The Plugged-In Manager

Get in Tune with Your People, Technology, and Organization to Thrive

Terri L Griffith

• Publisher: Jossey-Bass
• Year: 2011
• Print ISBN: 9780470903551
• eBook ISBN: 9781118112564
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

A game-changing approach to management

Too often discussions of management practice focus exclusively on managing people and organizational issues. Rarely, however, do they incorporate a discussion about technology or address all three dimensions in a balanced way. When they do, the result is game changing. In our hypercompetitive environment, those managers who are outstanding at being plugged into their people, technology, and organizational processes simultaneously excel at coming up with effective business solutions.

The Plugged-In Manager makes the case that being plugged-in—the ability to see choices across each of an organization's dimensions of people, technology, and organizational processes and then to mix them together into new and powerful organizational strategies, structures, and practices—may be the most important capability a manager can develop to succeed in the 21st century. Step by step Griffith shows you how to acquire this ability.

• Shows what it takes for business managers to succeed as technology and organizations become more and more complex
• Profiles exceptional leaders and organizations who are plugged-in, such as Tony Hsieh, CEO of Zappos.com
• Offers a fresh look at management issues

Filled with compelling case studies and drawing on first-hand interviews, The Plugged-In Manager highlights this often neglected managerial capability and the costs of only focusing on one dimension rather than all three.

Part ONE: The Three Practices of the Plugged-In Manager

My goal up to this point was to introduce the concept of plugged-in management and create a sense of how urgently it is needed today. Technology tools, organizational processes, and even the people of our organizations are changing in ways that require a thoughtful redesign of our approaches. There are also systemic shifts in terms of how communication and relationships cross formal organizational boundaries. You need to be plugged in to navigate this environment.

In Part One I show how to get plugged in by adding or emphasizing three particular practices in your management approach:

1. Scanning for choices across the people, technology, and organization dimensions of workplace decisions—what I call Stop-Look-Listen

2. Creatively blending those choices into effective strategies and tactics—Mixing

3. Sharing—ensuring that others understand your plugged-in approach and can work in parallel

Let’s start with a short example from Internet retailer Zappos. I have dug into the history of the company, had the chance to take one of their famous tours, and corresponded with several Zappos Family members.¹ Zappos clearly developed their abilities to plug in as they built and developed their company. When you apply the ideas of plugged-in management from the ground up, the result is, in Zappos’s words, “Wow!”

Wow! From the Fulfillment Center?

Founded in 1999, in 2010 Zappos was listed as the fifteenth best U.S. company to work for² and the number one ranked online retailer for customer service.³ This is after a US$1.2 billion acquisition by Amazon—an acquisition that repaid years of personal investment and risk by early investors and employees. Zappos is a company built on providing Wow! Service (their term). If you look closely at Zappos, you can see Wow! supported by the three practices of plugged-in management at every level, in every dimension, from their website design to their fulfillment center.

Wow! from the fulfillment center? You don’t think Zappos hits its Wow! service standard by drop shipping, do you? (Drop shipping is the common mail-order practice whereby orders are taken by the retailer, but then are sent to the manufacturing company, which then sends the order to the customer.) Zappos did start out that way, but drop shipping didn’t give them the kind of control they needed to provide their extreme form of customer service. Though the team didn’t have experience in complex inventory systems, they jumped in, got their hands dirty, and created a system to hit their service goals while still managing costs. The iterations they’ve gone through show deep abilities to plug in, driven by their focus on delivering a Wow! experience to their customers—as well as great shoes and other products.

Take it from Keith Glynn, the guy who jumped on a plane to Kentucky, without going home to pack, to help for a couple of weeks with third-party warehouse issues—and ended up staying for two years.⁴ At the point where Keith and Zappos CEO Tony Hsieh decided they needed to run their own warehouse, Keith went back to San Francisco to pick up his truck. He and Tony then drove the truck for thirty-six hours nonstop to Kentucky. This is serious commitment to warehouse operations!

I asked Keith how Zappos came to run the fulfillment center the way they do.⁵ I’d read that they randomly stocked the shoes, as this actually made things easier to find!⁶ Keith’s response:

In a traditional brick and mortar store stocking was done based on Brand, Style, Size and Color. At Zappos originally there was no intent to stock inventory. As Zappos grew we realized we wanted to own the customer experience, so we started to hold inventory.

We started with a small space in our office. It held a couple thousand pairs of shoes. This consisted of static racking and the shoes were stocked based on what other stores were doing. Brand, Style, Size, Color. We learned early on that this was a laborious job. You would have to continually shift brands because you did not account for seasonality and future growth.⁷

In 2000, Zappos moved to a larger warehouse in Willows, California. As Keith tells it:

We would receive a shipment, let’s say from UGG. We would have to unbox the shoes. Lay them out in a large area on the floor based on style, size and color. Imagine hundreds of shoe boxes laid out on the floor and the amount of space needed to do this. And this was only one brand.

Once you had them organized you would have to now figure out how to put them on the racks for storage. In order to get everything to fit you most likely had to shift thousands of shoes to get everything in the proper place. There were other brands on each side which had to be moved as well. We would review our processes and come up with some small wins as to efficiency but it could cost us in space or other areas. We thought it would be great to have a system where we did not have to rotate the inventory every day when the shipments came in. We had the idea but did not have the resources or know how to make it work.

In 2002, they thought they had a solution when warehouse service provider eLogistics offered to take over the warehouse and fulfillment operations. eLogistics had a warehouse next to the UPS Worldport hub; this would speed up shipping. “When we moved to the Kentucky eLogistics location they did things quite differently,” Keith told me.

They had large static racks about twenty-five to thirty feet high. This probably worked for most of what they were shipping but there was no way it would work for us. We had large volumes of shoes, thousands of SKUs [stock keeping units—product identifiers]. The need for speed and accuracy was extremely important to us as this was our business’ “customer service.”

We had many conversations with eLogistics on how to improve what they were doing. We even had them install shorter racks so it wouldn’t take as long to put shoes away or pick for shipping. They only wanted to use this space for the faster moving products and felt the need to grow upward since this space was available to them. Imagine having thirty-foot ceilings and only six-foot racks. I could see their rationale but it would not work for Zappos. Another challenge was that we were paying them for space. Basically this was a cube that varied in size. Let’s say one foot long by two feet wide by eighteen inches deep. They may have had only one or two shoes in the space based on Brand, Style, Size or Color that we had in inventory. This left a lot of empty space that we were paying for since we paid for the entire cube.

This is the sort of problem that requires serious plugged-in management skills. At this point they are trying to work with building space, types of storage racks, costs, alliance partners, customer perception, and human heights (note the comment about shorter racks and stocking). You can see how the team is stopping, looking, listening as they scan for the best option.

They eventually decided to again have their own warehouse. Keith went shopping for a warehouse and found one only fifteen minutes from the Louisville airport. Again, good for shipping and thus for customer service.⁸ They signed the lease and took the crazy road trip mentioned above in preparation for moving the inventory.

In Delivering Happiness, Tony Hsieh tells the story of how they gave eLogistics a last chance to keep the business.⁹ They designed a competition pitting Zappos’s new warehouse operations against that of eLogistics. For every week that the Zappos system beat eLogistics on shipping and inventory accuracy, ten thousand pairs of shoes would move from the eLogistics warehouse to the new Zappos warehouse. It took only a month for the Zappos warehouse to win all the inventory. “It was a valuable lesson,” Hsieh says. “We learned that we should never outsource our core competency. As an e-commerce company, we should have considered warehousing to be our core competency from the beginning.”¹⁰

Keith continues:

While receiving the inventory, Tony came up with a quick program that would allow us to scan the UPCs [the “universal product code” you see with a barcode on many products] into a location on a shelf. This allowed us to put any shoe anywhere in the racks and we would be able to find it based on the UPC and the rack location. We realized that this system would give us a higher density of storage and allow us to store items randomly.

Random storage is good for the people in the warehouse. The inventory system lets the worker know where to find the box, and because it’s randomly stored, the specific box the worker is looking for will stand out among different brands and styles. Think about having to grab the right box if it were stored next to boxes that all were identical except for a color or size designation. Random brand storage works better in concert with the inventory system, as the boxes are more distinctive.

But Zappos needed yet another innovation. UPCs are not unique to a particular pair of shoes. That is, the pair of size 7 Chocolate Leather Fitflops that I bought would have the same UPC code as the pair of size 7 Chocolate Leather Fitflops that you bought. No good for managing inventory or returns. In addition, some boxes have multiple UPCs printed on them. The warehouse team needed a unique identifier for each and every unique box of shoes.

The LPN (license plate number) system they came up with turns out to be an excellent example of plugged-in management in action. It’s a great way for Zappos to track the location of every item accurately in the warehouse and have a higher density of storage—the technology component. They are able to track specific items through receiving, shipping, and returns. (Fun fact: One out of every sixty overnight packages shipped by UPS is a Zappos box!)¹¹ As a result, they are able to be amazingly responsive to customer service needs (and so be true to the Zappos Wow! standard of service)—that’s technology and organizational process. Random storage takes into account human perception—that’s people. It’s the mixing of these dimensions that makes the LPN system so powerful. All from a number!

The Zappos Family is also strongly focused on the third practice of plugged-in managers: sharing. I was able to correspond with Keith and his colleagues because of Zappos’s openness, its proclivity for sharing. Tony Hsieh says in the preface to Delivering Happiness, “I decided to write this book to help people avoid making many of the same mistakes that I’ve made.”¹² Through the Zappos Insights website, experiences, and community, the Zappos Family freely shares the “how” as well as the “what” of their company.¹³

As the Zappos.com case study demonstrates, plugged-in management works for individuals, groups, organizations, and cross-organization relationships. When we talk about the people, technology, and organizations of plugged-in management, thi...

Table of contents

• Cover
• Praise for The Plugged-In Manager
• Title page
• Copyright page
• FOREWORD
• Dedication
• chapter ONE: Plugging In to the Twenty-First Century
• chapter TWO: Why You Need Plugged-In Management
• Part ONE: The Three Practices of the Plugged-In Manager
• Part TWO: Learning to Plug In
• ACKNOWLEDGMENTS
• ABOUT THE AUTHOR
• Index
• Download CD/DVD content