MBD Essentials May 5th, 2019

Evolve Glossary

Evolve Glossary

All glossary terms are listed in alphabetical order.

Learn more about who the Evolve Circle is and what our Evolutionary Org goals are by visiting HERE.


Autonomy is the quality and right of self-governance. In the workplace, an autonomous employee or team has the freedom to make choices, particularly around their work and allocation of resources.

Bank Balance

One of the two primary metrics visible in the CFO Tool, a circle’s Bank Balance corresponds to the funds the circle currently has available to spend. This is based on actual revenue received YTD and actual costs and expenses YTD.


A Bounty is a call to action, usually a project or a task, with a reward tied to it. It’s simple - Complete a task and you or your Circle gets paid for it! Bounties can act as ‘Help Wanted’ advertisements for Circle’s in need.

The complete list of bounties can be found in the CFO Tool. Any Circle that has enough funding or can generate enough capital through the project/task itself, can create a bounty.

More information about Bounties can be found HERE.

CFO Tool (Circle Financial Overview Tool)

The Circle Financial Overview Tool, simply called “CFO Tool” is a homegrown financial tool and system that allows every Lead Link and/or Circle Delegate to view and manage their Circle’s financials. The CFO Tool also enables radical transparency into any other Circle’s financials as well.

The CFO Tool itself can be found HERE.

More information about the CFO Tool can be found HERE.

Circle of One

A “Circle of One” (Co1) is a Circle that is autonomously operated by a single-person, or a “solopreneur”. Utilizing a person's unique skillsets, experiences, interests and ideas, the Co1 program not only allows a person to work on what they are passionate about and interested in, what they are good at, and what brings value to our business, our customers and the organization.

Discover more about the Circle of One Program HERE.


Co-Creation occurs when different parties work together to jointly produce a mutually valued outcome.


Crowdfunding is the practice of raising investment capital in small chunks from a large number of parties, as opposed to from a single investor. Each party who contributes acts as an investor would, though their contribution and return is significantly smaller.

At Zappos, any individual or circle can seek crowdfunding, just as any individual or circle can contribute to a crowdfunding effort.

Customer Circles / Service-Provider Circles

The “internal customer” is defined as any Circle in the organization (and the people within them) who utilizes any products/services being produced by another Circle. Our belief is that every Circle is a Customer-Circle, just as every Circle is a Service-Provider Circle that sells their goods and services to at least one other Circle in the organization.

Most Circles, in the early stages of CGB, will consider their one Customer to be their Parent Circle.

Customer-Focused Mindset

At our core, “Zappos is a service company that happens to sell ___________”. It’s expressed in our Core Values document that if every single Zapponian is deeply obsessed with being customer-focused, no matter who/where the customer is, it will have profound and positive effects on Zappos' future. Directly connected to the Customer-Focused Mindset is our belief that if we’re customer-obsessed internally, meaning, we treat each other as customers, then we will continually be able to maximize our opportunities with our external customers. In everything we do, our number one goal should always be to provide the very best service and experience to our customer(s).

Read more about the Customer-Focused Mindset HERE.

Customer-Generated Budgeting (CGB)

Directly connected to building an internal market is Customer-Generated Budgeting (CGB). This is a new customer-focused method of budgeting. Rather than having a traditional budgeting paradigm where budgets are passed down from the top of the organization to the bottom, CGB puts the power of budgeting in every Circle’s hands. In CGB, real money is exchanged for goods and services between Circles involved in each service-provider/customer relationship. The traditional term of “budgeting” is now commonly referred to as “revenue”.

The transition from “traditional budgeting” to CGB requires all Circles in the organization to clearly define 1) what services/products they offer, 2) how much they will charge for them and 3) who the customers of those services/products are, then engage them in a business relationship.

In MBD and CGB, any Circle can do whatever they want (operating as a fully self-managed, self-organized, and autonomous business) so long as the Circle:
• has customers who find their products/services valuable and will pay for them
• earns the revenue required to offset its operating and people costs (i.e. breaking even on its Profit & Loss statement)

Learn more about Customer-Generated Budgeting HERE.

Diversified Revenue Stream

A Diversified Revenue Stream is comprised of multiple sources of revenue contributing to the total allocation of income. A diversified revenue stream mitigates the risk of losing any single source of money.


Money gifted from one circle to another, but not in exchange for a service provided. Within the CFO Tool, circles can both make and request donations.


A Circle that is collecting payment for something it's already getting paid to do by another Circle (already being funded to perform accountabilities)

Entrepreneurial Mindset

An entrepreneur is a problem seeker, a problem solver, and an innovator, but more than anything, an entrepreneur is a person that can add value, whether they create something themselves or work for a company or a team. In the traditional sense of the word, we are not asking every person in the organization to be “entrepreneurial”, but it is necessary that every Circle has members that are entrepreneurially minded, which are people that are flexible, always hustling, value-oriented, and driven to achieve success.

Read more about the Entrepreneurial Mindset HERE.


A test undertaken to make a discovery, test a hypothesis, or to determine something is valuable or not. In essence, an experiment enables the application of research tools and techniques to test different assumptions (or hypotheses) and subject them to measurement, validation and analysis, so that we can come to an evidence-based conclusion about next steps. If the conclusions are positive, then move forward with the product/service. If not, then abandon, or restructure and retest.

External Revenue

Any monies a Circle collects from outside the walls of Zappos; revenue generated by a Circle from an external client/customer.


One of the two primary metrics visible in the CFO Tool, a circle’s Forecast corresponds to the difference between a circle’s revenue and expenses, combining both YTD actuals and forecasts for the year’s remainder. This shows how much money a circle has to spend, once the rest of the year’s forecasted revenue and expenses are factored in.


A founder is someone who starts a business. They typically act as entrepreneurs, establishing the business and assuming the risks and rewards that come with it. This is not necessarily a solo endeavor, as groups of people can team up and serve as co-founders.

At Zappos, every employee has the opportunity to become a founder of a business.


Huzzah! is a platform that lets organizations customize their structure and operations to fit the way their team works. At Zappos.com, we use it to map out our self-organizing structure and to communicate each team's work to the larger organization.

Internal Revenue

Any monies a Circle collects from another Circle for goods and/or services; revenue generated by a Circle to Circle transaction.


An investor is an individual or group willing to provide resources, often funding, to another individual or group with the aim of earning a profit. Investors build investment portfolios by taking a long-term strategic view of the companies and projects they choose to invest in, typically providing capital or support in exchange for convertible debt or ownership equity.

At Zappos, any individual or circle can act as an investor, just as any individual or circle can seek funding from other potential investors within the organization.


Within the CFO Tool, money can be exchanged between circles through invoices, either as part of an existing service agreement between circles or on an ad hoc basis. The service provider circle creates an invoice and sends to the customer circle for approval, as a way to bill them for work already completed.

Alternatively, a quote can be issued to the customer in advance of the work being done and then converted into an invoice upon the work’s completion.

Within a service agreement, invoicing can be set up as either an automated or manual process.


Leap! is a tool which helps employees frame, organize, and commit their ideas to action. The Evolve team supports employees who submit ideas through Leap! by providing them consultation and recommended next steps.


Legacy refers to a previous method, process, or technology. Referencing something as ‘legacy’ often means that it paved the way for the standards that would follow it.

Monopoly (Service or Product)

A monopoly exists when an individual or group exerts exclusive possession or control over a particular service or product in a marketplace. In the Zappos internal marketplace, monopolies can arise when an individual or team is the sole provider of a particular service or product.

Market-Based Dynamics (MBD)

Market-Based Dynamics (MBD) is another stepping-stone towards our goal of making Zappos a fully self-organized company. MBD is an operating system that enables every team to not only think like small, autonomous business owners or start-ups, but to also act like them. A critical part of MBD is creating a homegrown internal market, generated by both Customer-Circles and Service-Providing Circles that “do business” with each other.

MBD also allows any Circle to take their business to the external market, if / when it makes sense for their business.

Learn more about Market-Based Dynamics HERE.

Market Forces

Market forces refers to economic factors that may influence the availability and price of a product or service. Examples include things like, supply and demand, government regulations, and competitive pressure. The Zappos internal marketplace, like any marketplace, is also influenced by these same type of market forces.

Menu of Services (MoS)

A Menu of Services (MoS) is a list of products and/or services, with accompanied pricing, that a Circle offers to its customers (internally and externally).

Each Circle’s Menu of Services is easily accessible through the Circle Financial Overview (CFO) Tool and through each Circle’s Huzzah Overview page.

Find more information about Menu of Services HERE.

Minimal Viable Product (MVP)

A minimum viable product (MVP) is an early version of a product, such as a SaaS (software as a service) application, that is designed to ensure that product vision and strategy are aligned with market needs. The goals of an MVP are to validate the premise of a product, to test hypotheses about market needs, to make adjustments to the product vision, and to prioritize where to invest in future development. As such, MVPs are a profoundly powerful approach towards finding product-market fit.

Learn more about MVPs HERE.

Networked Approach

The networked approach is a methodology/process of developing and maintaining connections between people, Circles and information. CGB, specifically, breaks down traditional budgeting processes and enables the organization to be more connected, or networked, than ever. The networked approach expands far beyond the boundaries of a Circle’s own org structure, supporting peers and partners, and service-providers and customers, from across the organization in way that solves for bigger problems at hand and marches the organization toward a common goal. Not surprisingly, the potential for impact increases exponentially when people leverage resources of all types—leadership, money, talent, etc…

People Costs (People Points)

Every Circle that has employees they’re paying to do work has “people costs” it needs to consider when running their business. Here’s what People Points are and how it breaks down:
• Every person is worth 100 People Points; One People Point equates to 1% of a Zapponian's working time (just as 20 People Points would equal 20% of his/her working time)
• A Circle's total number of People Points helps it know exactly what its People Costs are...
o One People Point costs your Circle $2000 every year ($167 per month)
o 100 People Points (or one full-time employee (FTE)) is gonna cost your Circle ~$16.7K every month, or $200,000 per year
o People costs break down to be ~$104/hour
• Every Circle is responsible for covering its People Costs (and its total expenses) from a various sources of income: Revenue from invoices and Service Agreements with internal and/or external customers, by earning bounties, and/or by receiving investment funding and/or donations from other Circles.


$100K covers the average Zapponian’s compensation and benefits, as well as a small percentage of the organization’s shared services (like legal or finance).

You can think of the other $100K as an Amazon Tax. Basically, the contribution profit that Zappos owes Amazon at the end of every year is shared between every employee and Circle. 1500 employees * $100K equals the $150mm that we owe Amazon for this year.

$200K is a starting point and happens to be the number that we are using now; it is subject to change as we find new, more effective ways to allocate People Costs to Circles.

More information about People Points can be found HERE.

Peach / 1% CEO

Peach, or a 1% CEO, is a type of Circle of One. It’s an experiment that gives Zapponians an opportunity to create unique online experiences through a program that allows them full access and authority to 1% of Zappos.com ecommerce customers. The objective here is to utilize an employee’s unique skillsets, experiences, and ideas to drive the greatest value from this subset of customers (as it relates to experience, revenue, and contribution profit) by utilizing (and paying for) available company services and resources to outperform a control set of Zappos customers.

Learn more about Peach / 1% CEO HERE.

Physiological Safety

Physiological Safety is a shared belief that the team is safe for interpersonal risk taking. It can be defined as being able to show and employ one's self without fear of negative consequences of self-image, status, or career. In psychologically safe teams, team members feel accepted and respected.

Profit and Loss Statement (P&L)

A profit and loss (P&L) statement summarizes all revenues and expenses for a business during a specified period. A circle’s P&L can be viewed in the CFO Tool.

In MBD, each circle is responsible for maintaining and balancing their P&L each month, factoring in incoming revenue from service agreements, invoices, and bounties, as well as outgoing expenses and people costs.


Self-management in the workplace is the concept that each employee is responsible for managing their own work and empowered to take control over their own professional journeys. There are different structures an organization can leverage to foster a culture of self-management, including autonomous teams, a focus on roles and accountabilities over job titles, distributed decision making, and fluid, networked hierarchy as opposed to a traditional, top-down pyramid.

In the spirit of self-management, at Zappos any employee or circle can do whatever they want so long as they satisfy the Triangle of Accountability.


Self-organization is ability of a system to spontaneously arrange its elements to achieve a form of order or accomplish a certain goal. Crucially, the necessarily changes are made without the help or guidance of any external party. In the workplace, self-organization refers to the idea that individuals and teams within the company be free and able to organize themselves and their work as needed to best fulfill their purposes.

At Zappos, individuals and teams are empowered to self-organize, as they can allocate resources and structure relationships as they see fit so long as they satisfy the Triangle of Accountability.

Service Agreements

A Service Agreement is a commitment made between two Circles (Service-Provider and Customer). It is important to note that Service Agreements are made between Circles and not employees.

Service Agreements primarily:
• describe products / services that will be provided by a Service-Providing Circle / received by a Customer-Circle (as defined by a Circle’s Menu of Services)
• outline the negotiated pricing of those goods / services and when the payment(s) will be made
• define Milestones and deliverables of the agreement

Learn more about Service Agreements HERE.

Shared Services

Shared Services are services which are fully funded by the GCC Funded Shared Services Circle to provide services to the entire organization (i.e., Payroll Services).

Triangle of Accountability

We want every person and team at Zappos to have the minimal number of constraints that enable maximum freedom, but also maximum accountability. We make what this means explicit through the Triangle of Accountability. What it comes down to: Any employee / Circle can do whatever they want so long as they simultaneously deliver on each side of the triangle:

Culture / Values
Zappos Culture & Our 10 Core Values

Every Circle is accountable for staying true to the core principles, behaviors, and mindsets that define us as an organization.

Customer-Focused Mindset
Delivering the Very Best Customer Service and Experience

Every Circle is accountable for continuously delivering beyond their customers’ expectations.

Customer-Generated Budgeting
Balancing Your Circle’s Profit & Loss

Every Circle is accountable for breaking-even on its P&L (where a Circle’s costs and expenses don’t exceed its funding and/or income).

More information about the Triangle of Accountability can be found HERE.

Zappos Franchises

An ecosystem of small micro-businesses that work independently within the organization.

Zappos Franchises microbusinesses can be found here in Huzzah

Learn more about who the Evolve Circle is and what our Evolutionary Org goals are by visiting our repository in Quip.