from the world's big
Measuring Corporate Success Beyond the Short Term
Question: How do you measure happiness in business?
Tony Hsieh: I think it is hard sometimes to measure the benefit of any one thing you do and I think if you approach it that way it’s... You know the way we really think about it is what it is going to be like in the aggregate and over the lifetime of the customer and so a perfect example of something that doesn’t make sense in the short term but does in the long term is if you call us and you’re looking for a pair of shoes and we’re out of stock for your size, everyone is trained to look on three competitor Web sites to see if they can find it there and if they do direct you to that competitor.
Obviously in the short-term we’re going to lose that transaction, that sell, but we’re not trying to maximize for every transaction. We’re trying to maximize the customer experience and build that lifelong relationship with customers and not only... That’s not only great from a loyalty perspective, but it’s stuff like that that drives a lot of the word-of-mouth, which... So from our point of view yes, a lot of the things that we do, free shipping both ways is really expensive, surprise upgrades to overnight shipping is expensive, phone calls where we actually just found out our longest phone call was seven and a half hours long. We just set that about a month ago and so all those things are expensive, but we really just while on a P&L maybe that falls under I don’t know, "cost of goods" or some other line item, but we really view those as our marketing costs. It’s we are investing in the customers and then relying on them to do the marketing for us through word of mouth and so that... so then we don’t need to spend all this money on more, I guess, normal methods of marketing.
And so we’ve grown from no sales in 1999 to in 2008 we hit a billion dollars in gross merchandise sales and even despite a down economy over the past 24 months we’ve continued to grow. Our Q1 net sales this year are up almost 50% year over year in a down economy and a lot of people ask us what did you do in the past 24 months and it’s not anything we’ve done over the past 24 months. It’s what we did prior to that, really all the things we’ve just been talking about that may be hard to justify in the short term, but we’re reaping the rewards of because we’ve always done that.
Question: How can other companies be happy and profitable?
Tony Hsieh: Yeah, I mean ultimately I guess that is what business is all about, right? About learning to balance the short-term, medium-term and long-term and I think it’s when things are going well it covers up a lot of mistakes and bad decisions because you’re growing so quickly... when really those are the times when you really should be investing more in the long-term. And I think for us we’ve basically just always invested in the long-term while trying to make our short-term targets as well. So yeah, there is no easy answer, but ultimately that is what business is. You need all of the above. It’s not just "Well I can’t afford to do that." And the other thing is a lot of the stuff actually doesn’t have to be expensive. Focusing on company culture, for example. It doesn’t cost anything to say hi when you pass someone else in the hallway, whereas, most corporations if you pass you avoid eye contact and so on.
Question: How do you engage Millennials as employees?
Tony Hsieh: Well for us we’ve never actually focused on Millenials and we tend to get asked that question a lot just because the things we focus on I think are pretty universal human wants or needs. It’s just that I think maybe 50 years ago people just had less mobility in terms of being able to job hop. But I don’t think we would if it was 50 years ago still be doing the same thing, and really focusing on employee happiness. I think it was more 50 years ago companies didn’t have to, and they could still get away with it. Whereas, our point of view is "If employees can be happy and feel like they can be themselves in the office"... You know there is so many people in corporate American where they’re a different person at home on weekends versus what on Monday when they’re in the office and they leave a little part of themselves or a big part of themselves at home. And I think that was definitely true 50 years ago and maybe what the Millenials are kind of bringing more into the forefront is maybe they’re just saying they want to be the same person and if not they can... we live in a world where they can afford to job hop. It’s much easier.
So yeah, I don’t know if it’s specific to Millenials, but everyone wants to be part of something bigger than themselves that they believe in and everyone would ideally want to be passionate about whatever work that it is they’re doing and so... and everyone wants to feel connected to people and so I don’t think those are specific to Millenials. Those apply to everyone.
Question: Is your business philosophy catching on?
Tony Hsieh: Well it’s been really interesting. We’ve been on a... So we’re in the middle of a 23-city bus tour that is taking 3 months and you can see all the list of cities wherein if you go to DeliveringHappinessBus.com. But what has been really interesting and we have a separate website kind of as a follow up to the book at DeliveringHappinessBook.com and there is a section called "Join the Movement" and we’re just having people submit their stories of if the book or discussion on the Web site has inspired them to either follow their passions or focus more on making customers happy or employees happy and so on, but a lot of the stuff actually hasn’t even... We’ve definitely heard a lot of feedback from other entrepreneurs and businesses, but what surprises us is also we’ve been hearing from churches and school systems and where we had a teacher that told us that they passed the book out to their faculty and within two weeks the whole vibe of the school changed, which I thought was really cool and certainly not anything that we thought would be affected from the book and so I guess we don’t necessarily...
The "Delivering Happiness" team is actually a team of about 15 or 20 of us. It’s basically its own separate startup and we don’t have a clear vision of exactly what this happiness movement will end up and a lot of it is being generated by people that are inspired and doing their own thing from all different industries including businesses and over time the website will be evolving and really that is how we’re learning what is resonating and what is not with different people, but it has definitely been… We’ve only gone in seven cities so far and just in those seven cities it has been really interesting. One of the cities we went to was Iowa City and at University of Iowa the book is now required reading for one of the classes and we’ve heard that for about three or four other universities and schools, so who knows what is going to happen with it.
Question: Do businesses need to be profitable before they can be happy?
Tony Hsieh: I think it really depends on each person’s specific situation, but what we generally hear the most about is not that people really can’t afford to follow their passion. It’s they kind of have ingrained in their mindset "Well I have to do this" and what they say the book has helped them do is actually realize that the ultimate goal of everyone, whatever... you know people have different goals in life, but ultimately the purpose of achieving that goal is they believe it will make them happier. And there are so many people that for example will work really hard in a job they hate for two years so they can go on this two-week vacation, dream vacation when people like Tim Ferriss in "4-Hour Work Week" basically woke up one day and was like if I want to travel then I’ll just travel and you can do it for much less than what your assumptions are. So I think a big part of the book is really question what your assumptions are in terms of what you have to do. And a lot of people realize "I don’t have to work in this job that I’m miserable at every year, or every day, and I don’t have to live in, for example, New York City where it’s super expensive and if I live somewhere else that is less expensive and could pursue my passion like, I can afford to do that."
Question: What is the right way for businesses to adopt change?
Tony Hsieh: For us it’s just built into the culture and I think for organizations in general it’s pretty important to have something like that as part of their culture because there is a quote from Darwin that it’s something like "It’s not the fastest or most intelligent of the species that survives. It’s the one that is most adaptable to change." And I think the same is true for businesses as well. And if you look back on the history of giant businesses, corporations that have kind of lost their way or gone bankrupt or whatever it’s because they were stuck in their old ways and for us I think we’ve... So we have 10 core values total. One of them is embrace and drive change. One of them is to be adventurous, creative and open minded. And one of them is to be humble. So I think if you combine those three it’s kind of I think for us really encapsulates this idea of "just because something worked yesterday doesn’t mean that is what we should be doing tomorrow" and just always be open minded and not wed in your ways and be ready to adapt and change and basically ask the question "Why not?" as often as possible.
Recorded September 24th, 2010
Interviewed by Peter Hopkins
Learning to balance short-term, medium-term and long-term goals is the key to corporate success.
Higher education faces challenges that are unlike any other industry. What path will ASU, and universities like ASU, take in a post-COVID world?
- Everywhere you turn, the idea that coronavirus has brought on a "new normal" is present and true. But for higher education, COVID-19 exposes a long list of pernicious old problems more than it presents new problems.
- It was widely known, yet ignored, that digital instruction must be embraced. When combined with traditional, in-person teaching, it can enhance student learning outcomes at scale.
- COVID-19 has forced institutions to understand that far too many higher education outcomes are determined by a student's family income, and in the context of COVID-19 this means that lower-income students, first-generation students and students of color will be disproportionately afflicted.
What conditions of the new normal were already appreciated widely?<p>First, we understand that higher education is unique among industries. Some industries are governed by markets. Others are run by governments. Most operate under the influence of both markets and governments. And then there's higher education. Higher education as an "industry" involves public, private, and for-profit universities operating at small, medium, large, and now massive scales. Some higher education industry actors are intense specialists; others are adept generalists. Some are fantastically wealthy; others are tragically poor. Some are embedded in large cities; others are carefully situated near farms and frontiers.</p> <p>These differences demonstrate just some of the complexities that shape higher education. Still, we understand that change in the industry is underway, and we must be active in directing it. Yet because of higher education's unique (and sometimes vexing) operational and structural conditions, many of the lessons from change management and the science of industrial transformation are only applicable in limited or highly modified ways. For evidence of this, one can look at various perspectives, including those that we have offered, on such topics as <a href="https://www.insidehighered.com/digital-learning/blogs/rethinking-higher-education/lessons-disruption" target="_blank">disruption</a>, <a href="https://www.nytimes.com/2020/02/20/education/learning/education-technology.html" target="_blank">technology management</a>, and so-called "<a href="https://www.insidehighered.com/sites/default/server_files/media/Excerpt_IHESpecialReport_Growing-Role-of-Mergers-in-Higher-Ed.pdf" target="_blank">mergers and acquisitions</a>" in higher education. In each of these spaces, the "market forces" and "market rules" for higher education are different than they are in business, or even in government. This has always been the case and it is made more obvious by COVID-19.</p> <p>Second, with so much excitement about innovation in higher education, we sometimes lose sight of the fact that students are—and should remain—the core cause for innovation. Higher education's capacity to absorb new ideas is strong. But the ideas that endure are those designed to benefit students, and therefore society. This is important to remember because not all innovations are designed with students in mind. The recent history of innovation in higher education includes several cautionary tales of what can happen when institutional interests—or worse, <a href="https://www.insidehighered.com/news/2016/02/09/apollos-new-owners-seek-fresh-start-beleaguered-company" target="_blank">shareholder</a> interests—are placed above student well-being.</p>
Photo: Getty Images<p>Third, it is abundantly apparent that universities must leverage technology to increase educational quality and access. The rapid shift to delivering an education that complies with social distancing guidelines speaks volumes about the adaptability of higher education institutions, but this transition has also posed unique difficulties for colleges and universities that had been slow to adopt digital education. The last decade has shown that online education, implemented effectively, can meet or even surpass the quality of in-person <a href="https://link-springer-com.ezproxy1.lib.asu.edu/article/10.1007/s10639-019-10027-z" target="_blank">instruction</a>.</p><p>Digital instruction, broadly defined, leverages online capabilities and integrates adaptive learning methodologies, predictive analytics, and innovations in instructional design to enable increased student engagement, personalized learning experiences, and improved learning outcomes. The ability of these technologies to transcend geographic barriers and to shrink the marginal cost of educating additional students makes them essential for delivering education at scale.</p><p>As a bonus, and it is no small thing given that they are the core cause for innovation, students embrace and enjoy digital instruction. It is their preference to learn in a format that leverages technology. This should not be a surprise; it is now how we live in all facets of life.</p><p>Still, we have only barely begun to conceive of the impact digital education will have. For example, emerging virtual and augmented reality technologies that facilitate interactive, hands-on learning will transform the way that learners acquire and apply new knowledge. Technology-enabled learning cannot replace the traditional college experience or ensure the survival of any specific college, but it can enhance student learning outcomes at scale. This has always been the case, and it is made more obvious by COVID-19.</p>
What conditions of the new normal were emerging suspicions?<p>Our collective thinking about the role of institutional or university-to-university collaboration and networking has benefitted from a new clarity in light of COVID-19. We now recognize more than ever that colleges and universities must work together to ensure that the American higher education system is resilient and sufficiently robust to meet the needs of students and their families.</p> <p>In recent weeks, various commentators have suggested that higher education will face a wave of institutional <a href="https://www.businessinsider.com/scott-galloway-predicts-colleges-will-close-due-to-pandemic-2020-5" target="_blank">closures</a> and consolidations and that large institutions with significant online instruction capacity will become dominant.</p> <p>While ASU is the largest public university in the United States by enrollment and among the most well-equipped in online education, we strongly oppose "let them fail" mindsets. The strength of American higher education relies on its institutional diversity, and on the ability of colleges and universities to meet the needs of their local communities and educate local students. The needs of learners are highly individualized, demanding a wide range of options to accommodate the aspirations and learning styles of every kind of student. Education will become less relevant and meaningful to students, and less responsive to local needs, if institutions of higher learning are allowed to fail. </p> <p>Preventing this outcome demands that colleges and universities work together to establish greater capacity for remote, distributed education. This will help institutions with fewer resources adapt to our new normal and continue to fulfill their mission of serving students, their families, and their communities. Many had suspected that collaboration and networking were preferable over letting vulnerable colleges fail. COVID-19's new normal seems to be confirming this.</p>
President Barack Obama delivers the commencement address during the Arizona State University graduation ceremony at Sun Devil Stadium May 13, 2009 in Tempe, Arizona. Over 65,000 people attended the graduation.
Photo by Joshua Lott/Getty Images<p>A second condition of the new normal that many had suspected to be true in recent years is the limited role that any one university or type of university can play as an exemplar to universities more broadly. For decades, the evolution of higher education has been shaped by the widespread imitation of a small number of elite universities. Most public research universities could benefit from replicating Berkeley or Michigan. Most small private colleges did well by replicating Williams or Swarthmore. And all universities paid close attention to Harvard, Princeton, MIT, Stanford, and Yale. It is not an exaggeration to say that the logic of replication has guided the evolution of higher education for centuries, both in the US and abroad.</p><p>Only recently have we been able to move beyond replication to new strategies of change, and COVID-19 has confirmed the legitimacy of doing so. For example, cases such as <a href="https://www.washingtonpost.com/education/2020/03/10/harvard-moves-classes-online-advises-students-stay-home-after-spring-break-response-covid-19/" target="_blank">Harvard's</a> eviction of students over the course of less than one week or <a href="https://www.nhregister.com/news/coronavirus/article/Mayor-New-Haven-asks-for-coronavirus-help-Yale-15162606.php" target="_blank">Yale's apparent reluctance</a> to work with the city of New Haven, highlight that even higher education's legacy gold standards have limits and weaknesses. We are hopeful that the new normal will include a more active and earnest recognition that we need many types of universities. We think the new normal invites us to rethink the very nature of "gold standards" for higher education.</p>
A graduate student protests MIT's rejection of some evacuation exemption requests.
Photo: Maddie Meyer/Getty Images<p>Finally, and perhaps most importantly, we had started to suspect and now understand that America's colleges and universities are among the many institutions of democracy and civil society that are, by their very design, incapable of being sufficiently responsive to the full spectrum of modern challenges and opportunities they face. Far too many higher education outcomes are determined by a student's family income, and in the context of COVID-19 this means that lower-income students, first-generation students and students of color will be disproportionately afflicted. And without new designs, we can expect postsecondary success for these same students to be as elusive in the new normal, as it was in the <a href="http://pellinstitute.org/indicators/reports_2019.shtml" target="_blank">old normal</a>. This is not just because some universities fail to sufficiently recognize and engage the promise of diversity, this is because few universities have been designed from the outset to effectively serve the unique needs of lower-income students, first-generation students and students of color.</p>
Where can the new normal take us?<p>As colleges and universities face the difficult realities of adapting to COVID-19, they also face an opportunity to rethink their operations and designs in order to respond to social needs with greater agility, adopt technology that enables education to be delivered at scale, and collaborate with each other in order to maintain the dynamism and resilience of the American higher education system.</p> <p>COVID-19 raises questions about the relevance, the quality, and the accessibility of higher education—and these are the same challenges higher education has been grappling with for years. </p> <p>ASU has been able to rapidly adapt to the present circumstances because we have spent nearly two decades not just anticipating but <em>driving</em> innovation in higher education. We have adopted a <a href="https://www.asu.edu/about/charter-mission-and-values" target="_blank">charter</a> that formalizes our definition of success in terms of "who we include and how they succeed" rather than "<a href="https://www.washingtonpost.com/opinions/2019/10/17/forget-varsity-blues-madness-lets-talk-about-students-who-cant-afford-college/" target="_blank">who we exclude</a>." We adopted an entrepreneurial <a href="https://president.asu.edu/read/higher-logic" target="_blank">operating model</a> that moves at the speed of technological and social change. We have launched initiatives such as <a href="https://www.instride.com/how-it-works/" target="_blank">InStride</a>, a platform for delivering continuing education to learners already in the workforce. We developed our own robust technological capabilities in ASU <a href="https://edplus.asu.edu/" target="_blank">EdPlus</a>, a hub for research and development in digital learning that, even before the current crisis, allowed us to serve more than 45,000 fully online students. We have also created partnerships with other forward-thinking institutions in order to mutually strengthen our capabilities for educational accessibility and quality; this includes our role in co-founding the <a href="https://theuia.org/" target="_blank">University Innovation Alliance</a>, a consortium of 11 public research universities that share data and resources to serve students at scale. </p> <p>For ASU, and universities like ASU, the "new normal" of a post-COVID world looks surprisingly like the world we already knew was necessary. Our record breaking summer 2020 <a href="https://asunow.asu.edu/20200519-sun-devil-life-summer-enrollment-sets-asu-record" target="_blank">enrollment</a> speaks to this. What COVID demonstrates is that we were already headed in the right direction and necessitates that we continue forward with new intensity and, we hope, with more partners. In fact, rather than "new normal" we might just say, it's "go time." </p>
The coronavirus pandemic has brought out the perception of selfishness among many.
- Selfish behavior has been analyzed by philosophers and psychologists for centuries.
- New research shows people may be wired for altruistic behavior and get more benefits from it.
- Crisis times tend to increase self-centered acts.
Paul Krugman on the Virtues of Selfishness<div class="rm-shortcode" data-media_id="7ZtAkm6C" data-player_id="FvQKszTI" data-rm-shortcode-id="828936bf6953080e9018307354c0c02b"> <div id="botr_7ZtAkm6C_FvQKszTI_div" class="jwplayer-media" data-jwplayer-video-src="https://content.jwplatform.com/players/7ZtAkm6C-FvQKszTI.js"> <img src="https://cdn.jwplayer.com/thumbs/7ZtAkm6C-1920.jpg" class="jwplayer-media-preview" /> </div> <script src="https://content.jwplatform.com/players/7ZtAkm6C-FvQKszTI.js"></script> </div> The Nobel Prize-winning economist on the virtues of selfishness.
Evolution Is Moving Us Away from Selfishness. But Where Is It Taking ...<div class="rm-shortcode" data-media_id="cyeqmYCb" data-player_id="FvQKszTI" data-rm-shortcode-id="6c5efecb56456e9acc25cf36935b1826"> <div id="botr_cyeqmYCb_FvQKszTI_div" class="jwplayer-media" data-jwplayer-video-src="https://content.jwplatform.com/players/cyeqmYCb-FvQKszTI.js"> <img src="https://cdn.jwplayer.com/thumbs/cyeqmYCb-1920.jpg" class="jwplayer-media-preview" /> </div> <script src="https://content.jwplatform.com/players/cyeqmYCb-FvQKszTI.js"></script> </div>
Exploring Morality and Selfishness in Modern Times<div class="rm-shortcode" data-media_id="02eX1Cag" data-player_id="FvQKszTI" data-rm-shortcode-id="45cc6180db791f32683988fb52faff26"> <div id="botr_02eX1Cag_FvQKszTI_div" class="jwplayer-media" data-jwplayer-video-src="https://content.jwplatform.com/players/02eX1Cag-FvQKszTI.js"> <img src="https://cdn.jwplayer.com/thumbs/02eX1Cag-1920.jpg" class="jwplayer-media-preview" /> </div> <script src="https://content.jwplatform.com/players/02eX1Cag-FvQKszTI.js"></script> </div> Philosopher Peter Singer discusses the state of global ethics.
Parenting could be a distraction from what mattered most to him: his writing.
Ernest Hemingway was affectionately called “Papa," but what kind of dad was he?
Scientists uncovered the secrets of what drove some of the world's last remaining woolly mammoths to extinction.
Every summer, children on the Alaskan island of St Paul cool down in Lake Hill, a crater lake in an extinct volcano – unaware of the mysteries that lie beneath.
Hollywood has created an idea of aliens that doesn't match the science.
- Ask someone what they think aliens look like and you'll probably get a description heavily informed by films and pop culture. The existence of life beyond our planet has yet to be confirmed, but there are clues as to the biology of extraterrestrials in science.
- "Don't give them claws," says biologist E.O. Wilson. "Claws are for carnivores and you've got to be an omnivore to be an E.T. There just isn't enough energy available in the next trophic level down to maintain big populations and stable populations that can evolve civilization."
- In this compilation, Wilson, theoretical physicist Michio Kaku, Bill Nye, and evolutionary biologist Jonathan B. Losos explain why aliens don't look like us and why Hollywood depictions are mostly inaccurate.