Start With Why

I. Why Start With Why?

“There Are Leaders & There Are Those Who Lead.”

Orville & Wilbur Wright, Bill Gates, Howard Schultz, Steve Jobs, Sam Walton, & Herb Kelleher didn’t run companies, they led movements. They all had a common way of communicating that’s the complete opposite of everyone else: they all started with the “X factor that trumps all predisposition & access to resources.” They all started with why.

Ultimately only two ways to drive human behavior: manipulation & inspiration. Both are completely valid & neutral by definition. Manipulation is short-term incentive motivation; inspiration breathes a sense of purpose or belonging to a group of individuals.

II. Assume You Know

“ We Make Decisions Based On What We Think We Know”

Data driven decision-making is the name the of the game lately; however, more data doesn’t always help, “specifically if a flawed assumption set the whole process in motion in the first place.” Ultimately, it’s the X factor, the WHY, what you can’t see, that makes long-term success more projectable. Too often an organization attains a result but that very seldom results in predictable, repeatable results.

III. Carrots & Sticks

“ Manipulation Works. But Are You Willing To Pay For What You Make?”

Manipulation works, & despite public connotations, it’s neutral by definition. Typical manipulation includes: novelty, dropping the price, running a promo, using fear, peer pressure or aspirational messages. Truthfully, owners can’t be blamed, “there’s barely a product/service on the market today that customers can’t buy from someone else for about the same price, about the same quality, about the same level of service & about the same features.” Most companies have no clue why their customers are their customers.

Manipulation absolutely works. But playing the price game comes at a tremendous cost in the long run. Eventually, a consistent price-dropping cycle begins, rendering one’s product as a commodity. Excess price manipulation is what put GM in the hole in 07’. Novelty is not innovation, feature differentiation does not lead to long term market success — Razr phone mania. Fear motivates us to move away from something; aspiration messages us to move toward something. Fear is the most powerful; when it’s employed, facts are incidental. Aspiration however, is equally manipulative, it just tempts us with the things we want to have or to be the person we wish we were. Peer pressure works because fear of being wrong is involved. These are effective with those who lack discipline, or constant insecurity.

Manipulations don’t produce loyalty. Repeat business is not loyal business. Repeat business is “when people do business with you multiple times; loyalty is when people are willing to turn down a better product or better price to continue doing business with you.” A feeling of camaraderie is needed. It is the feeling of “we’re in this together,” shared between customer & company, voter & candidate, boss & employee, that defines great leaders.

  • 40% of rebates are never fulfilled
  • GM lost $800 per car sold in 2007
  • Breakage — retail industry metric that measures the percentage of customers who fail to take advantage of a promotion & pay full price
  • Shippage — retail industry metric that measures the percentage of customers who don’t fill the rebate

IV. The Golden Circle

“ It All Starts From Inside Out. It All Starts With Why.”

The Golden Circle helps us understand why we do what we do; it’s a top-down way of communicating from why, to how, to what, to the marketplace from the inside out. What is WHAT the company does(bring people to places through art). How is HOW we do WHAT we do that makes us different; a differentiating value proposition or proprietary process(we don’t hire developers, we create them). Why is WHY we do WHAT & HOW we do. What is our purpose/belief?(to empower entrepreneurs). Most companies communicate from the down-top, starting with what they do.

People don’t buy what you do, they buy why you do it. The lifestyle comes first, then the why is understood; companies with a clear sense of why don’t worry about their competition because they understand that their DNA is different.

V. This Is Not An Opinion, This Is Biology

“ There Is Literally More To Decision-Making Than The Rational Mind”

When a company effectively communicates their why from the inside out, what they believe, their products become symbols of not just what the company believes, but also as symbols of what the loyal buyers believe. The need to belong is a very basic, albeit illogical basic human need. This why customers become loyal to brands. Not because they are “better,” but because they’ve become symbols of values & beliefs that we identify with & hold dearly.

People know what they do, but they have a hard time explaining why they do what they do. This is biology. Why is to limbic brain as What is to neocortex. The limbic brain, the part associated with decision-making, ironically, has no capacity for language. Gut-decisions, which are limbic-driven, tend to start with why, be faster, & higher-quality than decisions made only with logic/rational. Starting with what helps people understand vast amounts of complicated information like facts & features; but starting with why & appealing to the language-less limbic brain drives behavior.

  • “If I had asked people what they wanted, they would have said a faster horse” — Henry Ford
  • “I can make a decision with 30% of the information” — Colin Powell (Jesus Christ that’s scary)

VI. Clarity, Discipline, & Consistency

“ Everything You Say & Everything You Do Has To Prove What You Believe”

A why is just a belief, the hows are the actions you take to actualize that belief, & whats are the results of those actions. Clarity, discipline & consistency bring a why to life. Starting with why is the beginning; the next question is how will you do it? Hows are the company values that bring our why to life; how we do things manifests in the systems & processes within an organization.Clarifying the why provides scale, discipline/accountability enhances the organization’s natural strength, & consistency creates loyal customers.

Nouns are not actionable; you can’t build processes or develop incentives around them. Instead of “integrity,” “always do the right thing.” Instead of “innovation,” “look at the problem from a different angle. With consistency, the why shines through. The only way people know what you believe is by the things you say & do. If you’re not consistent with that, no one will know what to believe.

If everything you say & everything you do you actually believe, then congrats you are authentic. Authenticity means that your Golden Circle is in balance. Authenticity happens at the what level. This authenticity produces real, loyal relationships. When decisions feel right, customers are willing to pay a premium or suffer inconvenience; it is those visceral limbic feelings that create loyalty. Loyalty, real emotional value, exists in the buyer, not the seller. This is the value of the Golden Circle — it provides a way to communicate consistent with how individuals receive information.

VII. The Emergence Of Trust

“ Value, By Definition, Is The Transference Of Trust”

Trust is the bedrock for the advancement of our own lives, our families, our companies, our societies, & our species; it’s historically played a bigger role in creating lasting companies than skills alone. Trust emerges when we have a sense that company is driven by things other than their own self-gain — this is real value. One earns this trust by communicating & demonstrating overlapping beliefs & values. A company is nothing more than a collection of people; a collection of people creates a culture. Cultures are groups of people who come together around a common set of values & beliefs.

It’s always about ourselves. We do better in cultures in which we are good fits; in places that reflect our own values & beliefs. Therefore the mark of a great leader is one with the ability to find great fits to join their organization — specifically, those who believe what they believe. People are either motivated or they aren’t. Great companies hire already motivated people & inspire them. Once hired, an effective executive doesn’t give their people something to work on, in contrast, the best leaders give their people something to work toward; from management on down, no one should see themselves as any more or less important than anyone else. Ultimately if people aren’t looking out for the community, then the benefits of the community erode.This means organizations require reciprocal behavior, individual decisions, efforts, & behaviors to become great; only when individuals trust the culture will they take personal risks in order to advance the culture as a whole. Trust & respect, & be trusted & respected by both those around above & below you. Every individual in the co needs to be able to trust that everyone is always acting on “leaving the organization better than you found it.”

This is the root of passion. Passion comes from feeling like you are a part of something that you believe in, something bigger than yourself. It is this bond, this camaraderie & invisible trust that gives a leader the following they need to get things done. If we hold this to be true, then it follows that great leadership is not about flexing & intimidation; great leaders lead with why, they embody a sense of purpose that inspires those around them. The role of a leader is not to come up with all the great ideas; but to create an environment in which great ideas can happen. Every company has star employees, but few have a culture that produces great people as a rule & not an exception. This can’t be done passively. Bonuses & incentives must revolve around the whys. The company must serve those whom they wish to serve.

  • Advertisement industry metric of how well recognized a celebrity is
  • “You don’t hire for skills, you hire for attitude. You can always teach skills.” — Herb Kelleher

VIII. How A Tipping Point Tips

  • Law of Diffusion of Innovations explains the spread of ideas — Innovators(2.5%), Early Adopters(13.5%), Early Majority(34%), Late Majority(34%), & Laggards(16%)
  • Can’t ignore the Law of Diffusion of Innovations; the best doesn’t win
  • Innovators & Early Adopters are similar in that they rely heavily on gut
  • Ironically, you need to aim to the left end of the curve to scale, because the early majority will not try something until someone else has tried it first
  • They need that trusted, personal recommendation
  • According to the LOD, mass-market success can only be achieved after you penetrate between 15% — 18%
  • The goal of business then should be to sell to those who believe what you believe, the left side of the bell curve.
  • 10%, by the law of averages, is the amount of business won; likewise 10% of your existing customer will naturally show loyalty
  • Crossing the ‘chasm’ the transition between the early adopters & the early majority, & it’s hard to cross but not if you know why
  • If you have the discipline to focus on the early adopters the majority will come along eventually but it must start with why
  • TiVO failed because it aimed it’s marketing right at the middle of the curve
  • The why is the belief that drives the decision & the what provides us a way to rationalize the appeal of the product
  • The leader’s role in the process is to be crystal clear about what purpose, to champion, & to show how your products/services help advance that cause
  • How many people showed up for Dr.King? Zero. Everyone showed up for themselves. It’s what they believed

IX. Start With Why, But Know How

  • Energy excites, charisma inspires
  • Charisma is hard to define, impossible to measure & too elusive to copy
  • All great leaders have charisma because all great leaders have clarity of why: an undying belief in a purpose or cause bigger than themselves
  • It’s Bill Gate’s optimism in humanity that draws us to him
  • Inspiration & why is the beginning; you need more to drive a movement
  • The Golden Circle is not a 2-D circle, it is a very real, top-down 3-D cone
  • The pessimists are usually right but the optimists change the world
  • Why-types are the visionaries, the ones with the overactive imaginations
  • Why-types tend to be optimists who believe that all the things they imagine can actually be accomplished
  • How-types live more in the here & now
  • How-types are focused on things most people can see & tend to be better at building structures & processes & getting things done
  • Gates is Why-Type; Allen is a How-Type
  • Jobs a Why-Type; Wozniak a How-Type
  • Walt Disney Why-Type; Roy Disney How-Type
  • Herb Kelleher Why-Type; Rollin Kings How-Type
  • This relationship^ highlights the difference between a vision statement & a mission statement in an organization
  • The vision is the public statement of the founders intent, why the company exists. It is literally the vision of a future that does not yet exist.
  • The mission statement is a description of the route, the guiding principles — how the company intends to create that future
  • The best unions of why & how come from families or old friendships
  • You need both types; neither is better than the other
  • Volume is reasonably easy to achieve; all it takes is money or stunts. Money can pay to keep a message front & center
  • 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
  • An organization effectively becomes the vessel through which a person with a clear purpose, cause or belief can speak to the outside world
  • A clear sense of why sets expectations
  • By any definition these few companies don’t function like corporate entities; they exist as social movements
  • Don’t run companies, lead movements

X. Know Why, Know How, Then What?

  • No Apple commercial shows groups, only individuals. This is on purpose. Empowering the individual spirit is WHY Apple exists.
  • Marketplace(customers)only communicates with the what level
  • As a company grows, the CEO will no longer be the loudest part of the megaphone; he will become the source of the message
  • The company’s personality is the founder’s personality
  • The CEO’s job is to ooze the why
  • The How-Types are responsible for understanding why & must come to work every day to develop the systems & hire the people ultimately responsible for bringing the why to life
  • The why exists in the limbic brain; whats exist in the part of the brain that controls ration thought & language
  • Symbols help us make tangible that which is intangible
  • All companies have logos, but few have been able to convert those logos into meaningful symbols
  • Most companies act like dictators-it’s all about them & what they want
  • For companies to be perceived as a great leader, all their symbols, need to stand for something deeper. This takes clarity, discipline & consistency
  • The goal of a logo is not to identify a company but to identify a belief
  • Best practices are not always best
  • This is why filtering decisions through a why is critical in decision-making
  • Ensuring that what you do proves what you believe makes it easy for those who believe what you believe to find you
  • Creating a filter from your why makes it easy for anyone within the co to make decisions with the same perspective. This is how you scale.
  • The Celery Test — “Does this decision go against our why?”
  • What companies say & do matters. A lot. It is at the what level that a cause is brought to life.

XI. When Why Goes Fuzzy

  • Less than .004% of all 27.7M USA companies make the Fortune 1000 with over $1.5B in annual revenues
  • Sam Walton(Wal-Mart) was successful because he believed in people. He believed that if he looked after people, people would look after him.
  • “We’re all working together, that is the secret” — Sam Walton
  • If it’s not clear on the inside, it will never be clear on the outside
  • All companies are in business to make money, but being successful at it is not the reason why things change so drastically.
  • Walmart lost sight of its why, which is why it’s fizzling out
  • Gathering of the Titans
  • Those with an ability to never lose sight of why, no matter how little or how much they achieve, can inspire us

XII. Split Happens

  • A why without the how; passion without structure, fails
  • As the megaphone(company) grows, the clarity of why starts to dilute
  • Guts are the filters early on; rational cases & empirical data serve later
  • School Bus Test — If a founder were to be hit by a school bus, would the organization continue to thrive at the same pace?
  • The founder’s why must be extracted & integrated into the culture
  • Bridgeport Financial — Christina Harbridge gave bonuses that weren’t based on sales; but by how many “thank you” cards were sent out
  • This measured why her company existed, not what they did
  • Most co’s track what(revenue), but very few measure whys
  • John Sculley was ineffective at running Apple because he ran the company as a movement & was not there to lead a cause
  • When the person who personifies the why departs without a successor, the co is in trouble
  • Starbucks thrived not because of coffee but because of the experience it
  • Schlutz set out not to build a coffee shop his vision of building a comfortable environment between work & home, the “third space”
  • Effective CEOs literally, physically embody the cause around which they built their companies
  • Microsoft was founded as a company that believed in making people more productive so they could achieve their highest potential
  • Succession, not replacement
  • Job as a leader is to lead the cause; to personify the values & remind everyone why they are there
  • Sam Walton valued people above all; if the average American didn’t have those things, then neither should those who are supposed to be their champions
  • Why-Type Jim Sinegal founded Costco in 1983 with the founding principal of “we’re going to be a company that’s on a first-name basis with everyone”
  • Costco’s turnover is consistently five times lower than Sam’s Club
  • Money is never a cause, it’s always a result

XIII. The Origins Of Why

  • There is no difference between a why customer & a why employee
  • The why for every other individual or organization comes from the past(founders); it is born out of life experience
  • Every co with the ability to inspire starts with a person or small group of people who were inspired to do something bigger than themselves
  • Learning why starts with you
  • Discover themes through your life.With friends, at school or professionally
  • Discover patterns throughout your life, these are your whys

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Owner @ SetDesign, NightKnight & CryptoSpace | Product Designer | Hobbyist Mathematician | VR Developer | MS in Finance @ UF

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Jesus Najera

Jesus Najera

Owner @ SetDesign, NightKnight & CryptoSpace | Product Designer | Hobbyist Mathematician | VR Developer | MS in Finance @ UF

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