People learned to tweak the system. Or the times just changed and it was irrelevant. And when somebody offered to change it there was this immediate opposition. Because it used to work. But when you ask people for the reasons and the rational for doing it in that particular way their answer is not the original goal of the idea. Their answer is: because that is how it always used to be. Just like the five monkeys.

A few days ago Rosabeth Moss Kanter wrote a post on the HBR blog about why winning streaks end:

“Winners become sinners when confidence turns into complacency and arrogance”

Not killing things is the manifestation of complacency and arrogance. Don’t let it get the better of you…


Shorts: @daverendall on tradeoffs

Dave Rendall from The Freak Factor is so spot on:

The same thing that causes some people to like you, will cause other people to dislike you. The same thing that makes some people happy, will make other people unhappy.

I said it before – life, business, relationships. It is all about tradeoffs. The more we accept that, the happier and more successful we will get.


A segment of one


Photo by Son Of Groucho

During the last week I heard the expression “a segment of one” a number of times. The idea is that with the tools of computerized customization many companies can actually understand the needs of each and every customer. For example, a company can send thousands of different emails to its customers, so each customer will get a personalized e-mail message. Sounds promising? It is. New technology creates an abundance of possibilities to do things that were once very hard to do. And I am sure that as time goes by, the ability to use it more effectively will enhance.

But, just because we can, does not immediately mean that we should!

Technology allows us to do many things today. It makes things that were once very hard, a lot easier. However that does not mean that we should do them. If it was not smart to do when it was hard, the fact that it is easy should not matter.

The “segment of one” example is a simple one. Segmentation is about going after the right customers. It takes into account the fact that there are some inherent tradeoffs because a company cannot be everything to everybody. The fact that we can understand all of our customers, does not mean we should try to satisfy all of them. Not all customers are born equal. Some are more important. Some are a liability more than an asset. Don’t invest time and money, even if it is a small amount of time and money, on these customers.

Don’t let the fact that there is a simple answer to the question: “how?” blind you from asking the question “why?”


Re-thinking tradeoffs


Photo by roland

During the last few weeks, as part of our AGSM MBA integrative experience, we participated in a simulation with a software called Markstrat. The simulation allowed us to run companies in teams as part of a competitive environment, making decisions about operations, marketing, strategy and more. In the end of the two weeks experience we each had to write a short essay about what we learned from the experience. Here is a short part of what I handed in:

As future managers we should be aware of that and think carefully about the implications each decision has on our cognitive resources. Attention and time are the scarcest resources a manager can allocate, even more than money. Thus, they should be considered in a decision like any other scarce resource.

This relates to an idea I have been writing and thinking about a lot lately. Tradeoffs. I think as human beings we have the immediate tendency to want everything. To try and be everything. To try and be the best at everything. Maybe instead we should focus our attention on being the best at something. Just one thing that will make us stand out. Not because being good at everything is bad. It is because it is so hard to achieve all at once. Because success is so many times the result of tradeoffs. Of actively deciding not to be good at something, because we put all our resources on something else.

Maybe, in our multi-tasking world, we need to re-learn what our forefathers, the hunters, knew how to do so good – focus on one thing. Become your prey. Follow it enough and you will understand it, start to think like it and finally hunt it.

I was reminded of this concept yesterday while I was reading Seth Godin’s post: “Spare no expense!“. Godin, makes the same point about tradeoffs in a different setting. The resources companies put into making one customer happy. A short excerpt:

The reason we get trapped by (c) is that, “I’m doing the best I can” is always much easier than, “we need to be disciplined and help more people, even if that means that some special cases will fall through the cracks. The internet makes this even more difficult because people who fall through the cracks are able to amplify their complaints ever louder.

The way around it, I think, is to set expectations early and often. If you’re going to give me your phone number, you better answer it. If you’re going to offer a warranty, you better honor it. If you position yourself as a company with real people eager to make every single person happy–you better deliver.

No matter what, you should decide. In advance. How much do you want to spend on ad hoc emergencies, how much do you want to reserve on design and helping the masses improve their experience?

The hard part is making the decision and sticking to it. We see many companies saying things like – “we put our people first” – but when it comes to making the actual choice, the actual tradeoffs, they don’t. It is not only about not fulfilling your promises; it is about not making the right tradeoffs even though you decided to make them.

So, what are your actively chosen tradeoffs? And what do you to keep them?