A presentation prepared by: Nina Atkinson, Mingfeng Cai, Yi Dong, Jebril

Fayyad, Alicia Kinert, Heng Zhang, Zubin Zhang.

Presentation Agenda

1. Company Background

2. Problem Identification

3. Diagnosis & Analysis

4. Change Recommendations

5. Conclusion

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

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.”

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

Structural Change

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

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

SWOT-TOWS

SWOT-TOWS

Internal Strengths (S)1. Customer focused2. Amazon partnership3. Company culture4. Product selection5. Strong brand6. Loyal customer base

Internal Weaknesses (W)1. Lack of onsite shopping2. Many competitors3. Long holacracy transition4. Website security issues5. High shipping costs6. Extensive inventory costs

External Threats (T)1. Security breach2. Increasing competitors3. Losing customers crisis4. 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 app2. Offer international shipping3. Accept luxury brand business4. Grow other product lines5. Offer shoe/clothing rental programs

Congruence Model

Transition Change Model Present State Transition Future State

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

Force Field Analysis

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

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