Part I – The World That Doesn’t Start With Why
1. Assume You Know
- When things go right, do we really know why or we assume we know why?
- When things go wrong, is it because incorrect assumptions led us to wrong decisions?
- More information and data are key for good decision making.
2. Carrot and Stick
Manipulation vs Inspiration
- Many product/service options for same price, same quality, same level of services, same feature.
- First movers advantages are lost in matter of months.
- Most companies don’t know why their customers are their customers, or their employers are their employers.
- So, assumptions drive their business.
- Two ways to influence human behavior: manipulation or inspiration. Typical manipulation: dropping price, running promotion, using fear, peer pressure, aspirational messages.
- Price games are effective.
- It is short term gain. It is difficult to kick the habits.
- Product become commodity.
- Cash back incentives or rebates drive decisions.
- Breakage. Percentage of customers who fail to take advantage of a promotion and end up paying full price for a product.
- In the case of rebates, slip-page is the number of customers who don’t bother to apply for the rebate, or don’t cash the check they receive for the rebate. Average of 40% slip-page, also known as tax on the disorganized.
- Fear motivates people to comply with demands, e.g., bank robbery with banana in the pocket pretending it is a gun.
- When fear is employed, facts are incidental.
- Fear is used to raise kids, motivate people to obey ethics, public safety ads (AIDS), political campaigns.
- Opposite of fear. Fear motivates us to move away from something, whereas aspirations motivate us to move towards something desirable, e.g., quitting smoking.
- Effective with those who lack discipline or have nagging fear or insecurity that they don’t have the ability to achieve their dreams.
- Corporate world has short-term response to long-term desires. They never have time or money to do it right the first time, but always have the time and money to do it again (consulting companies).
- “Four out of five dentists prefer Trident”
- Celebrity endorsements
- From sales person: “70% of your competitors use my solution”
Novelty (vs Innovation)
- Real innovation changes the course of an industry or a society: light bulb, microwave, fax, iTunes.
- Better camera on an phone is not innovation, it is a feature.
- Novelty (features) can drive sales, but they don’t last.
The Price You Pay for the Money You Make
- Manipulation works, but don’t breed loyalty.
- They increase level of stress for buyers and sellers.
- Applied for short-term gains (politics, i.e., get elected)
Manipulation Lead to Transactions, Not Loyalty
- For one-time or rare transactions, carrot and sticks are the best way to elicit the desired behavior.
- Manipulations are valid strategies for driving the transaction.
- Manipulations don’t help when there is a hope for a loyal, lasting relationship.
Just Because It Works Doesn’t Make It Right
- Manipulations are practiced by a majority of companies, and it creates systemic peer pressure. Ironically, the manipulators are manipulated by their own system.
- Employees can be manipulated by bonuses that encourage short-sighted decision making.
- Manipulations are the norm in today’s world.
Part II – An Alternative Perspective
3. The Golden Circle
- Some leaders choose to inspire people instead of manipulate them.
- Any company faced with the challenge of how to differentiate themselves in their market is basically a commodity, regardless of WHAT they do and HOW they do it.
Not the Only Way, Just One Way
- Knowing the WHY is not the only way to be successful, but it is the only way to maintain a lasting success and have a greater blend of innovation and flexibility.
4. This Is Not Opinion, This Is Biology
- Our need to belong is not rational, but it is a constant that exists across all people in all culture.
- We want to be around people and organizations who are like us and share our beliefs.
- We are drawn to leaders and organizations that are good at communicating what they believe. Their ability to make us feel like we belong, to make us feel special, safe and not alone is part of what gives them the ability to inspire us.
Gut Decisions Don’t Happen In Your Stomach
- The reason gut decisions feel right is because the part of the brain that controls them also controls our feelings.
- Companies that fail to communicate a sense of WHY force us to make decisions with only empirical evidence. This is why those decisions take more time, feel difficult or leave us uncertain.
It’s What You Can’t See That Matters
- The limbic brain not only controls our gut decision, but it can influence us to do things that seem illogical or irrational.
5. Clarity, Discipline, Consistency
Clarity of Why
- You have to know WHY you do WHAT you do.
Discipline of How
- How are your values and principles that will guide HOW to bring your cause to life.
- HOW are actionable items, not nouns.
Integrity -> Always do the right things
Innovation -> Look at the problem from different angle
Consistency of What
- WHY is just a belief. HOW are the actions you take to realize your belief. WHAT are the result of those actions (everything you say and do).
- If people don’t buy WHAT you do but WHY you do, then all those things need to be consistent. It is a tangible world and people need to see and hear WHAT you do. It is authenticity, being authentic: the Golden Circle is in balance.
The Right Order
- WHY (belief) must come first, before WHAT (tangible proof of WHY).
If You Don’t Know Why, You Can’t Know How
- Southwest wasn’t interested in competing with everyone else for 15% of the travelling population. Southwest cared about the 85%. “We are the champion for the common man”.
- Cheap, fun and simple, that’s HOW they did it.
Manipulation and Inspiration Are Similar, But Not The Same
- Without WHY, the buyer is easily motivated by aspiration or fear.
Doing Business Is Like Dating
- People are people. To learn how to apply WHY to a business situation, you needn’t look much farther than how we act on a date.
- If you manipulate dates with fancy dinners, it will be costly later.
- WHAT doesn’t drive decisions, it is the tangible proof of WHY.
Three Degrees of Certainty
- When we make gut decisions, the highest level of confidence we can offer is “the decision feels right”.
- The gut decision can only be made by a single person.
- When you know your why, the highest level of confidence you can offer is “I know it’s right”.
- The goal of business should not be to do business with anyone simply wants what you have. It should be to focus on the people who believe what you believe. When you are selective about doing business only with those who believe in your WHY, trust emerges.
Part III – Leaders Need a Following
6. The Emergence of Trust
- ” … and you can’ have a good product without people who like coming to work. It just can’t be done.” Gordon Bethune
- Trust begins to emerge when we have a sense that another person or organization is driven by things other than their own self-gain. … With trust comes the sense of value.
- WHY is just a belief. HOW are the actions you take to realize the belief, and WHAT is the result of those actions.
The Only Difference Between You and a Caveman is the Car You Drive
- We succeeded as a species because of our ability to form culture. Culture are groups of people who come together around a common set of values and beliefs.
- We do better in cultures in which we are a good fit.
Finding the People Who Believe What You Believe
- The goal is to hire those who are passionate with your WHY, your purpose, cause of belief, only then should their skill set and experience be evaluated.
- Great companies don’t hire skilled people and motivate them, they hire already motivated people and inspire them.
- Unless you give motivated people something they believe in, something bigger than their job to work toward, they will motivate themselves to find a new job and you will be stuck with whoever’s left.
Give ‘Em a Cathedral
- Companies with a strong sense of WHY are able to inspire their employees.
When Motivated by Why, Success Just Happens
- The Wright brothers inspired a group of people to join them in pursuit of something bigger than each member of the team.
Innovation Happens at the Edges
- Average companies give their people something to work on. Innovative organizations give their people something to work towards.
- The role of a leader is to create an environment in which great ideas can happen.
- Companies that define themselves by WHAT they do instead of WHY they do it instruct their people to be innovative (add features) around a product and service.
The Definition of Trust
- If there were no trust, then no one would take risks. No risks would mean no exploration, no experimentation, and no advancement of the society as a whole. … Only when individuals can trust the culture or organization will they take personal risks in order to advance that culture or organization as a whole.
- Great organizations become great because the people inside the organization feel protected. The strong sense of culture creates a sense of belonging and acts like a net.
Real Trust Comes from the Things You Can’t See
- Trust comes from being a part of a culture or organization with a common set of values and beliefs.
- Trust is maintained when the values and beliefs are actively managed.
- Without managed trust, people will show up to do their jobs and they will worry primarily about themselves.
The Influence of Others
- People recommendations go a long way. We are more likely to trust those who share our values and beliefs.
- The feeling of trust is lodged in the same place as the WHY – the limbic brain – and it is powerful enough to trump empirical research, or at least seed doubt.
- Celebrity status alone may work to influence behavior, but at this level it is just peer pressure. Celebrity association to company qualities is another WHAT to the company’s WHY. The celebrity must embody the qualities that already exist at the company.
7. How a Tipping Point Tips
- Gladwell: The Tipping Point. Tipping points exist and they should not be by accident. Tipping points should be designed and happen intentionally.
- Everett M. Rogers: Diffusion of Innovation. The Law of Diffusion of Innovation explains the spread of ideas.
Innovators pursue new products or ideas aggressively and are intrigued by any fundamental advance.
Early adopters appreciate the advantages wrought by new ideas or technologies.
These two groups rely heavily in intuition.
The farther right you go on the curve, the more you will encounter the clients and customers who may need what you have, but don’t necessarily believe what you believe.
- Mass market success can only be achieved after you penetrate between 15% and 18% of the market, at a great expense if not started with the why.
Refusing to Consider the Law of Diffusion Will Cost You
- We’ve got a new product.
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- People don’t buy WHAT you do, they buy WHY you do it.
- When you start with WHY, those who believe what you believe are drawn to you for very personal reasons. Be crystal clear about what purpose, cause of belief you exist to champion, and show how your products and services help advance that cause.
- Avoid the price-and-feature game.
Give the People Something to Believe In
- “I have a dream” vs “I have a plan”.
Part IV – How To Rally Those Who Believe
8. Start With Why, But Know How
Energy Excites. Charisma Inspires
- Energy is easy to see, easy to measure and easy to copy. Charisma is hard to define, near impossible to measure and too elusive to copy.
- All great leaders have charisma because all great leaders have clarity of WHY; an undying believe in a purpose or cause bigger than themselves.
The Chosen Path
- When a WHY is clear, those who share that believe will be drawn to it and maybe want to take part in bringing it to life.
Amplifying the Source of Inspiration
- The cone represents a company or an organization. CEO at top (WHY), next are senior executives (HOW) inspired by the leader’s vision and know how to bring it to life, and the WHAT’s are the results of those actions.
I Have a Dream (And He’s Got a Plan)
Those Who Know WHY Need Those Who Know HOW
- Most people in the world are HOW types. Most people are quite functional in the real wold and can do their jobs and do very well.
- To alter the course of an industry requires a very special and rare partnership between one who knows WHY and those who know HOW.
- The vision is the public statement of the founder’s intent, WHY the company exists. The mission statement is a description of the route, the guiding principles, HOW the company intends to create that future.
To Run or To Lead
- Great organizations not only excite the human spirit, they inspire people to take part in helping to advance the cause without needing to pay them or incentivize them in any particular way.
Build a Megaphone That Works
- For a message to have real impact, to affect behavior and seed loyalty, it needs more than publicity. It needs to publicize some higher purpose, cause of belief to which those with similar values and beliefs can relate.
- For a WHY to have the power to move people it must not only be clear, it must be amplified to reach enough people to tip the scale.
Say It Only If You Believe It
- A clear sense of WHY sets expectations. When we don’t know the WHY, we don’t know what to expect, so we expect the minimum – price, quality, service, features.
9. Know Why. Know How. Then What?
- The WHY message needs to be clear all the way to the marketplace even when the company grows and the CEO is no longer involved in the HOW and WHAT.
10. Communication Is Not About Speaking, It’s About Listening
- Great societies understand the importance of symbols as a way of reinforcing their values, of capturing their beliefs.
- The goal is to protect the meaning the symbol represents: the WHY.
- For a logo to become a symbol, people must be inspired to use that logo to say something about who they are.
The Celery Test
- The WHAT and HOW must be consistent with the WHY.
- Buying celery indicates that you are looking after your health: your WHAT communicates your WHY.
- Any decisions – hiring, partnership, strategies and tactics – should all pass the Celery Test.
The More Celery You Use, The More Trust You Earn
- Disney, Southwest: clear messages
In Violation Of Celery
- VW: people’s car trying to market luxury models under same brand, in contrast with Honda/Acura and Toyota/Lexus.
Part V – The Biggest Challenge Is Success
11. When Why Goes Fuzzy
- Sam Walton believed in people. Wal-Mart was WHAT he built to serve his fellow human beings. After his death, Wal-Mart started to confuse why it existed – to serve people – with HOW it did business – to offer lower prices
Being Successful vs Feeling Successful
- Many successful business owners know WHAT do, they know HOW they do, but they no longer know WHY.
Achievement vs Success
- Achievement is something you reach or attain, like a goal.
- Success is feeling, or a state of being.
- Success comes when you are clear in pursuit of WHY you want it.
12. Split Happens
- The single greatest challenge an organization will face is success. As the megaphone grows, the clarity of WHY starts to dilute.
- When organizations are small, WHAT they do and WHY they do it are in close parallel.
- The WHY must be extracted and integrated into the culture of the company.
What Gets Measured, Gets Done
- Measure the WHY, to make sure it stays clear.
Good Successions Keep The Why Alive
- When the person who personifies the WHY departs without clearly articulating WHY the company was founded in the first place, they leave no clear cause for their successor to lead.
- Successful succession is more than selecting someone with an appropriate skill set – it’s about finding someone who is in lockstep with the original cause around which the company was founded.
- … apply the Celery Test and see if what the company is saying and doing makes sense.
When the WHY Goes, WHAT Is All You’ll Have Left
- Money is never a cause, it is the result.
Part VI – Discover Why
13. The Origins of a Why
- A company’s WHY is born with the founder WHY.
The WHY Comes From Looking Back
- The WHY does not coming from looking ahead at what you want to achieve and figuring out an appropriate strategy to get there. It is not born from any market research. It does not come from extensive interviews with customers and even employees. It comes from looking in the completely opposite direction from where you are now. Finding WHY is a process of discovery, not invention.
- Every company, organization or group with the ability to inspire starts with a person or a small group of people who were inspired to do something bigger than themselves. Gaining clarity of WHY, ironically, is not the hard part. It is the discipline to trust one’s gut, to stay true to one’s purpose, cause of beliefs. Remaining completely in balance and authentic is the most difficult part.
I Am a Failure
- The biology of the human brain and the Golden Circle overlapped perfectly. While I was trying to understand why some marketing worked and some didn’t, I had tripped over something vastly more profoundly. I discovered why people do what they do.
To Inspire People To Do The Things That Inspire Them
- … so that, together, we can change the world.
14. The New Competition
If You Follow Your WHY, Then Others Will Follow You
- All organization start with WHY, but only the great ones keep their WHY clear year after year. Those who forget WHY they were founded show up to the race every day to outdo someone else instead of to outdo themselves. The pursuit, for those who lose sight of WHY they are running the race, is for the medal or to beat someone else.
- … why should I do business with you? Because the work we are doing now is better than the work we were doing six months ago. And the work we will be doing six months from now will be better than the work we’re doing today. Because we wake everyday with a sense of WHY we come to work. We come to work to inspire people to do the things that inspire them.
- Our goal is to find customers who believe what we believe and work together so that we can all succeed.