January 6, 2016
“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.
“ 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.
“ 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.
“ 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.
“ 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.
“ 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.
“ 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.