Two Recent Consumer Experiences

I wrote several blog posts recently about organizational transformation efforts at Zappos.Com. I figured I should check out their customer service so I ordered a pair of casual shoes. I really liked the shoes and wore them often for about 10 weeks. But when I turned them over I saw that the heels of each were coming apart.

The online instructions were clear and easy to follow. I boxed the shoes up and sent them—postage free–off to Zappos. Two days later, I received a cheery email telling me that the package had survived its travels and that my credit card was credited the full amount of the shoes.

A typical customer service email from Zappos:

Hello Tom, Thank you for contacting the Customer Loyalty Team. My name is Lui, the Comics Guy, and I’m happy to help you today. On behalf of the whole Zappos family, you are very welcome! We like to consider ourselves more of a service company that happens to sell different products. It is our goal to give you the best shopping experience you can find. We are happy that you are happy! Thank you for being an awesome customer and taking the time out of your day to share your kind words with us. Please don’t hesitate to let us know if you have any questions, concerns, or Super Villains that need stomping! For now, I must go back to my secret hideout, to keep watch over everyone, protecting them from evil-doers and delivering happiness to all the citizens of Zappos City! Please let us know if there is anything else we can do for you, we’re here 24/7. Have a super day!

I will visit Zappos.Com again.

About the same time, I ordered a $1.00 look at my credit report at The process went well and I got my look at my credit report. My credit card was charged appropriately. I liked our transaction. A week later, I noticed a charge for $21.95 from Experian for a “credit tracker.”   I hadn’t knowingly ordered anything from Experian.

I went back to and found the fine print—right under the link (above the link would be a better place for consumers) I clicked to order the $1.00 credit review. I had unwittingly become a trial member in something and had a week to cancel my online order or I would be charged $21.95 each month for my permanent membership.

Perhaps this is just an example of buyer beware. Technically I had ordered the product and Experian had provided it to me. Maybe I should just chalk it up to experience and be more careful reading the fine print. But I felt scammed: the fine print was in a small font and it was easy for my eye to miss it as my attention focused on the large link pointing to get your credit report and FICO score. Once I clicked, I moved to another page. In hindsight, I was also suspicious about not receiving any information during the trial week. When you join up with something on the Internet, you always get a ton of emails telling you about your new product. But not this time. I imagined they didn’t want to alert consumers that they had become members of something for fear they would realize their mistake and cancel. But they were sure quick to bill me $21.95 as soon as the “free trial” expired.  I wasn’t alone: I found hundreds of complaints about the same issue at

My wife and I had to search the Internet to find an email for Experian customer service (from a site that helps people cancel services with Experian). I wrote and cancelled my membership. I also asked that my credit card be credited for the purchase I had not wanted, didn’t know I had made and hadn’t ever seen. They didn’t reverse the charge. What reputable company would not immediately refund the price of a minor product purchased in error by an unwitting customer who didn’t want or even receive the product? Only a company who wants the $21.95 more than they want a relationship with the customer.

Experian violated our new relationship.

I disputed the charge with my bank and asked if I could block Experian from making charges to my account—as I don’t trust them to cancel my membership in whatever club I had joined.

I like to be treated with respect; I don’t like to be treated with disdain. I will be saying nice things about Zappos for a long time and I will buy from them again soon. I will be warning others about Experian. I will not do business with them again.

My letters to the Better Business Bureau and to the Minnesota Attorney General are ready to go into the mail.

We do what we can.

Zappos and Transformation

Sit down before fact like a little child, and be prepared to give up
every preconceived notion, follow humbly wherever and to
whatever abyss Nature leads, or you shall learn nothing.
T.H. Huxley

The recent attention to change at has brought renewed focus to the whole concept of organizational transformation. Some of the voices I hear surprise me: they talk as if they have invented something new (see my recent posts re Zappos).

Efforts to change organizations from the Frederick Taylor model–hierarchical, bureaucratic, anti-human and mechanistic with conformity as the first rule–have gone on for a long time. I led a transformative change process at the Star Tribune newspaper in the early 1990’s, and I learned about self-managed teams from manufacturing industries. I then spent 13 years consulting with leaders who wanted to make such transitions.

Most transformational efforts—fundamental changes in culture, values, and operating procedures–fail.

Why? Some important reasons:

1. Leaders like quick-fixes: fast, easy and painless. They jump from one fad to another without internalizing the lessons of any of them. They often lack commitment. Real transformation takes time, is hard and pain and conflict are necessary.

2. Mechanistic leaders try to lead organic change with a mechanistic mental model. They recreate a more insidious version of what they want to change. Transformation requires an inner transformation within leaders and employees to an organic world view that sees organizations as living systems. They must transform from mechanics in suits to artists who love people.

3. Leaders implement off-the-shelf change programs or copy what may have worked somewhere else. They gain compliance from employees. Transformation requires people to go through their own struggle to learn and internalize new beliefs and assumptions and develop new skills unique to their reality. People gain commitment and support what they help create.

4. The skills of a mechanistic enterprise don’t work in an organic organization. A living system organization requires skills in things like facilitation, personal mastery, conflict management and systems thinking.

5. Mechanistic organizations ignore emotions. Transformation change is emotional. People suffer losses, they fear the unknown, they get upset and leaders have to lead not just physical changes but emotional transitions.

6. Mechanistic organizations change from the top down and don’t support non-conformists or outliers. Living system organizations require leaders and change agents throughout the enterprise.

7. Mechanistic leaders ignore the dark side of their enterprises. The dominant culture will resist and try to expel the vulnerable islands of organic growth. The shadow side must be acknowledged, brought to the light of day and engaged with.

8. Mechanistic leaders often marginalized talented leaders in the ranks. Talented leaders of change must be supported, protected, and empowered to lead changes that upset the status quo.

9. Mechanistic managers and supervisors yell and threaten often but rarely hold anyone accountable in a formal way and when they do, they often mess things up. In a living system organization, relationships based on trust are essential. All in management must embrace a tough-love mentality of high standards AND compassion. People must be held accountable so trust can grow along with relationships.

Transformation is a spiritual journey. Real transformative leaders may have to couch change in the language of making money but they know it is really about creating conditions where people can come to work and use their talents to fully engage. Then the money comes.

Few leaders have the courage, patience and consciousness to lead such a journey.

Organizations fail because of the lack of the right kind of leadership.

Zappos and Employee Empowerment

Continuing with the stories brought to mind by the business news accounts of

News accounts point out that 14% of Zappos employees accepted a severance package instead of go forward with the fad of the month: Holacracy.

I’m not surprised with the percentage of employees who choose to leave the company. I’m sure there are many reasons but one resonates with me.

Peter Block described a simulation his colleague Joel Henning designed, which rings true in most of my experience:

Three teams role-played high-control patriarchal leadership, cosmetic empowerment, and genuine participation and empowerment. The high control group was quiet, had their arms folded, and had one or two pale, informational questions at the end. When asked their feelings about the meeting, they said they felt controlled and punished.

The cosmetic empowerment team had many questions, all of which were cynical and reeked of barter and deal making. They asked, “What’s in it for me?” and “Where did this fad come from?” They wanted the leaders to prove their sincerity. There was a lot of laughter and energy during the meeting. Upon reflection, they felt manipulated and doubtful, although they admired the cleverness of the strategy.

The genuine participation group went last and when they shared their intention to involve everyone in defining the program and solution the employees would have none of it. They wanted a common vision and strategy, they wanted to know what was expected of them and were fed up with this soft, open-ended non-solution. They questioned who was in charge and who was going to steer the ship to a safe harbor. They wanted to know what management was going to do to fix the problem. In processing the meeting, they felt management had abdicated. The employees had 20 suggestions about how the team could have done a better job and voted no confidence.

What disturbed Block?

• We resent patriarchy and its dominance,
• We become cynical at attempts at cosmetic change,
• Yet faced with the prospects of real participation and accountability for an unpredictable tomorrow, patriarchy begins to look better and better.

Block concluded that while we may talk blithely about the end of command and control, emotionally we miss it when it’s gone. If we are offered real choice and power, we push our leaders back into a controlling and directive stance. Our lips may say no to a benevolent monarch, but our eyes say yes. Leaders see the longing for good parenting in our eyes, and they have little choice but to respond.

Genuine empowerment carries freedom, responsibility, and accountability with it. We get to make choices about the work that we do. We get to select between alternatives that matter. It is our job to make our decisions real and to implement action steps. We get rewarded or punished, praised or criticized for our choices and actions. We get to act like adults and are treated like grownups. Many of us don’t want this level of adulthood in our work lives. Many of us, instead, want freedom from responsibility and escape from conflict.

Genuine involvement is messy, difficult, and time consuming. Reactive problem-solvers have to learn to be imaginative anticipators and that is hard to do—maybe impossible. People disconnected from others throughout their competitive work histories have to learn to listen, engage, connect, cooperate, compromise, empathize with others, and find win-win solutions. People who only feel okay when they are accomplishing a task have to learn to sit still, think, and engage with others. For them it feels unproductive

Many of us don’t want to develop new emotional and intellectual muscles. When put in a situation that asks us to stretch, we can’t get away from ourselves fast enough. We may prefer to be one of the walking dead so prevalent in our organizations. Aliveness is way too threatening for us.

Zappos and The Dark Side of Leadership

Zappos CEO Tony Hsieh described a dramatically new design for the company and told employees to get on board or leave the company with a severance package. He made this announcement via a 4,552 word email. The email was long, directive, jargon-filled and overwhelming.

Approximately 14% of Zappos employees left the company.

One paragraph from the email:

As of 4/30/15, in order to eliminate the legacy management hierarchy, there will be effectively be no more people managers. In addition, we will begin the process of breaking down our legacy silo’ed structure/circles of merchandising, finance, tech, marketing, and other functions and create self-organizing and self-managing business-centric circles instead by starting to fund this new model with the appropriate resources needed to flourish. Functions that were previously silo’ed will be embedded inside these business-centric circles instead — this structure will require fewer roles that primarily manage expectations and drive alignment across legacy silos. We will continue using Holacracy’s systems and processes for prioritization and resource allocation, so it’ll be extremely important for all of us to keep Glass Frog up to date.

Say again?

I imagine that in the beginning Zappos.Com, like almost all organizations, operated from a mechanistic/paternalistic model: linear, hierarchical and compartmentalized organizations with functionalized departments with detailed job descriptions and rigid rules and boundaries.  A machine where managers tell workers to follow directions and leave the thinking to management. Mechanics (supervisors) with metaphorical wrenches tighten controls in search of consistency and predictability. Not a place of self-management, self-organization or humanistic values–anti-human places where conformity is the first rule.

Here’s what happens too often: Smart executives want to transform their enterprises from  mechanistic/paternalistic systems to various forms of employee involvement/engagement such as self-managed teams or self-organization for the bottom-line benefits of fully engaged employees. Suddenly the company talks about valuing employees. Leaders get excited to get going. They begin to put self-managed teams or self-organized teams in place. But their deeper beliefs and perhaps the only model of organizations they have ever known–often unconsciously–remain mechanical/paternalistic. With good intentions, they unconsciously fall victim to what author Peter Block defined as the dark side of leadership, “The very system that has patriarchy as the root problem uses patriarchal means to try to eliminate its symptoms.” We recreate what we want to change. Befuddled employees might feel crazy.

We cannot create organic–relationship based–organizational forms (self-management) with the thinking and skills used to manage mechanistic organizations.

Was Mr. Hsieh’s email an example of the dark side of leadership?

Before they rush into the fads (fads not because the theory is bad; fads because leaders like quick-fixes and move on quickly when change gets hard) of the day, people must have what Peter Senge called “moments of Metanoia.” Their inner shift opens them to a new and more expansive world view. Their underlying beliefs and assumptions about people, leadership and organizations change. The light bulb goes on and they “get it.”

Organizational mechanics can still use the mechanistic world view and tools of Newtonian physics for machines and linear work processes but now organizational artists can use the living system worldview from chaos theory, quantum physics and other natural sciences–where relationships are fundamental–for people.

This shift in thinking, required for self-management to succeed calls for new thinking and new skills not generally common  in mechanistic organizations. For example, systems thinking, emotional intelligence, conflict management skills, facilitation skills, a tough-love mentality. Evolved people must be developed or found. People with the courage and character to live by their personal and organizational values. Self-directed and assertive people who will take risks and who want to learn. And leaders must love people.

Most efforts to transform organizations fail. Real transformation is hard and rare. Few leaders have the skills, ability, wisdom, maturity or experience to lead successful organizational transformation. And many leaders, at all levels, are needed.

Instead of a paternalistic top-down memo, the leaders at Zappos might have used their imaginations to find a way to engage directly with employees about the vision for the future.They might have invited employees to engage in examining and charting the future course of Zappos.Com.

People comply and conform to top-down orders and threats; they support what they help create.

See Value Driven Leadership: A Story of Personal and Organizational Transformation.

Zappos, Teams & Pizza Pie

Zappos.Com, an online shoe and clothing shop based in Las Vegas, Nevada, offered employees three months’ severance pay to leave if they felt they could not get behind the company’s move to self-managed teams. The Washington Post reported that about 14% of Zappos 1,500 employees took the money and left.

The article reminded me of a similar story.

In the early 90’s, I was privileged to lead a business unit at the Star Tribune newspaper in Minneapolis, MN through a cultural transformation, which included the move to 15 self-managed teams in the Customer Service Center (we also added 15 self-managed teams in the Circulation department’s field operation spread throughout the newspapers Primary Market Area).

Our goals were to improve the quality of work life for employees, improve customer service, become faster moving and more creative and save millions of dollars. On top of that, we had to defeat a Teamster’s Union organizing effort in the Customer Service Center.

We wanted to downsize 100 positions without laying anyone off. We froze hiring in the Customer Service Center, the newspaper froze the hiring of outside candidates so our employees could apply for positions throughout the company and some employees accepted an early retirement incentive. And we offered an incentive similar to Zappos.Com for employees to leave if they wanted to do something else.

More people signed up for the incentive plan than we had anticipated. Nineteen employees who counted on the money had to be told they would not receive the severance pay. We scheduled a lunch and had pizza brought in.

The people were excited and filled with anticipation as they walked into the conference room. They thought they would get the severance pay. I welcomed everyone and invited them to dig into the pizza. I said I had good news and I had bad news. They looked at me expectantly. The good news was that we had achieved our downsizing goal through voluntary means. The bad news? They would have to stay.

The people were shocked, angry and disappointed. One married couple had booked a cruise. A man had bought a new car. They were critical of me. Some felt we were obligated to give them the money anyway. Some were critical of the process. I never thought I would be criticized for telling people they had a job.

We survived and went on to implement 15 self-managed teams, a skill-based pay system, reduced job descriptions from 25 to 12, eliminated most supervisors, reduced staff by 35%, improved customer service dramatically and saved millions of dollars. Employees told the Teamsters to go away.

The teams were engaged, empowered and morale was high.

I wrote the story of our transformation in my e-book, “Value-Driven Leadership: A Story of Personal & Organizational Transformation.”

The leadership experience changed me. I left the company after the transformation was finished. I completed a PhD in leadership and organizational change, wrote about life and leadership and consulted for 13 years before I retired.

What happened to the teams? Neglected by a mindless senior management, the teams faded away. A great opportunity was missed.

I  believe in the vision of organizations filled with engaged and involved employees who produce phenomenal business results. I’ve lived the experience.

I also believe that at this time in history we lack the number of leaders, at all levels, who have the talents, skills, maturity and experience to understand the difficulty of such transformation and lead such change.

My  prediction: Another transformation will prove unsustainable for lack of leadership.

Best wishes to Zappos.

I hope you prove me wrong.


P.S. to Zappos leaders: Knock off the jargon. It shows your lack of experience. It’s your job to learn the theory and explain it to employees in ways that they can understand. Realize that what you are doing is not new. Do your homework on self-management, employee involvement and past efforts to transform organizations.