5

CLARITY, DISCIPLINE AND CONSISTENCY

Nature abhors a vacuum. In order to promote life, Mother Nature attempts to find balance whenever possible. When life is destroyed because of a forest fire, for example, nature will introduce new life to replace it. The existence of a food chain in any ecosystem, in which each animal exists as food for another, is a way of maintaining balance. The Golden Circle, grounded in natural principles of biology, obeys the need for balance as well. As I’ve discussed, when the WHY is absent, imbalance is produced and manipulations thrive. And when manipulations thrive, uncertainty increases for buyers, instability increases for sellers and stress increases for all.

Starting with WHY is just the beginning. There is still work to be done before a person or an organization earns the right or ability to inspire. For The Golden Circle to work, each of the pieces must be in balance and in the right order.

Clarity of WHY

It all starts with clarity. You have to know WHY you do WHAT you do. If people don’t buy WHAT you do, they buy WHY you do it, so it follows that if you don’t know WHY you do WHAT you do, how will anyone else? If the leader of the organization can’t clearly articulate WHY the organization exists in terms beyond its products or services, then how does he expect the employees to know WHY to come to work? If a politician can’t articulate WHY she seeks public office beyond the standard “to serve the people” (the minimum rational standard for all politicians), then how will the voters know whom to follow? Manipulations can motivate the outcome of an election, but they don’t help choose who should lead. To lead requires those who willingly follow. It requires those who believe in something bigger than a single issue. To inspire starts with the clarity of WHY.

Discipline of HOW

Once you know WHY you do what you do, the question is HOW will you do it? HOWs are your values or principles that guide HOW to bring your cause to life. HOW we do things manifests in the systems and processes within an organization and the culture. Understanding HOW you do things and, more importantly, having the discipline to hold the organization and all its employees accountable to those guiding principles enhances an organization’s ability to work to its natural strengths. Understanding HOW gives greater ability, for example, to hire people or find partners who will naturally thrive when working with you.

Ironically, the most important question with the most elusive answer—WHY do you do what you do?—is actually quite simple and efficient to discover (and I’ll share it in later chapters). It’s the discipline to never veer from your cause, to hold yourself accountable to HOW you do things; that’s the hardest part. Making it even more difficult for ourselves, we remind ourselves of our values by writing them on the wall . . . as nouns. Integrity. Honesty. Innovation. Communication, for example. But nouns are not actionable. They are things. You can’t build systems or develop incentives around those things. It’s nearly impossible to hold people accountable to nouns. “A little more innovation today if you would please, Bob.” And if you have to write “honesty” on your wall to remind you to do it, then you probably have bigger problems anyway.

For values or guiding principles to be truly effective they have to be verbs. It’s not “integrity,” it’s “always do the right thing.” It’s not “innovation,” it’s “look at the problem from a different angle.” Articulating our values as verbs gives us a clear idea . . . we have a clear idea of how to act in any situation. We can hold each other accountable to them measure them or even build incentives around them. Telling people to have integrity doesn’t guarantee that their decisions will always keep customers’ or clients’ best interest in mind; telling them to always do the right thing does. I wonder what values Samsung had written on the wall when they developed that rebate that wasn’t applicable to people living in apartment buildings.

The Golden Circle offers an explanation for long-term success, but the inherent nature of doing things for the long term often includes investments or short-term costs. This is the reason the discipline to stay focused on the WHY and remain true to your values matters so much.

Consistency of WHAT

Everything you say and everything you do has to prove what you believe. A WHY is just a belief. That’s all it is. HOWs are the actions you take to realize that belief. And WHATs are the results of those actions—everything you say and do: your products, services, marketing, PR, culture and whom you hire. If people don’t buy WHAT you do but WHY you do it, then all these things must be consistent. With consistency people will see and hear, without a shadow of a doubt, what you believe. After all, we live in a tangible world. The only way people will know what you believe is by the things you say and do, and if you’re not consistent in the things you say and do, no one will know what you believe.

It is at the WHAT level that authenticity happens. “Authenticity” is that word so often bandied about in the corporate and political worlds. Everyone talks about the importance of being authentic. “You must be authentic,” experts say. “All the trend data shows that people prefer to do business with authentic brands.” “People vote for the authentic candidate.” The problem is, that instruction is totally unactionable.

How do you go into somebody’s office and say, “From now on, please, a little more authenticity.” “That marketing piece you’re working on,” a CEO might instruct, “please make it a little more authentic.” What do companies do to make their marketing or their sales or whatever they’re doing authentic?

The common solution is hilarious to me. They go out and do customer research and they ask the customers, what would we have to tell you for us to be authentic? This entirely misses the point. You can’t ask others what you have to do to be authentic. Being authentic means that you already know. What does a politician say when told to be “more authentic”? How does a leader act more “authentically”? Without a clear understanding of WHY, the instruction is completely useless.

What authenticity means is that your Golden Circle is in balance. It means that everything you say and everything you do you actually believe. This goes for management as well as the employees. Only when that happens can the things you say and do be viewed as authentic. Apple believed that its original Apple computer and its Macintosh challenged the dominant IBM DOS platforms. Apple believes its iPod and iTunes products are challenging the status quo in the music industry. And we all understand WHY Apple does what it does. It is because of that mutual understanding that we view those Apple products as authentic. Dell introduced mp3 players and PDAs in an attempt to enter the small electronics business. We don’t know what Dell’s WHY is, we have no certainty about what the company believes or WHY it produced those products beyond self-gain and a desire to capitalize on a new market segment. Those products are not authentic. It’s not that Dell couldn’t enter other markets—it certainly has the knowledge and ability to make good products—but its ability to do so without a clear understanding of WHY is what makes it much harder and much more expensive. Just producing high-quality products and marketing them does not guarantee success. Authenticity cannot be achieved without clarity of WHY. And authenticity matters.

Ask the best salesmen what it takes to be a great salesman. They will always tell you that it helps when you really believe in the product you’re selling. What does belief have to do with a sales job? Simple. When salesmen actually believe in the thing they are selling, then the words that come out of their mouths are authentic. When belief enters the equation, passion exudes from the salesman. It is this authenticity that produces the relationships upon which all the best sales organizations are based. Relationships also build trust. And with trust comes loyalty. Absent a balanced Golden Circle means no authenticity, which means no strong relationships, which means no trust. And you’re back at square one selling on price, service, quality or features. You are back to being like everyone else. Worse, without that authenticity, companies resort to manipulation: pricing, promotions, peer pressure, fear, take your pick. Effective? Of course, but only for the short term.

Being authentic is not a requirement for success, but it is if you want that success to be a lasting success. Again, it goes back to WHY. Authenticity is when you say and do the things you actually believe. But if you don’t know WHY the organization or the products exist on a level beyond WHAT you do, then it is impossible to know if the things you say or do are consistent with your WHY. Without WHY, any attempt at authenticity will almost always be inauthentic.

The Right Order

After you have clarity of WHY, are disciplined and accountable to your own values and guiding principles, and are consistent in all you say and do, the final step is to keep it all in the right order. Just like that little Apple marketing example I used earlier, simply changing the order of the information, starting with WHY, changed the impact of the message. The WHATs are important—they provide the tangible proof of the WHY—but WHY must come first. The WHY provides the context for everything else. As you will see over and over in all the cases and examples in this book, whether in leadership, decision-making or communication, starting with WHY has a profound and long-lasting impact on the result. Starting with WHY is what inspires people to act.

If You Don’t Know WHY, You Can’t Know HOW

Rollin King, a San Antonio businessman, hatched the idea to take what Pacific Southwest was doing in California and bring it to Texas—to start an airline that flew short-haul flights between Dallas, Houston and San Antonio. He had recently gone through a long and messy divorce and turned to the one man he trusted to help him get his idea off the ground. His Wild Turkey–drinking, chain-smoking divorce lawyer, Herb Kelleher.

In nearly every way, King and Kelleher were opposites. King, a numbers guy, was notoriously gruff and awkward, while Kelleher was gregarious and likable. At first Kelleher called King’s idea a dumb one, but by the end of the evening King had successfully inspired him with his vision and Kelleher agreed to consider coming on board. It would take four years, however, before Southwest Airlines would make its first flight from Dallas’s Love Field to Houston.

Southwest did not invent the concept of a low-cost airline. Pacific Southwest Airlines pioneered the industry—Southwest even copied their name. Southwest had no first mover’s advantage—Braniff International Airways, Texas International Airlines and Continental Airlines were already serving the Texas market, and none was eager to give up any ground. But Southwest was not built to be an airline. It was built to champion a cause. They just happened to use an airline to do it.

In the early 1970s, only 15 percent of the traveling population traveled by air. At that rate, the market was small enough to scare off most would-be competitors to the big airlines. But Southwest wasn’t interested in competing against everyone else for 15 percent of the traveling population. Southwest cared about the other 85 percent. Back then, if you asked Southwest whom their competition was, they would have told you, “We compete against the car and the bus.” But what they meant was, “We’re the champion for the common man.” That was WHY they started the airline. That was their cause, their purpose, their reason for existing. HOW they went about building their company was not a strategy developed by a high-priced management consultancy. It wasn’t a collection of best practices that they saw other companies doing. Their guiding principles and values stemmed directly from their WHY and were more common sense than anything else.

In the 1970s, air travel was expensive, and if Southwest was going to be the champion for the common man, they had to be cheap. It was an imperative. And in a day and age when air travel was elitist—back then people wore ties on planes—as the champion for the common man, Southwest had to be fun. It was an imperative. In a time when air travel was complicated, with different prices depending on when you booked, Southwest had to be simple. If they were to be accessible to the other 85 percent, then simplicity was an imperative. At the time, Southwest had two price categories: nights/weekends and daytime. That was it.

Cheap, fun and simple. That’s HOW they did it. That’s how they were to champion the cause of the common man. The result of their actions was made tangible in the things they said and did—their product, the people they hired, their culture and their marketing. “You are now free to move about the country,” they said in their advertising. That’s much more than a tagline. That’s a cause. And it’s a cause looking for followers. Those who could relate to Southwest, those who saw themselves as average Joes, now had an alternative to the big airlines. And those who believed what Southwest believed became fiercely loyal to the company. They felt Southwest was a company that spoke directly to them and directly for them. More importantly, they felt that flying Southwest said something about who they were as people. The loyalty that developed with their customers had nothing to do with price. Price was simply one of the ways the airline brought their cause to life.

Howard Putnam, one of the former presidents of Southwest, likes to tell a story of a senior executive of a large company who approached him after an event. The executive said he always flew one of the big airlines when he traveled on business. He had to, it was a company mandate. And although he had accumulated many frequent flier miles on the other airline and money was no object, when he flew for himself or with his family, he always flew Southwest. “He loves Southwest,” Putnam says with a grin when he tells the story. Just because Southwest is cheap doesn’t mean it only appeals to those with less money. Cheap is just one of the things Southwest does that helps us understand what they believe.

What Southwest has achieved is the stuff of business folklore. As a result of WHY they do what they do, and because they are highly disciplined in HOW they do it, they are the most profitable airline in history. There has never been a year that they didn’t turn a profit, including after September 11 and during the oil crises of the 1970s and early 2000s. Everything Southwest says and does is authentic. Everything about them reflects the original cause King and Kelleher set out to champion decades earlier. It has never veered.

Fast-forward about thirty years. United Airlines and Delta Airlines looked at the success of Southwest and decided they needed a low-cost product to compete and share in Southwest’s success. “We got to get us one of those,” they thought. In April 2003, Delta launched their low-cost alternative, Song. Less than a year later United launched Ted. In both cases, they copied HOW Southwest did it. They made Ted and Song cheap, fun and simple. And for anyone who ever flew Ted or Song, they were cheap, they were fun and they were simple. But both failed.

United and Delta were both old hands in the airline business and were every bit qualified to add whatever products they wanted to adapt to market conditions or seize opportunities. The problem was not with WHAT they did, the problem was, no one knew WHY Song or Ted existed. They may have even been better than Southwest. But it didn’t matter. Sure, people flew them, but there are always reasons people do business with you that have nothing to do with you. That people can be motivated to use your product is not the issue; the problem was that too few were loyal to the brands. Without a sense of WHY, Song and Ted were just another couple of airlines. Without a clear sense of WHY, all that people had to judge them on was price or convenience. They were commodities that had to rely on manipulations to build their businesses, an expensive proposition. United abandoned its entry into the low-cost airline business just four years after it began, and Delta’s Song also took its last flight only four years after it launched.

It is a false assumption that differentiation happens in HOW and WHAT you do. Simply offering a high-quality product with more features or better service or a better price does not create difference. Doing so guarantees no success. Differentiation happens in WHY and HOW you do it. Southwest isn’t the best airline in the world. Nor are they always the cheapest. They have fewer routes than many of their competition and don’t even fly outside the continental United States. WHAT they do is not always significantly better. But WHY they do it is crystal clear and everything they do proves it. There are many ways to motivate people to do things, but loyalty comes from the ability to inspire people. Only when the WHY is clear and when people believe what you believe can a true loyal relationship develop.

Manipulation and Inspiration Are Similar, but Not the Same

Manipulation and inspiration both tickle the limbic brain. Aspirational messages, fear or peer pressure all push us to decide one way or another by appealing to our irrational desires or playing on our fears. But it’s when that emotional feeling goes deeper than insecurity or uncertainty or dreams that the emotional reaction aligns with how we view ourselves. It is at that point that behavior moves from being motivated to inspired. When we are inspired, the decisions we make have more to do with who we are and less to do with the companies or the products we’re buying.

When our decisions feel right, we’re willing to pay a premium or suffer an inconvenience for those products or services. This has nothing to do with price or quality. Price, quality, features and service are important, but they are the cost of entry in business today. It is those visceral limbic feelings that create loyalty. And it is that loyalty that gives Apple or Harley-Davidson or Southwest Airlines or Martin Luther King or any other great leader who commands a following such a huge advantage. Without a strong base of loyal followers, the pressure increases to manipulate—to compete or “differentiate” based on price, quality, service or features. Loyalty, real emotional value, exists in the brain of the buyer, not the seller.

It’s hard to make a case to someone that your products or services are important in their lives based on external rational factors that you have defined as valuable (remember the Ferrari versus the Honda). However, if your WHYs and their WHY correspond, then they will see your products and services as tangible ways to prove what they believe. When WHY, HOW, and WHAT are in balance, authenticity is achieved and the buyer feels fulfilled. When they are out of balance, stress or uncertainty exists. When that happens, the decisions we make will also be out of balance. Without WHY, the buyer is easily motivated by aspiration or fear. At that point, it is the buyer who is at the greatest risk of ending up being inauthentic. If they buy something that doesn’t clearly embody their own sense of WHY, then those around them have little evidence to paint a clear and accurate picture of who they are.

The human animal is a social animal. We’re very good at sensing subtleties in behavior and judging people accordingly. We get good feelings and bad feelings about companies, just as we get good feelings and bad feelings about people. There are some people we just feel we can trust and others we just feel we can’t. Those feelings also manifest when organizations try to court us. Our ability to feel one way or another toward a person or an organization is the same. What changes is who is talking to us, but it is always a single individual who is listening. Even when a company airs its message on TV, for example, no matter how many people see the commercial, it is always and only an individual that can receive the message. This is the value of The Golden Circle; it provides a way to communicate consistent with how individuals receive information. For this reason an organization must be clear about its purpose, cause or belief and make sure that everything they say and do is consistent with and authentic to that belief. If the levels of The Golden Circle are in balance, all those who share the organization’s view of the world will be drawn to it and its products like a moth to a light bulb.

Doing Business Is Like Dating

I’d like to introduce you to our imaginary friend Brad. Brad is going on a date tonight. It’s a first date and he’s pretty excited. He thinks the woman he’s about to meet is really beautiful and that she makes a great prospect. Brad sits down for dinner and he starts talking.

“I am extremely rich.”

“I have a big house and I drive a beautiful car.”

“I know lots of famous people.”

“I’m on TV all the time, which is good because I’m good-looking.”

“I’ve actually done pretty well for myself.”

The question is, does Brad get a second date?

The way we communicate and the way we behave is all a matter of biology. That means we can make some comparisons between the things we do in our social lives and the things we do in our professional lives. After all, 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. Because, in reality, there is no difference between sales and dating. In both circumstances, you sit across a table from someone and hope to say enough of the right things to close the deal. Of course, you could always opt for a manipulation or two, a fancy dinner, dropping hints of tickets that you have or whom you know. Depending on how badly you want to close the deal, you could tell them anything they want to hear. Promise them the world and the odds are good that you will close the deal. Once. Maybe twice. With time, however, maintaining that relationship will cost more and more. No matter the manipulations you choose, this is not the way to build a trusting relationship.

In Brad’s case, it is obvious that the date did not go well. The odds are not good that he will get a second date, and he’s certainly not done a good job of laying down the foundation to build a relationship. Ironically, the woman’s initial interest may have been generated based on those elements. She agreed to go on the date because her friends told her that Brad was good-looking and that he had a good job and that he knew a lot of famous people. Even though all those things may be true, WHATs don’t drive decision-making, WHATs should be used as proof of WHY, and the date plainly fell flat.

Let’s send Brad out again, but this time he’s going to start with WHY.

“You know what I love about my life?” he starts this time. “I get to wake up every day to do something I love. I get to inspire people to do the things that inspire them. It’s the most wonderful thing in the world. In fact, the best part is trying to figure out all the different ways I can do that. It really is amazing. And believe it or not, I’ve actually been able to make a lot of money from it. I bought a big house and a nice car. I get to meet lots of famous people and I get to be on TV all the time, which is fun, because I’m good-looking. I’m very lucky that I’m doing something that I love, I’ve actually been able to do pretty well because of it.” This time the chances Brad will get a second date, assuming that whoever is sitting across from him believes what he believes, went up exponentially. More importantly, he’s also laying a good foundation for a relationship, one based on values and beliefs. He said all the same things as on the first date; the only difference is he started with WHY, and all the WHATs, all the tangible benefits, served as proof of that WHY.

Now consider how most companies do business. Someone sits down across a table from you, they’ve heard you’re a good prospect, and they start talking.

“Our company is extremely successful.”

“We have beautiful offices, you should stop by and check them out sometime.”

“We do business with all the biggest companies and brands.”

“I’m sure you’ve seen our advertising.”

“We’re actually doing pretty well.”

In business, like a bad date, many companies work so hard to prove their value without saying WHY they exist in the first place. You’ll have to do more than show your résumé before someone finds you appealing, however. But that is exactly what companies do. They provide you with a long list of their experience—WHAT they’ve done, whom they know—all with the idea that you will find them so desirable that you will have to drop everything to do business with them.

People are people and the biology of decision-making is the same no matter whether it is a personal decision or a business decision. It’s obvious that in the dating scenario it was a bad date, so why would we expect it to be any different in the business scenario?

Like on a date, it is exceedingly difficult to start building a trusting relationship with a potential customer or client by trying to convince them of all the rational features and benefits. Those things are important, but they serve only to give credibility to a sales pitch and allow buyers to rationalize their purchase decision. As with all decisions, people don’t buy WHAT you do, they buy WHY you do it, and WHAT you do serves as the tangible proof of WHY you do it. But unless you start with WHY, all people have to go on are the rational benefits. And chances are you won’t get a second date.

Here’s the alternative:

“You know what I love about our company? Every single one of us comes to work every day to do something we love. We get to inspire people to do the things that inspire them. It’s the most wonderful thing in the world. In fact, the fun part is trying to figure out all the different ways we can do that. It really is amazing. The best part is, it is also good for business. We do really well. We have beautiful offices, you should stop by sometime to see. We work with some of the biggest companies. I’m sure you’ve seen our ads. We’re actually doing pretty well.” Now, how certain are you that the second pitch was better than the first?

Three Degrees of Certainty

When we can only provide a rational basis for a decision, when we can only point to tangible elements or rational measurements, the highest level of confidence we can give is, “I think this is the right decision.” That would be biologically accurate because we’re activating the neocortex, the “thinking” part of our brain. At a neocortical level we can verbalize our thoughts. This is what’s happening when we spend all that time sifting through the pros and cons, listening to all the differences between plasma or LCD, Dell versus HP.

When we make gut decisions, the highest level of confidence we can offer is, “The decision feels right,” even if it flies in the face of all the facts and figures. Again, this is biologically accurate, because gut decisions happen in the part of the brain that controls our emotions, not language. Ask the most successful entrepreneurs and leaders what their secret is and invariably they all say the same thing: “I trust my gut.” The times things went wrong, they will tell you, “I listened to what others were telling me, even though it didn’t feel right. I should have trusted my gut.” It’s a good strategy, except it’s not scalable. The gut decision can only be made by a single person. It’s a perfectly good strategy for an individual or a small organization, but what happens when success necessitates that more people be able to make decisions that feel right?

That’s when the power of WHY can be fully realized. The ability to put a WHY into words provides the emotional context for decisions. It offers greater confidence than “I think it’s right.” It’s more scalable than “I feel it’s right.” When you know your WHY, the highest level of confidence you can offer is, “I know it’s right.” When you know the decision is right, not only does it feel right, but you can also rationalize it and easily put it into words. The decision is fully balanced. The rational WHATs offer proof for the feeling of WHY. If you can verbalize the feeling that drove the gut decision, if you can clearly state your WHY, you’ll provide a clear context for those around you to understand why that decision was made. If the decision is consistent with the facts and figures, then those facts and figures serve to reinforce the decision—this is balance. And if the decision flies in the face of all the facts and figures then it will highlight the other factors that need to be considered. It can turn a controversial decision from a debate into a discussion.

My former business partner, for example, would get upset when I turned away business. I would tell him that a potential client didn’t “feel” right. That would frustrate him to no end because “the client’s money was as good as everyone else’s,” he would tell me. He couldn’t understand the reason for my decision and, worse, I couldn’t explain it. It was just a feeling I had. In contrast, these days I can easily explain WHY I’m in business—to inspire people to do the things that inspire them. If I were to make the same decision now for the same gut reason, there is no debate because everyone is clear WHY the decision was made. We turn away business because those potential clients don’t believe what we believe and they are not interested in anything to do with inspiring people. With a clear sense of WHY, a debate to take on a bad-fit client turns into a discussion of whether the imbalance is worth the short-term gain they may give us.

The goal of business should not be to do business with anyone who simply wants what you have. It should be to focus on the people who believe what you believe. When we are selective about doing business only with those who believe in our WHY, trust emerges.