I believe in people and I like people
I’m struck also by the irony of an
organization or an event like this where
a bunch of technologists have come
together to discuss largely the issues
of people and that we’re doing it even
here together as a group what I find
fascinating about all of this is that
all of the content that you will hear
today you could easily hear online we
could videotape all of it I could give
this exact same talk in front of my
computer and you could sit at your desk
in front of your computer and listen to
it
the difference is it’s not quite the
same all the communication of the
information would be exactly the same
but for the fact that you wouldn’t be
here and it’s this it’s this interaction
it’s that we’re here together as a group
that makes these kinds of events special
in fact if for the rest of the day all
of the speakers are absolutely awful you
could go home and someone will say how
was it you say well as speakers we’re
all four and they’ll say you’re gonna go
back again next year and they say of
course I’m going to bang again next year
because I had a wonderful time because I
met all these wonderful people and this
is where the ideas are exchanged it’s
the conversations in between and I’m
fascinated about this idea I’m
fascinated by how in a world where
technology is remarkable the things that
we can dream up and the things that we
can do yet we still come together as
groups to do things as people I was also
struck by something that Neil Armstrong
said that he was grateful to be led by
people who inspired him to yearn for
that place to yeren listen to that
that’s a such as wonderful feeling and
so it begs the question sort of what
does it mean to lead you know why do
people do what they do I’m fascinated by
this idea of leadership and we I read
the same books as everyone else I read
the same books as all of you and you
know learn your style of leadership and
how to adjust your style of leadership
to fit to the situation at hand etc etc
that’s not leadership that’s management
all leaders have one thing and one thing
only followers that’s it
that’s it if you’re a leader it means
you have followers it hasn’t
to do with rank and has nothing to do
with intelligence it has nothing to do
with seniority if people are willing to
follow you you are a leader the question
is what’s a follower a follower somebody
who volunteers to go where you want to
go someone who raises their hand and
says I choose to follow you we can get
people to do all kinds of things using
authority that doesn’t make you a leader
a leader is when someone says I
volunteer to go where you’re going the
question is why should anyone follow you
there’s only two ways to influence human
behavior
you can either manipulate people or you
can inspire people
examples of manipulation in the business
world are things like dropping your
price if you drop your price low enough
people will buy from you
we know this promotions two-for-one free
toy inside or if you’re in the business
to business space we call it value-added
the concept is the same it’s giving
things away for free to reduce someone’s
risk so they’ll choose you over the
competition and it works innovation what
organizations like to call innovation is
really novelty innovation real
innovation changes the course of
industries if not the way we live our
lives adding a camera to your cell phone
is a wonderful feature but it is not an
innovation it’s the difference between
steps and leaps the problem is what most
organizations think is innovation is
really novelty it’s the latest shiny
thing the example I love to give is an
American example about Colgate
toothpaste the brand of toothpaste in
the 1970s there are only two choices of
Colgate toothpaste do you know how many
there are now 27 27 different choices of
one brand of toothpaste because what
happened was competition increased and
the metric went down whether its
revenues or market share profit doesn’t
matter the metric went down and so they
added a new product and the population
when Lulu shiny we were all drawn to it
the pup the problem is the competition
copied this is one of the problems with
competition you see they compete
and then the metric went down again well
it worked the first time so we’ll do it
again and they added another product and
another product and another product and
another product and before you know it
you have 27 different line extensions
which means that their competition is
offering about the same number of
products that about the same price about
the same quality about the same service
literally hundreds of choices of
toothpaste to choose from and yet I have
no data to show that people are brushing
their teeth now more than they were
before
and the best part is what’s what are
these companies complain about now
what’s their biggest challenge how do we
differentiate ourselves this is
hilarious to me which is how do we what
how do we get out of a problem that we
created for ourselves there are all
kinds of other manipulations fear
wonderful manipulator if any of you are
parents you know exactly what I’m
talking about
you can scare people into doing all
sorts of things
aspirational messages we’re constantly
being told you have to be aspirational
give people something to aspire to
you know you can get people to join the
gym with an aspirational message but to
get them to workout three days a week
that requires a little bit of
inspiration now I cannot dispute that
these and many other manipulations work
the problem is none of them breed
loyalty the problem is none of them
create trust and over the course of time
they cost more money someone has to pay
for it all and over the course of time
it increases stress both for the buyer
and for the seller it is stressful for
us to make decisions today in a world in
which manipulation is the norm where we
are bombarded by manipulations from all
sides from all people trying to get us
to do any number of things whether it’s
vote for them or buy from them or do
something the question is how do we
choose what’s right for us it’s called
stress we literally have trouble
choosing these days but it’s stressful
for the sellers as well in a marketplace
where manipulation is the norm how do we
stand out how do we get hurt how do we
find people to follow us the alternative
is inspiration and there are only a few
people and a few organizations that tend
to rely vastly more an inspiration than
manipulation and I’ll talk about some of
the bigger ones like Apple computers or
Southwest Airlines or Martin Luther
King and you see it not only in
organizations but great leaders as well
like Martin Luther King or John F
Kennedy or Nelson Mandela and what I
learned is that regardless of their size
and regardless of their industry every
single one of these leaders every single
one of these organizations thinks acts
and communicates the exact same way and
it’s the complete opposite to everyone
else all I did was write it down and
it’s probably the world’s simplest idea
I call it the golden circle and it’s
three concentric circles or bull’s eye
in the middle is why the center ring is
how and the outside ring is what why how
what it’s this little idea that
distinguishes those with the capacity to
inspire versus everyone else let me
define the terms really quickly every
single organization on the planet knows
what they do these are the products you
sell the services you offer everyone
here knows what they do some know how
they do it whether you call it your
differentiating value proposition your
USP or proprietary process these are the
things that you think make you different
or special or stand out from the
competition from everyone else but very
very few people and very few very very
few organizations can clearly articulate
why they do what they do and by why I
don’t mean to make money that’s a result
by why I mean what’s your purpose what’s
your cause what’s your belief why does
your organization exist do we really
need another company to do what you’re
doing do we really need another one why
did you get out of bed this morning and
why should anyone care as a result the
way we think the way we act the way we
communicate is from the outside in it’s
obvious we go from the clearest thing to
the fuzziest thing we tell people what
we do we tell them how we’re different
or how we’re better or how we’re special
and we expect some sort of behavior a
vote a purchase support whatever it is
but not those leaders with the capacity
to inspire regardless of their size
regardless of their industry every
single one of them thinks acts and
communicates from the inside out let me
give you an example I use Apple
frequently just because they’re easy to
understand and we all get it if Apple
were like everyone else a piece of
communication would sound like this
we make great computers they’re
beautifully designed simple to use and
user friendly wanna buy one man that’s
normal
here’s our new car it’s got you know
great gas mileage leather seats tinted
windows here’s our law firm we went to
all the best schools we’ve got all the
best lawyers we went all of our cases we
work with all of the biggest firms this
is normal here’s how Apple actually
communicates they start with why
everything we do they say we believe in
challenging the status quo we believe in
thinking differently the way we
challenge the status quo is by making
our products beautifully designed simple
to use and user friendly we just happen
to make great computers one of AI one it
actually feels different all I did was
reverse the order of the information
when it starts to show us is that it’s
not what you do that matters it’s why
you do it and what you do simply serves
as the tangible proof of what you
believe people don’t buy what you do
they buy why you do it this is the
reason why every single person in this
room is perfectly comfortable with the
idea that Apple sells computers we’re
also perfectly comfortable with the idea
that Apple sells mp3 players and phones
and DVRs Apple is just a company that’s
all they are it’s a corporate structure
every single one of their competitors
has equal and open access to the same
resources the same agencies the same
consultants the same talent the same
media it is a zero-sum game the
difference is all of their competitors
have defined themselves by what they do
we make computers Apple has defined
themselves by why they exist to
challenge the status quo to give an
individual the opportunity to stand up
to Big Brother and choose a simple
alternative everything they say and
everything they do simply serves as
proof Dell makes perfectly good products
there every little bit qualified to make
every single product that Apple makes
and a few years ago they tried a few
years ago at Dell came out with mp3
players and PDAs
and nobody bought one
doesn’t make sense why would we buy an
mp3 player from a computer company but
we do it every day because it’s not what
you do that matters it’s why you do it
and people don’t buy what you do they
buy why you do it for this little idea
to work we have to have three things one
you have to know why you do what you do
if you don’t know why you do what you do
how will anyone else you have to have
clarity of why – you have to have
discipline of how you have to hold
yourself and your people accountable to
your own guiding principles and your own
values and thirdly you have to have
consistency of what everything you say
and everything you do has to prove what
you believe this is the concept behind
authenticity people are always telling
us you have to be authentic people
prefer to buy from the authentic brand
they prefer to vote for the authentic
candidate what does that mean how do you
implement authenticity if I send you
home to your to your work tomorrow and
say please the next thing you do I want
to make sure it’s more authentic what’s
the first thing you’re gonna do no clue
what authenticity means is the things
you say and the things you do you
actually believe this is caveman stuff
the reason the human race is so
successful is not because were the
strongest it’s not even because we’re
the smartest it’s because we’re social
animals it’s because we have the ability
to form communities and cultures
what’s a community what’s a culture it’s
a group of people with a common set of
values and beliefs
what’s a country it’s a group of people
with a common set of values and beliefs
what’s a company it should be a group of
people with a common set of values and
beliefs when we’re surrounded by people
who believe what we believe something
remarkable happens Trust emerges make no
mistake of it trust is a feeling Trust
is a human experience simply doing
everything you say you’re going to do
does not mean people will trust you it
just means you’re reliable and we all
have friends who are total screw-ups and
yet we still trust them
Trust is a feeling born out of a common
set of values and beliefs and our very
survival depends on our ability to find
those people so that we can form trust
when we trust them and they trust us
we’re more willing we’re more likely to
take risks to explore to
which requires failure by the way all
with the confidence that if we turn our
back or fall over and make a mistake
that someone from within our community
will come to our aid or watch our back
or help us up
absent trust we still have the will to
survive the difference is it’s every man
for himself
absent trusts you know we all try and
push each other out of the way because
we got a win we got a we got to compete
we got to live we got to survive this is
what happened at Lehman Brothers Lehman
Brothers was very very good at what they
did very very good at how they did it
but there was no sense of purpose or
cause or why then that bonded the
company together and at the slightest
shake the whole thing collapsed not in
months not in weeks in days that company
collapsed in days and that’s because
when stress started to show up all the
individuals said I’m out of here I’ve
got to look after numero uno got mouths
to feed got bills to pay they’re not the
first organization to go through hard
times they’re not the first organization
to suffer financial scandal the
difference is in great organizations in
great cultures and in great communities
when there is stress the organization
comes together to solve the problem
absent Trust we back off and the thing
collapses the most basic human desire on
the planet is to feel like we belong
again we are social animals and we all
have the innate ability to do this if I
ask you to go out in the street and find
all the people who believe what you
believe you know exactly what to do
you’re gonna strike up a conversation
with someone you either have good
chemistry with them or you won’t you
either get along with them quickly or
it’ll take some time the point is you
know how to do it our survival depends
on it it’s called dating it’s called
making friends it’s called networking we
know how to do it the problem is it’s
not scalable but if you know the symbols
to look for it becomes much easier if I
ask you to go out on the street and find
all the people wearing red hats it’s
easy there’s one there’s one there’s one
there’s one there’s one there’s one they
easy to spot because you know what to
look for this is what we do when we look
for certain symbols and certain we read
things about each other every single
decision we make in our lives as
individuals or as organizations is a
piece of communication
our way of saying something about who we
are and what we believe in an attempt to
track people so that they may form trust
with us and we may form trust with them
there are people who walk around with
harley-davidson logos on their body
right on tattoos this is a corporate
logo some of them don’t even own the
product but it has nothing to do with
the company it has to do with them
because Harley is so clear about what
they believe because they’re so
disciplined and how they do it and
they’re so consistent and what they do
it gets to the point that everything
they say and everything they do now
serves as a symbol of above the person
of who they are who they believe they
are and the reason we want to put those
symbols out is so that we may attract
people who believe what we believe you
can lie you could tell people with what
they what we think they want to hear and
they’ll still be attracted to you except
they’ll be attracted to the lie and then
when they realize that it’s not true
you’ll have a hard time forming trust
this is what Tiger Woods did to us he
lied to us he told us what he thought we
wanted to hear and we thought it was
great the difference is we found out it
was a lie and now he’s having a very
hard time in forming trust again if I
told you that some footballer cheated on
his wife and slept with a hundred women
would you care no it’s because we expect
it it’s because it’s authentic it’s
because it’s because it’s it’s it’s who
they are
but not with Tigers he chose to lie to
us it’s not actually the behavior that
were offended by it’s that it’s
inconsistent with what our expectations
are everything you say and everything
you do has to prove what you believe
like I said the most basic human desire
is to feel like we belong and it’s so
remarkably powerful how many of you are
from Paris most of you right yeah
oh good number of you okay are you
friends with everyone in Paris why not
why not but when you go to Leone and you
meet someone from Paris like hey hey I’m
from Paris and you’re best friends and
when you go to America and you’re on
holiday and you’re standing there in New
York and you’re riding the subway and
you happen to hear French being spoken
behind you and you turn around and you
say where you’re from they say Leon we
say we’re from Paris and you
best friends because when you’re in an
environment where you don’t feel like
you belong you seek out anyone who may
share the same values and beliefs as you
so that you can start to form trusting
relationships and the amazing thing is
those relationships are real those
relationships are real that other family
will say to you
have you eaten at this restaurant you’ve
got to go to this restaurant and you
will take your family to this restaurant
because complete strangers on the subway
told you to that’s insane
if that happened here if somebody done
the Metro just turned to you and told
you to go to some restaurant you’d go
like this the most basic human desire on
the planet is to feel like we belong and
we have the innate ability to fend to
find those things into sense that this
is the reason why this could not be
recreated over our computers it’s
because as human beings it’s our biology
that gives us this ability it’s this
ability to read each other you know the
blogosphere gets very upset at me when I
talk about this and how you know you
cannot replace these human experiences
in these human feelings over the
internet they get very mad at me and yet
every single year 20,000 bloggers
descend on Las Vegas to have a huge big
conference they call blog sphere blog
world my question is why couldn’t I do
it online it’s because you’ve nothing
can recreate that sense of of human
being of human coming together nothing
I’m telling you is my opinion it’s
actually grounded in the tenants of
biology if you look at a cross-section
of the human brain looking from the top
down you see that the human brain
evolved into three major areas that
corresponds precisely with this little
idea the outside area is our neocortex
our Homo Sapien brain responsible for
all of our rational and analytical
thought and language the middle two
sections make up our limbic brains and
our limbic brains are responsible for
all of our feelings like trust and
loyalty it’s also responsible for all
human behavior all decision-making and
it has no capacity for language this is
the reason you can’t ask people why do
you do business with us why do you like
why do you like us they can’t tell you
the part of the brain that controls
behavior doesn’t control language and so
they rationalize this is the reason why
the
why do you love your husband or why do
you love your wife is a difficult
question why do you love your wife I
don’t know that’s where most people
start and then they start saying things
they start rationalizing she’s fun she’s
she’s I’ve known her forever she’s
always there for me when I need her
it sounds like the household pet and
those aren’t necessarily the qualities
for marriage my sister says of my
brother-in-law my sister says of my
brother-in-law I never imagined I’d
marry a guy like him right what she’s
saying is before I got married I had a
list of all the attributes I wanted my
future husband and he’s got none of them
and yet I fell in love with him anyway
and want to spend the rest of my life
with him and raise a family with him and
is a human experience that we have
trouble putting into words and so we try
we rationalize and then we say things
that don’t make sense she completes me I
don’t know what that means what does
that means it means I have a left arm
and a left leg and I’m looking for
someone with a right arm and a right leg
and together we can make one I mean it’s
nonsense what we’re attempting to do is
put into words the feelings we have
towards another person or organization
with the part of the brain that doesn’t
control language and so we rationalize
or make things up we do the exact same
thing at work we talk about people who
get it and that guy no matter how much
data I show him no matter how how much
information I give them he just doesn’t
get it
what’s it what how do we find people who
get it before we do business with them
to realize they don’t get it what we’re
attempting to do is put into words the
feelings we have towards other people
this common set of values and beliefs
with the part of the brain that doesn’t
control language this sense of belonging
in the sense of community is so powerful
the example I love to give and it freaks
me out every time I talk about it what’s
our most valuable possession on the
planet come on what’s a most valuable
possession on the planet our children
very good
so let’s suppose you want to go out with
your wife or with your husband and you
need a babysitter
you have two options option number one
is a 16 year old from just down the
street with barely if any babysitting
experience option number two is a 32
year old from you don’t know from where
she just moved into the neighborhood and
she’s got ten years of babysitting
experience who do you choose the 16 year
old you choose the 16 year old you would
rather trust your most valuable
possession on the planet your children
with somebody from within your community
with no experience over somebody from
outside from you don’t know where with
vast amounts of experience then why do
we do it differently at work
why are we so preoccupied with someone’s
CV and where they’ve worked and how long
they’ve worked and how much money they
made for our competitors and yet we
never think to ask what they believe
what they value can we trust you can you
trust us leadership is the ability to
stand on the street corner with your own
red hat and simply talk about what you
believe go to Red Hat got a red hat got
a red hat here and all the other people
wearing red hats whether they know their
own Y or not whether they can see their
own red hat or not our eerily drawn to
you because what you’re able to do is
put into words the way they see
themselves what you’re able to do is put
into words the values and beliefs that
they hold dear and they’re drawn to you
because they feel that they can trust
you and I can start to form community
around you this is what leadership is
leadership puts our own desires and our
own values and our own beliefs into
words there’s an inextricable link
between leadership and communication
those who lead are the ones who can
clearly talk about what they believe and
those who can clearly talk about what
they believe are the ones who lead let’s
imagine that we’re out on a on a tour a
three-hour tour on a boat and we get
stranded on a desert island here we are
all stranded on the desert island the
question is how will we get off the
island well one of us stands up and says
I will lead we like that we’re social
animals we appreciate leadership and he
stands up and says okay who’s got ideas
you you think we should build a fire I
like it good you you think we should
look for food
good good you you think we should build
a boat good I like it okay let’s take a
vote
at the same time someone else stands up
and says as we were coming into the
beach I saw some masts over on the west
side of the island and I saw some smoke
which means there’s a fishing village
over there and if we can get to that
fishing village we can find help now
we’re gonna have to get through this
forest to get there and I don’t know how
to get through the forest I’m gonna need
some help
but if you want to help I’ll welcome it
and if you don’t want to help don’t
worry when we get help we’ll come back
and get you the question I have for you
is who do you want to follow who do you
want to follow we want to follow the
second guy there’s no data to show that
that fishing village exists there’s no
photographs and no one else saw it the
only thing we have is his conviction his
absolute belief in the existence of that
world that we cannot see and his ability
to put that future state into words that
were drawn to it and we will volunteer
to go with him maybe even take personal
risk I don’t know how to get to the
forest I don’t know how to cut down
trees but I will go because I believe
it’s important not for me but for the
greater group the irony is our own
survival depends on our ability to help
each other this is the irony and here we
go we rally together we choose to take
the risk we choose to follow we
volunteer to follow him and we go
through these woods and it’s hard and we
have to cross rivers and go around
boulders and chop down trees and
eventually we come to where he said the
fishing village is and there’s no
fishing village did he lie to us who we
just conned was this all a big joke is
this a all is this all for naught and we
say to him where is the fishing village
you said there was a fishing villages
you said if we could get here we would
survive and he turns to us and say I
believe there was a fishing village but
that doesn’t matter because look what we
were able to do we were able to get
through that forest together that means
that we can pick absolutely any
direction on this island and we will be
able to get there that’s called
leadership when people believe what you
believe they will work for you with
blood and sweat and tears when they
don’t believe what you believe they work
for your money the goal is not to
surround yourself with everybody who
needs what you have the goal is to
surround yourself
with people who believe what you believe
there are a million reasons why people
will do business with you that have
nothing to do with you
you happen to meet some checklist that
they have they happen to hate your
competition more there’s a difference
between repeat business and loyalty you
see repeat business means I’ll do
business with you over and over and over
again
loyalty means I’m willing to turn down a
better product at a better price to
continue to do business with you and
it’s the loyal ones those who feel like
they belong
those who doing business with you gives
them some sense of identity or belonging
those are the ones those are the ones
who do great and the reason is it
because it becomes personal it becomes
personal we use these symbols we use
these companies we use these leaders we
use these organizations as tangible ways
of saying something about who we are
this is why people with Macintosh
computers love opening their computers
in airports they love for us to see the
computer they’re using how many of you
love your Macintosh computer or know
someone who loves their Macintosh
computer ok rationally speaking based on
facts and figures data right factual
factually speaking
Mac’s are substandard computers they’re
at least 25% more expensive sometimes
double the price of their PC
counterparts there’s less software
there’s fewer peripherals and I know
because I switched to a Mac they’re
absolutely slower rationally speaking no
one should ever buy one but they do over
and over and over again and when they
decide they’re going to buy one they
don’t do any comparative competitive
comparisons they’re not comparing the
price and the date and the features from
one product to another they simply
decide that’s the one I want and they go
and choose it and if you ask somebody
who loves their Mac why do you love your
Mac they don’t tell you well you see I
see myself as somebody who likes to
challenge the status quo and so it’s
very important for me to surround myself
with all the people and the products and
the brands to prove to the outside world
Who I am because I’m using these things
as symbols to tell people about Who I am
in an attempt to attract people who
believe what I believe so that I can
start to form strong bonds of trust
because my own survival depends on it
biologically that’s what happened in the
part of the brain that controls behavior
but not language and so they rationalize
it’s the user interface it’s the
simplicity it’s the design and they say
things that don’t make sense I’m a
creative person whatever that means at
the end of the day what they’re doing is
they’re using this symbol to say
something about who they are which is
why people with Macs will never put big
stickers of their families over the tops
of their computers it’ll never happen
cover up that beautiful glowing Apple
never never and have you ever seen a
dirty Macintosh that’s because they
clean them how many of you broken out
the glass cleaner simply to clean your
HP it doesn’t happen never the people
with Macs will sit there and clean their
computers right because we have to keep
it clean we because it is a symbol of
Who I am
and when you tell them you know that you
bought a substandard computer they start
foaming at the mouth and they start
getting angry and they’ll probably call
you an idiot
and the reason they take it so
personally is because you didn’t insult
their computer you insulted them because
Apple is so clear about what they
believe
so discipline and how they do it and so
consistent in what they do that symbol
now serves as a representation of who I
believe I am and if I surround myself
with enough of these symbols that I’m
consistent enough you’ll know something
about me it’s the same thing as a flag
what’s a flag a flag is just a logo a
flag is just a symbol who cares about
the flag but we don’t we get angry when
we see people burning our flag why do we
get angry because you’re attacking me
I mean I’m attacking you I just burnt my
own property no we get angry because
it’s a symbol of our values and beliefs
and when you attack the flag it’s the
same as attacking me what do you think
the Mafia comes from you killed my
cousin now I have to kill your whole
family
you can do anything to me it’s because
we’re protective of those within our
community we’re protective of those who
believe what we believe so much so that
when you attack someone who believes
what I believe it’s as if you’re
attacking us says if you’re attacking me
and at the same time we will protect
each other this is what great
organizations are great organizations
are communities cultures common sets of
values and beliefs where we will go to
bat for each other and work for
each other and help each other even at
great personal sacrifice because
ironically my own survival depends on it
what we need more of today is not
talking just about the technology what
technology can do that’s all fine and
good but the question is why does that
technology exist in the first place why
do you have the technology what’s the
point of it why should I care how are
you helping me on a very very human
level innovation doesn’t come from
telling people to come up with a better
technology innovation comes from solving
problems that are deeply deeply personal
for me we hail Apple as this great
innovative organization the most
innovative organization in the world
blah blah blah where does it come from
Steve Jobs by the way do you know how
many of the ideas that Apple currently
sells how many Steve Jobs came up with
zero none of them he didn’t come up with
Apple Steve Wozniak came up with the
Apple he didn’t come up with iTunes or
the iPod or iPhone as all people within
his organization what Jobs was able to
do was put into words why they were
coming to work what he was able to put
into words was why the company exists he
gave people something to build this is
what they were looking for just as Neil
Armstrong talked about that yearning
give people some sort of yearning and
they will solve the problem this is what
entrepreneurship is entrepreneurship
isn’t starting a business
entrepreneurship is solving a problem 35
years ago when Apple before Apple even
existed Steve Jobs and Steve Wozniak
we’re standing in a garage in Cupertino
California and they made something that
they called the little blue box it
allowed people to avoid paying
long-distance rates on their phone bills
in a day and age when there was only one
long-distance phone company they were
challenging Ma Bell the existing status
quo phone monopoly and then they started
Apple and they challenged big blue IBM
the existing status quo monopoly
computer platform and then they
challenged Microsoft and then they
challenged the music industry and then
they challenged the phone industry now
their trouble it challenging publishing
and if you’re in television or movies
you’re next it is just a repeating
pattern it is other people in the
organization who came to work and looked
for things that restricted human
opportunity look for things
held the individual down and they gave
people they use the technology as a way
of people giving people to challenge
that giving them an option it’s
remarkable and it’s a repeating pattern
even if you look at all of their
advertising and all of their
communications for the past decades it’s
all exactly the same
that 1984 commercial that wonderful
Ridley Scott commercial that woman runs
into the Orwellian scene and throws the
hammer through the screen it’s one
individual challenging the status quo
and then you have hi I’m a Mac hi I’m a
PC an individual and you have one person
standing there listening to their iPod
it’s always an individual it’s always an
individual it’s always AI and Jobs is
constantly talking about the revolution
this and the revolution that it is a
cause think different is a belief it is
not a product differentiate err what
distinguishes one organization from
another it’s not simply what you do it’s
why you do it and if people believe what
you believe they’ll be drawn to you as
if you were their own the goal is not to
surround yourself with people who need
what you have the goal is to surround
yourself with people who believe what
you believe and the reason is because of
something called the law of diffusion of
innovations if you don’t know the law
you definitely know the terminology what
the law of diffusion tells us standard
deviation bell curve is that the first
two and a half percent of our population
are our innovators the next thirteen and
a half percent of our population are our
early adopters the next thirty four
percent are your early majority than
your late majority and the last 16
percent are your laggards the only
reason these people by touch-tone phones
is because you can’t buy rotary phones
anymore we all we all fit at various
times at various reasons across this
standard deviation what the law of
diffusion tells us is that this
population the innovator and the early
adopter population are very comfortable
trusting their guts they’re very
comfortable making intuitive decisions
remember that biology the part of the
brain that controls decision-making
doesn’t control language but it does
control feelings this is where gut
decisions come from there is no part of
your stomach that controls
decision-making and it’s not in your
blood and it’s not in your bones and
it’s not in your soul and you’re not
following your heart
you know let’s win hearts and minds it’s
winning minds and minds this is the
reason why we talk about decisions
feeling right we say just feels right
why would we use the verb to feel to
describe a decision it’s because the
part of the brain that controls feelings
controls decision-making that’s why it
just doesn’t control language and so we
ascribe it to different parts of the
body these people are very comfortable
trusting their guts and making those
intuitive decisions this population the
majority is more cynical more practical
they absolutely care about things like
price and quality and service and
features the problem is is that they
will not try something until someone
else has tried it first these are the
people we have to drop our price offer
value add and come up a little
promotions we have to reduce their risk
to try something unfamiliar these people
happily try new things that have never
been tried before simply to reflect
something what they believe the problem
is is that you cannot achieve
mass-market success or mass-market
acceptance for an idea until you achieve
between 15 and 18 percent market
penetration this is the tipping point
it’s a social phenomenon the problem is
is that it’s hard to get there and when
I talk about 15 to 18 percent I don’t
mean of the mass population I mean 15 to
18 percent of people who believe what
you believe it’s easy to get 10 percent
if you ignore everything I’m telling you
today I promise you you can get about 10
percent loyalty you have about 10
percent of your customers who love you
not like you like is rational love you
it’s emotional now you ask somebody do
you like your job I really like my job I
get paid well I like the people I work
with I like the challenge do you love
your job I wouldn’t go that far
like we know there’s a hierarchy like as
rational love is emotional right it’s
easy to get about 10 percent the law of
averages will say you have about 10
percent but it’s hard to get this
tipping point this is what Jeffrey Moore
in his book crossing the chasm talks
about this is the chasm so the question
is how do you get those people and this
is where leadership matters this is when
you talk about what you believe I’ll
give you two examples I’ll give you a
business example in a social example in
the United States we have a brand called
TiVo which is a brand of DVR TiVo
basically invented the category and
been around for about 11 or 12 years now
when you ask any company why did your
company fail or why did your product
fail they will usually give you some
combination of four reasons they’ll
either tell you that there was
undercapitalized didn’t have enough
money that’s very popular poorly
executed that’s common one you know we
didn’t have a good product with we had
bad people I had the wrong people or bad
market conditions that pretty much
explains absolutely every failure there
is TiVo had the recipe for success they
had everything that we consider what we
need for success when their product was
introduced about eleven years ago to
this current day it is the single
highest quality product on the market no
one will dispute that it’s incredibly
fantastic product so execution flawless
people they hire the best engineer as
money could buy market conditions the
unaided awareness of TiVo is through the
roof we use it like a verb by TiVo
things and they had venture capital up
the wazoo so money no problem money was
no problem TiVo is a commercial and
financial failure they’ve never made
money and when their company went public
the stock launched about 40 or 50
dollars and then very quickly plummeted
and except for a couple of little blips
has never traded above ten dollars and
the reason is because they took they
took this brilliant product this
brilliant piece of technology and they
attempted to tell the mass market what
the product does they attempted to
convince with facts and figures what the
product does they said to the mass
market we have a product that pauses
live TV skips commercials memorizes your
viewing habits and records on your
behalf without you even asking and the
cynical practical majority said I don’t
need it I don’t like it I don’t want it
you’re scaring me and they didn’t buy
one there are a few who did a few early
adopters who did but it didn’t make a
difference and the company has done very
poorly imagine if they ho told this
population why the product exists
imagine if they had said if you’re the
kind of person who wants to have total
control over every aspect of your life
boy do we have a product for you it
pauses live TV it skips commercials it
memorizes your viewing habits and we’re
cool
in your behalf without you even asking
in this instant what the product does
serves as the tangible reasons to
believe it they’re not the reasons you
use to convince somebody to choose you
of the competition in the first place
it’s not what you do that matters it’s
why you do it
and people don’t buy what you do they
buy why you do it I’ll give you my
favorite example it’s a social example
in the summer of 1963 250,000 people
showed up on the mall in Washington DC
to hear Martin Luther King give his
famous I have a dream speech there were
no invitation sent out and there was no
website to check the date how do you do
that how many emails did you get to be
here today and there’s only what a few
hundred people two hundred and fifty
thousand dr. King was not the only man
in that country who knew what had to
change to bring about civil rights over
there he wasn’t the only great orator he
wasn’t the only man who suffered in a
pre-civil Rights America in fact he
wasn’t even the perfect man he had his
complexities we just don’t talk about
those things the difference is he didn’t
go around telling people what we need to
do what we need to do what we need to do
he went around and told people I believe
I believe I believe and people who
believed what he believed took his cause
and made it their own and they told
people what they believed and those
people took that cause and made it their
own and they told people what they
believed and lo and behold on the right
day on the right time a quarter of a
million people showed up to hear him
speak how many of them showed up for him
zero they showed up for themselves it’s
what they believed about America it’s
the America that they wanted to live in
it was the country that they wanted to
raise their children and that inspired
them to get on a bus travel eight hours
and stand in the Sun in Washington in
August simply to hear him speak showing
up was one of the things that they did
to prove what they believed and by the
way he gave the I have a dream speech
not the I have a planned speech nobody
was inspired by any plan ever the goal
is not to talk about what you do the
goal is to talk about we can believe and
people who believe what you believe are
drawn to you as if you are their own
because you helped them put into words
the way they see themselves and the
things you say and the things you do
give them the ability to tell others
what they believe to make tangible
because those symbols and those products
and those services say something about
who they are and they will say with
pride I love working with that company
this is why we talk about in sales it’s
about relationships I love my guy we
always talk about when we have a good
relationship with a company because it’s
a human experience it’s a human
experience
make no mistake of it all of these
things were talking about like trust and
loyalty are human experiences technology
and the Internet are wonderful things to
speed up transactions there are
wonderful things to connect people to
spread information absolutely but it’s
very very difficult to form strong human
bonds through the internet just like we
talked about with blog world the
Internet can live alongside and
technology can live alongside the human
experience but it cannot replace the
human experience your friends are not on
Facebook
you know and your your network isn’t on
LinkedIn and you’re not having any
conversations on a blog you know having
a dialogue on Twitter
those aren’t human experiences if you
compare the way we actually have
conversations where we interrupt each
other we advance ideas versus the way
people communicate online is sort of my
idea my idea my idea hey that’s a good
idea Steve that agrees with my idea my
idea my idea
hey you’re an idiot my idea my idea and
if you ask any retailer on the planet
who’s ever come out with a blog for
their customers to give feedback the
number of innovations that have come out
of the feedback from those blogs the
answer is zero none because people just
use it to complain and moan and there’s
no vulnerability and there’s no risk in
doing things online which is the reason
we put ourselves out there like that
risk requires this vulnerability
requires this and when you feel that
someone’s willing to tell you something
genuinely about who they are you can
start to form strong bonds of trust
there’s something called a Paris social
relationship a real relationship is when
we know a lot about each other we start
to learn about each other a parasocial
relationship is one person knows more
about the other person than they know
about you and you start to form a strong
bond except it’s one-sided this is what
happens with Fame with celebrities we
know all about them but they don’t know
even that we exist and we know about
their lives we know about their social
lives we know who they’re dating we know
about their careers and we follow them
as if they’re our friends and we call
them on that we’re on
first-name basis with them right we call
them by their first names as if we know
them it’s a Paris social relationship
where we feel that we know them but they
don’t know us the problem is all those
feelings associated are absolutely real
they feel absolutely real the
opportunity for innovation is not to
just tell people in the outside world
you know do this do that the
opportunities to bring people together
so the feeling is mutual so we work
together to advance a problem so we work
together to get to that fishing village
because our own survival depends on it
if people don’t feel that you’re in it
as well with them if they don’t believe
that you believe it they believe then
there’s not gonna be any strong human
bond the opportunity is to articulate
your vision of the future that does not
yet exist yet what is your vision
what is your fishing village and are you
putting it towards so clearly that other
people can understand it as clearly as
you can and they can tell others about
it and they want to go there and they
will risk blood and sweat and tears to
help you get there not that you would
prefer themselves and they will watch
your back and help you explore just like
that 16 year old that you hired to
babysit your children because they get
you they understand you they know that
you’re the same they know you believe
what you believe this is the goal human
relationships real trust real loyalty
that is not born out of products and
services but born out of beliefs and
values there are leaders and there are
those who lead leaders hold a position
of power or influence but those who lead
inspire us and whether they’re
individuals or organizations we follow
those who lead not because we have to
but because we want to we follow those
who lead not for them but for ourselves
this is for those who want to find
someone to inspire them this is for
those who want to inspire those around
them thank you very much
thank you very much we’ve left some time
for questions so you have any questions
you think Y has to be more at some point
already done this is CG and my single
question is gonna be where you haven’t
talked a lot about how yeah this is more
important than what’s in your background
yeah so can you sure so the questions in
the reverse order
how is about process and structure it’s
how we do things and in the business
world today you know this is tactics and
this is strategy you know or we set a
goal and we figure out the strategy to
get there and if we miss the goal we
either change the goal we change the
strategy and then that’s business right
but in reality what makes the great
organizations go is that they understand
this fishing village this place far from
the future this vision of the future why
did this purpose or cause and the
structures and the processes that they
build how they’re gonna do that what
they’re gonna do you know in terms of
actions is all driven by that not by the
goals right the goals of the Waypoint
and so I have a sort of a very different
read on on waypoints I don’t believe by
the way that any one of these pieces is
more or less important than each other
they’re all equally important the
difference is lots of people talk about
process and lots of people talk about
product right we don’t even have a word
for this
like I said strategy tactics we don’t
even have a word for this the point is
that every organization on the planet
functions on all three levels but most
of us are only even aware of two of them
and so the reason I talk primarily about
this one is because that’s the missing
piece and you need to have all three for
the system to be in balance but they’re
all how is not more important than what
what did Thomas Eddins Edison say vision
without execution is hallucination right
you can have all the vision in the world
but if you don’t execute who cares right
it’s like that fishing village example
you know somebody could have stood up in
with the same vision of that village and
just walked away no ability to
communicate it then there’s no value you
know he’s a visionary he’s not a leader
you know and there are plenty of people
who are great communicators you know but
no vision so they’re great communicators
but they’re not leaders they give a
great speech about how we need to work
together but then we don’t know how to
get off the island so
don’t think that it’s more important but
there are lots of people who talk about
these things and much more about these
things than I do so it’s all three
pieces and in terms of your first
question does the why evolve and the
answer is no you only have one why each
individual only has one why and your why
is born from from your upbringing you
know we are products of our childhood
you know who we are who we are which is
the sum total of all these three things
my beliefs my values and what I do to
the outside world who we are comes from
our teachers our parents and experiences
we had when we were young our wise are
fully formed probably by the time we’re
you know 18 or 19 and it never changes
the rest of our lives our opportunities
to either live in balance or not to
either feel fulfilled by the work that
we do or not and we sometimes make right
decisions and with companies it’s the
same which is the why of a company is
born at the founding of that company you
know at the founding that the company is
one of the things that an entrepreneur
has done to bring to life something they
believe the great companies usually
solved a real human problem the
companies that really struggle to
survive are the ones who are just
looking for some market opportunity and
they pour money into it because they
can’t rally people to commit to anything
they can’t rally people to sacrifice the
best they can do is offer them a big
bonus and that doesn’t really appeal to
everyone there’s a great story from the
space program it was November of 1963
but sorry November of 1969 and it was
Apollo 12 so Apollo 11 had already
landed on the moon in July and this was
the second lunar mission and so
obviously the press was all there and
everybody was excited and it was all
wonderful and a journalist was walking
through NASA and she finds somebody
wearing a NASA badge and she says can I
talk to you he said absolutely and she
starts asking him questions and he knew
everything about the Saturn 5 program
and he was excited and it was amazing
and and he talked about how they’re
putting a man on the moon and we’re
gonna do it again and and he knew
everything and after about half an hour
45 minutes she said so what specifically
do you do for NASA and he said oh I’m
the janitor the point is is when the
when the cause is clear everyone inside
the organization is equally emotionally
committed to it
and most of us we talk about superior
technology the only people who think
that’s cool are the engineers what about
if your receptionist isn’t as
emotionally involved in it then you
don’t have a clear why the CEO and the
receptionist and everyone in between
need to be committed to this they all
have different jobs they all have
different responsibilities you know the
CEOs job is not to control it the CEOs
job is to keep talking about the fishing
village and remind people why they come
to work then they have the the CEO or
the CFO who’s the operator the one who
figures out how we’re gonna bring that
vision to life we do ourselves a great
disservice in business by making one
line of leadership we say CEO is number
one and CFO or CEO is number two and all
these guys think that they’re in line
for this job right it’s not true it’s
one and a it’s parallel and this job is
about very very far in the future and
this job is about now how we’re gonna
build that you know these how types can
do very well in the world but they’ll
never change the world and they’ll never
build billion-euro businesses these guys
they can change the world or build
billion-euro businesses if only they
knew how all right and you see you see
always in great organizations any any
any social organization that ever
achieved anything big there’s always a
partnership between the why and the how
you know Steve Jobs and Steve Wozniak
Bill Gates Paul Allen and it was Bill
Gates who had the vision to put a PC on
every desk but it was Paul Allen who
built the company Walt Disney Roy Disney
Walt Disney was the one who talked about
good clean family fun but it was Roy
Disney who built the fed built the
company he came up with Buena Vista he
came up with a licensing and it goes on
and on and on and you see these these
kinds of partnerships everywhere what’s
amazing is when you look at the history
of the partnership Steve Jobs and Steve
Wozniak grew up together in height in
high school in California Bill Gates and
Paul Allen grew up together in Seattle
and dropped out of Harvard together Roy
Disney and Walt Disney were brothers
JFK RFK you they just go on and on and
on and what you see is that these great
partnerships they’re always either
childhood friends or family that doesn’t
mean you have to go into business with
childhood friends or family but it means
the quality of the relationship and the
trust and the fact that you share common
values and beliefs is much higher if you
grew up the same way
so we are all products of our upbringing
including a company a company comes from
its founders you know Richard Branson
has over 300 companies every single one
of those companies is his why we when
you see the word virgin
we know virgin Cola Virgin Trains virgin
weddings we know what to expect and it’s
a reflection of his own personality
because what his company is is one of
the things that he’s done in his own
life to say something about who he is
go listen to Bill Gates’s TED talk when
he talks about the Bill and Melinda
Gates Foundation he talked about he’s an
optimist he talks about productivity and
human potential and if you replace the
word mosquito nets with a PC it’s the
exact speech he gave in the 1970s what
he’s doing his difference
why is doing it as exactly the same a
company is born of the companies why is
born at the beginning whether it stays
clear or not is a different story
but it comes from the founding of the
organization and it never never changes
it can collapse and have to be rebuilt
at it collapses but it never changes
it’s silent you describe a lot of your
company to the why and you identify them
with one founder on one guy yeah other’s
company survives the founders do I’m is
great to the white workers oh that’s a
very good question you know the biggest
challenge that any organization has is
its own success right when a company is
founded it exists on some sort of metric
you know euros or money or any kind of
other metric or yen or dollars or
whatever or time right
well organizations exist on these two
planes and when they’re founded what
they do and why they do it are
inextricably linked and that’s because
the company is small and you know the
visionary founder or founders you know
they they have this crazy an idea and
they take a huge amount of risk and
passion alone is what drives them
because the likelihood of failure is
very high and they’re crazy and they’re
mad and they inspire their friends to
come join them which is also crazy and
everybody gets it because we all kind of
hang out together and you know and it
goes the big challenge is its own
success when it starts selling more and
doing very well and what they’re doing
starts to go like this and you have to
hire somebody who hires somebody who
hire somebody who hires someone who has
to make a decision based
what based on what and then the Y starts
to go like this we were just talking
about it before we were talking about
Dunbar’s number you know we know that
that humans can manage successfully a
hundred and fifty relationships and
beyond that it’s very difficult and even
online they found that Dunbar’s number
is clean where people still can only
manage 150 relationships online so it
raises the philosophical question does
this start to happen at 150 I don’t know
but this but this is called the split
and symptoms of a split is when you
start to become more obsessed with what
your competition is doing versus what
you are doing small companies don’t
obsess about their competition they
can’t afford to and the more successful
company does they literally become
obsessed with the competitors every
single morning everyone at Microsoft is
worrying what Apple is doing every
single morning everyone at Apple doesn’t
care what Microsoft is doing it’s true
they don’t you know how much market
research Apple does before they come out
with a product zero because they don’t
care because what they’re doing is
they’re taking their vision of the world
their beliefs about the world and
they’re bringing it to life and the
products they believe reflect that and
those who are drawn to those products
are drawn or drawn to them viscerally
and the whole concept of asking our
customers what they want that whole
process is inauthentic you know it’s
either what you believe so when you
start becoming more obsessed with the
competition when you start asking others
more about who you should be when the
old-timers the people who’ve been there
a while start saying yeah it’s not like
it used to be I mean I know we’re making
more money than we used to and I know
we’re growing faster than ever but ya
know I don’t know it’s just not the same
you know the young ones don’t get no no
no they can’t put it into words but it
feels different these are simply
symptoms of the Split stress goes up
passion goes down symptoms of the split
and so if you look at there’s a lot of
organizations where that have gone
through the split you know Steve Jobs
was thrown out of his own company in
1985 the company went like this and the
Steve Jobs came back and Mike Dell left
Dell and Mike Devils forced to come back
and Howard Schultz les Starbucks and
Howard Schultz was forced to come back
and it’s not that these guys are God’s
gift to management it’s that as they’re
the founders simply being there reminds
people why they come to work the the
whether they’re able to put it into
words or not as a different problem and
so the greatest challenge that most
companies have in succession is
not finding somebody to manage the
company which is its to lead the people
you know you can’t lead nobody leads a
company you lead people you manage a
company a company is nothing more than a
structure and the funny thing is when
companies start to have financial
problems they hire somebody to fix this
but it’s this that went fuzzy and so the
opportunity for succession is is not to
hire the brilliant engineer but to hire
somebody who doesn’t want to reinvent
the Y but simply take the torch that was
already lit and say now I will carry it
into the next generation it’s not lost
on me that the average lifespan of a
company on the Fortune 1000 list is
about 40 years and it’s not lost on me
that 80% of the DAO index are companies
that are 35 years or younger in other
words it’s about the lifespan of a
career you know about 40 years it’s not
lost on me that that companies do go
through the split and things start to
break up in other words very very few
companies have have gotten succession
down and the reason is because they take
these visionary CEOs and they replace
themselves with the CEO or the CFO they
take a visionary and replace it with a
structure builder and they always do
that even even at Apple they’re talking
about it you know they talk about Tim
Cook taking over and that makes me
nervous and jobs will say ah but he’s
been around forever and he knows the
business as well as I do and I rely on
him and it’s true because of that
partnership the problem is the guy is
not a visionary in the way he thinks he
sees the world and so yes he understands
the company but he can only think steps
ahead not leaps ahead and as soon as I
hear a CFO or CEO if they were good at
their job is taking over the company it
it’s going through a split I can promise
interestingly out just a quick aside
about Steve Jobs you know what why is
that this one guy is so special you know
he can’t really be the most amazing
leader in the world like Dell is a
pretty remarkable guy and you know Gates
is a pretty remarkable guy and they’re
all visionaries and they all built
remarkable organizations they all change
the way we live our lives every one of
those guys so what is it about this one
man Steve Jobs that he seems to continue
to do it where the others have lost it
Steve Jobs has won
thing that none of the others have he’s
dying
serious he’s dying think about the
people who take the big risks in the
world young people take big risks
because they’re oblivious of the risks
ahead right this is why entrepreneurs
you know have that youthful spirit or
they tend to be young and if you want to
get advice you always ask an old man
because old man’s no men don’t care
right so they’ll tell you exactly what
they think and so there’s this thing
that comes with youth or age where
you’re oblivious or you’re at peace with
your own mortality it’s this piece in
the middle where we worry about what our
friends will think what the magazine’s
will think what the press will think
what our colleagues will think what our
employers will think what I think this
is an insecurity I got to provide for my
family Steve Jobs doesn’t have that
because he’s dying and so he still acts
like a little boy or an old man ask you
know what is what what will Wall Street
think he doesn’t care what Wall Street
things just like somebody young or
somebody old doesn’t care what Wall
Street thinks so that’s I believe my my
theory one of the reasons that Steve
Jobs is such a remarkable executive is
not because he’s a genius it’s because
he’s dying seriously I mean we’re always
told what would you do if you would die
tomorrow right and when when we have
earth-shattering events like I went I
lived through September 11th I watched
those buildings fall down and it changes
you for a short time and then we go back
to the way things were and we come to
terms of their mortality and realize we
only have one life to live and why am I
doing this
I should just risk it all and have fun
and I should take three months off and
go on a holiday because we’ll imagine
having that every day it’s like why do
we get so much done the week before we
go on holiday because there’s a deadline a deadline I never thought about that
I’m struck also by the irony of an
organization or an event like this where
a bunch of technologists have come
together to discuss largely the issues
of people and that we’re doing it even
here together as a group what I find
fascinating about all of this is that
all of the content that you will hear
today you could easily hear online we
could videotape all of it I could give
this exact same talk in front of my
computer and you could sit at your desk
in front of your computer and listen to
it
the difference is it’s not quite the
same all the communication of the
information would be exactly the same
but for the fact that you wouldn’t be
here and it’s this it’s this interaction
it’s that we’re here together as a group
that makes these kinds of events special
in fact if for the rest of the day all
of the speakers are absolutely awful you
could go home and someone will say how
was it you say well as speakers we’re
all four and they’ll say you’re gonna go
back again next year and they say of
course I’m going to bang again next year
because I had a wonderful time because I
met all these wonderful people and this
is where the ideas are exchanged it’s
the conversations in between and I’m
fascinated about this idea I’m
fascinated by how in a world where
technology is remarkable the things that
we can dream up and the things that we
can do yet we still come together as
groups to do things as people I was also
struck by something that Neil Armstrong
said that he was grateful to be led by
people who inspired him to yearn for
that place to yeren listen to that
that’s a such as wonderful feeling and
so it begs the question sort of what
does it mean to lead you know why do
people do what they do I’m fascinated by
this idea of leadership and we I read
the same books as everyone else I read
the same books as all of you and you
know learn your style of leadership and
how to adjust your style of leadership
to fit to the situation at hand etc etc
that’s not leadership that’s management
all leaders have one thing and one thing
only followers that’s it
that’s it if you’re a leader it means
you have followers it hasn’t
to do with rank and has nothing to do
with intelligence it has nothing to do
with seniority if people are willing to
follow you you are a leader the question
is what’s a follower a follower somebody
who volunteers to go where you want to
go someone who raises their hand and
says I choose to follow you we can get
people to do all kinds of things using
authority that doesn’t make you a leader
a leader is when someone says I
volunteer to go where you’re going the
question is why should anyone follow you
there’s only two ways to influence human
behavior
you can either manipulate people or you
can inspire people
examples of manipulation in the business
world are things like dropping your
price if you drop your price low enough
people will buy from you
we know this promotions two-for-one free
toy inside or if you’re in the business
to business space we call it value-added
the concept is the same it’s giving
things away for free to reduce someone’s
risk so they’ll choose you over the
competition and it works innovation what
organizations like to call innovation is
really novelty innovation real
innovation changes the course of
industries if not the way we live our
lives adding a camera to your cell phone
is a wonderful feature but it is not an
innovation it’s the difference between
steps and leaps the problem is what most
organizations think is innovation is
really novelty it’s the latest shiny
thing the example I love to give is an
American example about Colgate
toothpaste the brand of toothpaste in
the 1970s there are only two choices of
Colgate toothpaste do you know how many
there are now 27 27 different choices of
one brand of toothpaste because what
happened was competition increased and
the metric went down whether its
revenues or market share profit doesn’t
matter the metric went down and so they
added a new product and the population
when Lulu shiny we were all drawn to it
the pup the problem is the competition
copied this is one of the problems with
competition you see they compete
and then the metric went down again well
it worked the first time so we’ll do it
again and they added another product and
another product and another product and
another product and before you know it
you have 27 different line extensions
which means that their competition is
offering about the same number of
products that about the same price about
the same quality about the same service
literally hundreds of choices of
toothpaste to choose from and yet I have
no data to show that people are brushing
their teeth now more than they were
before
and the best part is what’s what are
these companies complain about now
what’s their biggest challenge how do we
differentiate ourselves this is
hilarious to me which is how do we what
how do we get out of a problem that we
created for ourselves there are all
kinds of other manipulations fear
wonderful manipulator if any of you are
parents you know exactly what I’m
talking about
you can scare people into doing all
sorts of things
aspirational messages we’re constantly
being told you have to be aspirational
give people something to aspire to
you know you can get people to join the
gym with an aspirational message but to
get them to workout three days a week
that requires a little bit of
inspiration now I cannot dispute that
these and many other manipulations work
the problem is none of them breed
loyalty the problem is none of them
create trust and over the course of time
they cost more money someone has to pay
for it all and over the course of time
it increases stress both for the buyer
and for the seller it is stressful for
us to make decisions today in a world in
which manipulation is the norm where we
are bombarded by manipulations from all
sides from all people trying to get us
to do any number of things whether it’s
vote for them or buy from them or do
something the question is how do we
choose what’s right for us it’s called
stress we literally have trouble
choosing these days but it’s stressful
for the sellers as well in a marketplace
where manipulation is the norm how do we
stand out how do we get hurt how do we
find people to follow us the alternative
is inspiration and there are only a few
people and a few organizations that tend
to rely vastly more an inspiration than
manipulation and I’ll talk about some of
the bigger ones like Apple computers or
Southwest Airlines or Martin Luther
King and you see it not only in
organizations but great leaders as well
like Martin Luther King or John F
Kennedy or Nelson Mandela and what I
learned is that regardless of their size
and regardless of their industry every
single one of these leaders every single
one of these organizations thinks acts
and communicates the exact same way and
it’s the complete opposite to everyone
else all I did was write it down and
it’s probably the world’s simplest idea
I call it the golden circle and it’s
three concentric circles or bull’s eye
in the middle is why the center ring is
how and the outside ring is what why how
what it’s this little idea that
distinguishes those with the capacity to
inspire versus everyone else let me
define the terms really quickly every
single organization on the planet knows
what they do these are the products you
sell the services you offer everyone
here knows what they do some know how
they do it whether you call it your
differentiating value proposition your
USP or proprietary process these are the
things that you think make you different
or special or stand out from the
competition from everyone else but very
very few people and very few very very
few organizations can clearly articulate
why they do what they do and by why I
don’t mean to make money that’s a result
by why I mean what’s your purpose what’s
your cause what’s your belief why does
your organization exist do we really
need another company to do what you’re
doing do we really need another one why
did you get out of bed this morning and
why should anyone care as a result the
way we think the way we act the way we
communicate is from the outside in it’s
obvious we go from the clearest thing to
the fuzziest thing we tell people what
we do we tell them how we’re different
or how we’re better or how we’re special
and we expect some sort of behavior a
vote a purchase support whatever it is
but not those leaders with the capacity
to inspire regardless of their size
regardless of their industry every
single one of them thinks acts and
communicates from the inside out let me
give you an example I use Apple
frequently just because they’re easy to
understand and we all get it if Apple
were like everyone else a piece of
communication would sound like this
we make great computers they’re
beautifully designed simple to use and
user friendly wanna buy one man that’s
normal
here’s our new car it’s got you know
great gas mileage leather seats tinted
windows here’s our law firm we went to
all the best schools we’ve got all the
best lawyers we went all of our cases we
work with all of the biggest firms this
is normal here’s how Apple actually
communicates they start with why
everything we do they say we believe in
challenging the status quo we believe in
thinking differently the way we
challenge the status quo is by making
our products beautifully designed simple
to use and user friendly we just happen
to make great computers one of AI one it
actually feels different all I did was
reverse the order of the information
when it starts to show us is that it’s
not what you do that matters it’s why
you do it and what you do simply serves
as the tangible proof of what you
believe people don’t buy what you do
they buy why you do it this is the
reason why every single person in this
room is perfectly comfortable with the
idea that Apple sells computers we’re
also perfectly comfortable with the idea
that Apple sells mp3 players and phones
and DVRs Apple is just a company that’s
all they are it’s a corporate structure
every single one of their competitors
has equal and open access to the same
resources the same agencies the same
consultants the same talent the same
media it is a zero-sum game the
difference is all of their competitors
have defined themselves by what they do
we make computers Apple has defined
themselves by why they exist to
challenge the status quo to give an
individual the opportunity to stand up
to Big Brother and choose a simple
alternative everything they say and
everything they do simply serves as
proof Dell makes perfectly good products
there every little bit qualified to make
every single product that Apple makes
and a few years ago they tried a few
years ago at Dell came out with mp3
players and PDAs
and nobody bought one
doesn’t make sense why would we buy an
mp3 player from a computer company but
we do it every day because it’s not what
you do that matters it’s why you do it
and people don’t buy what you do they
buy why you do it for this little idea
to work we have to have three things one
you have to know why you do what you do
if you don’t know why you do what you do
how will anyone else you have to have
clarity of why – you have to have
discipline of how you have to hold
yourself and your people accountable to
your own guiding principles and your own
values and thirdly you have to have
consistency of what everything you say
and everything you do has to prove what
you believe this is the concept behind
authenticity people are always telling
us you have to be authentic people
prefer to buy from the authentic brand
they prefer to vote for the authentic
candidate what does that mean how do you
implement authenticity if I send you
home to your to your work tomorrow and
say please the next thing you do I want
to make sure it’s more authentic what’s
the first thing you’re gonna do no clue
what authenticity means is the things
you say and the things you do you
actually believe this is caveman stuff
the reason the human race is so
successful is not because were the
strongest it’s not even because we’re
the smartest it’s because we’re social
animals it’s because we have the ability
to form communities and cultures
what’s a community what’s a culture it’s
a group of people with a common set of
values and beliefs
what’s a country it’s a group of people
with a common set of values and beliefs
what’s a company it should be a group of
people with a common set of values and
beliefs when we’re surrounded by people
who believe what we believe something
remarkable happens Trust emerges make no
mistake of it trust is a feeling Trust
is a human experience simply doing
everything you say you’re going to do
does not mean people will trust you it
just means you’re reliable and we all
have friends who are total screw-ups and
yet we still trust them
Trust is a feeling born out of a common
set of values and beliefs and our very
survival depends on our ability to find
those people so that we can form trust
when we trust them and they trust us
we’re more willing we’re more likely to
take risks to explore to
which requires failure by the way all
with the confidence that if we turn our
back or fall over and make a mistake
that someone from within our community
will come to our aid or watch our back
or help us up
absent trust we still have the will to
survive the difference is it’s every man
for himself
absent trusts you know we all try and
push each other out of the way because
we got a win we got a we got to compete
we got to live we got to survive this is
what happened at Lehman Brothers Lehman
Brothers was very very good at what they
did very very good at how they did it
but there was no sense of purpose or
cause or why then that bonded the
company together and at the slightest
shake the whole thing collapsed not in
months not in weeks in days that company
collapsed in days and that’s because
when stress started to show up all the
individuals said I’m out of here I’ve
got to look after numero uno got mouths
to feed got bills to pay they’re not the
first organization to go through hard
times they’re not the first organization
to suffer financial scandal the
difference is in great organizations in
great cultures and in great communities
when there is stress the organization
comes together to solve the problem
absent Trust we back off and the thing
collapses the most basic human desire on
the planet is to feel like we belong
again we are social animals and we all
have the innate ability to do this if I
ask you to go out in the street and find
all the people who believe what you
believe you know exactly what to do
you’re gonna strike up a conversation
with someone you either have good
chemistry with them or you won’t you
either get along with them quickly or
it’ll take some time the point is you
know how to do it our survival depends
on it it’s called dating it’s called
making friends it’s called networking we
know how to do it the problem is it’s
not scalable but if you know the symbols
to look for it becomes much easier if I
ask you to go out on the street and find
all the people wearing red hats it’s
easy there’s one there’s one there’s one
there’s one there’s one there’s one they
easy to spot because you know what to
look for this is what we do when we look
for certain symbols and certain we read
things about each other every single
decision we make in our lives as
individuals or as organizations is a
piece of communication
our way of saying something about who we
are and what we believe in an attempt to
track people so that they may form trust
with us and we may form trust with them
there are people who walk around with
harley-davidson logos on their body
right on tattoos this is a corporate
logo some of them don’t even own the
product but it has nothing to do with
the company it has to do with them
because Harley is so clear about what
they believe because they’re so
disciplined and how they do it and
they’re so consistent and what they do
it gets to the point that everything
they say and everything they do now
serves as a symbol of above the person
of who they are who they believe they
are and the reason we want to put those
symbols out is so that we may attract
people who believe what we believe you
can lie you could tell people with what
they what we think they want to hear and
they’ll still be attracted to you except
they’ll be attracted to the lie and then
when they realize that it’s not true
you’ll have a hard time forming trust
this is what Tiger Woods did to us he
lied to us he told us what he thought we
wanted to hear and we thought it was
great the difference is we found out it
was a lie and now he’s having a very
hard time in forming trust again if I
told you that some footballer cheated on
his wife and slept with a hundred women
would you care no it’s because we expect
it it’s because it’s authentic it’s
because it’s because it’s it’s it’s who
they are
but not with Tigers he chose to lie to
us it’s not actually the behavior that
were offended by it’s that it’s
inconsistent with what our expectations
are everything you say and everything
you do has to prove what you believe
like I said the most basic human desire
is to feel like we belong and it’s so
remarkably powerful how many of you are
from Paris most of you right yeah
oh good number of you okay are you
friends with everyone in Paris why not
why not but when you go to Leone and you
meet someone from Paris like hey hey I’m
from Paris and you’re best friends and
when you go to America and you’re on
holiday and you’re standing there in New
York and you’re riding the subway and
you happen to hear French being spoken
behind you and you turn around and you
say where you’re from they say Leon we
say we’re from Paris and you
best friends because when you’re in an
environment where you don’t feel like
you belong you seek out anyone who may
share the same values and beliefs as you
so that you can start to form trusting
relationships and the amazing thing is
those relationships are real those
relationships are real that other family
will say to you
have you eaten at this restaurant you’ve
got to go to this restaurant and you
will take your family to this restaurant
because complete strangers on the subway
told you to that’s insane
if that happened here if somebody done
the Metro just turned to you and told
you to go to some restaurant you’d go
like this the most basic human desire on
the planet is to feel like we belong and
we have the innate ability to fend to
find those things into sense that this
is the reason why this could not be
recreated over our computers it’s
because as human beings it’s our biology
that gives us this ability it’s this
ability to read each other you know the
blogosphere gets very upset at me when I
talk about this and how you know you
cannot replace these human experiences
in these human feelings over the
internet they get very mad at me and yet
every single year 20,000 bloggers
descend on Las Vegas to have a huge big
conference they call blog sphere blog
world my question is why couldn’t I do
it online it’s because you’ve nothing
can recreate that sense of of human
being of human coming together nothing
I’m telling you is my opinion it’s
actually grounded in the tenants of
biology if you look at a cross-section
of the human brain looking from the top
down you see that the human brain
evolved into three major areas that
corresponds precisely with this little
idea the outside area is our neocortex
our Homo Sapien brain responsible for
all of our rational and analytical
thought and language the middle two
sections make up our limbic brains and
our limbic brains are responsible for
all of our feelings like trust and
loyalty it’s also responsible for all
human behavior all decision-making and
it has no capacity for language this is
the reason you can’t ask people why do
you do business with us why do you like
why do you like us they can’t tell you
the part of the brain that controls
behavior doesn’t control language and so
they rationalize this is the reason why
the
why do you love your husband or why do
you love your wife is a difficult
question why do you love your wife I
don’t know that’s where most people
start and then they start saying things
they start rationalizing she’s fun she’s
she’s I’ve known her forever she’s
always there for me when I need her
it sounds like the household pet and
those aren’t necessarily the qualities
for marriage my sister says of my
brother-in-law my sister says of my
brother-in-law I never imagined I’d
marry a guy like him right what she’s
saying is before I got married I had a
list of all the attributes I wanted my
future husband and he’s got none of them
and yet I fell in love with him anyway
and want to spend the rest of my life
with him and raise a family with him and
is a human experience that we have
trouble putting into words and so we try
we rationalize and then we say things
that don’t make sense she completes me I
don’t know what that means what does
that means it means I have a left arm
and a left leg and I’m looking for
someone with a right arm and a right leg
and together we can make one I mean it’s
nonsense what we’re attempting to do is
put into words the feelings we have
towards another person or organization
with the part of the brain that doesn’t
control language and so we rationalize
or make things up we do the exact same
thing at work we talk about people who
get it and that guy no matter how much
data I show him no matter how how much
information I give them he just doesn’t
get it
what’s it what how do we find people who
get it before we do business with them
to realize they don’t get it what we’re
attempting to do is put into words the
feelings we have towards other people
this common set of values and beliefs
with the part of the brain that doesn’t
control language this sense of belonging
in the sense of community is so powerful
the example I love to give and it freaks
me out every time I talk about it what’s
our most valuable possession on the
planet come on what’s a most valuable
possession on the planet our children
very good
so let’s suppose you want to go out with
your wife or with your husband and you
need a babysitter
you have two options option number one
is a 16 year old from just down the
street with barely if any babysitting
experience option number two is a 32
year old from you don’t know from where
she just moved into the neighborhood and
she’s got ten years of babysitting
experience who do you choose the 16 year
old you choose the 16 year old you would
rather trust your most valuable
possession on the planet your children
with somebody from within your community
with no experience over somebody from
outside from you don’t know where with
vast amounts of experience then why do
we do it differently at work
why are we so preoccupied with someone’s
CV and where they’ve worked and how long
they’ve worked and how much money they
made for our competitors and yet we
never think to ask what they believe
what they value can we trust you can you
trust us leadership is the ability to
stand on the street corner with your own
red hat and simply talk about what you
believe go to Red Hat got a red hat got
a red hat here and all the other people
wearing red hats whether they know their
own Y or not whether they can see their
own red hat or not our eerily drawn to
you because what you’re able to do is
put into words the way they see
themselves what you’re able to do is put
into words the values and beliefs that
they hold dear and they’re drawn to you
because they feel that they can trust
you and I can start to form community
around you this is what leadership is
leadership puts our own desires and our
own values and our own beliefs into
words there’s an inextricable link
between leadership and communication
those who lead are the ones who can
clearly talk about what they believe and
those who can clearly talk about what
they believe are the ones who lead let’s
imagine that we’re out on a on a tour a
three-hour tour on a boat and we get
stranded on a desert island here we are
all stranded on the desert island the
question is how will we get off the
island well one of us stands up and says
I will lead we like that we’re social
animals we appreciate leadership and he
stands up and says okay who’s got ideas
you you think we should build a fire I
like it good you you think we should
look for food
good good you you think we should build
a boat good I like it okay let’s take a
vote
at the same time someone else stands up
and says as we were coming into the
beach I saw some masts over on the west
side of the island and I saw some smoke
which means there’s a fishing village
over there and if we can get to that
fishing village we can find help now
we’re gonna have to get through this
forest to get there and I don’t know how
to get through the forest I’m gonna need
some help
but if you want to help I’ll welcome it
and if you don’t want to help don’t
worry when we get help we’ll come back
and get you the question I have for you
is who do you want to follow who do you
want to follow we want to follow the
second guy there’s no data to show that
that fishing village exists there’s no
photographs and no one else saw it the
only thing we have is his conviction his
absolute belief in the existence of that
world that we cannot see and his ability
to put that future state into words that
were drawn to it and we will volunteer
to go with him maybe even take personal
risk I don’t know how to get to the
forest I don’t know how to cut down
trees but I will go because I believe
it’s important not for me but for the
greater group the irony is our own
survival depends on our ability to help
each other this is the irony and here we
go we rally together we choose to take
the risk we choose to follow we
volunteer to follow him and we go
through these woods and it’s hard and we
have to cross rivers and go around
boulders and chop down trees and
eventually we come to where he said the
fishing village is and there’s no
fishing village did he lie to us who we
just conned was this all a big joke is
this a all is this all for naught and we
say to him where is the fishing village
you said there was a fishing villages
you said if we could get here we would
survive and he turns to us and say I
believe there was a fishing village but
that doesn’t matter because look what we
were able to do we were able to get
through that forest together that means
that we can pick absolutely any
direction on this island and we will be
able to get there that’s called
leadership when people believe what you
believe they will work for you with
blood and sweat and tears when they
don’t believe what you believe they work
for your money the goal is not to
surround yourself with everybody who
needs what you have the goal is to
surround yourself
with people who believe what you believe
there are a million reasons why people
will do business with you that have
nothing to do with you
you happen to meet some checklist that
they have they happen to hate your
competition more there’s a difference
between repeat business and loyalty you
see repeat business means I’ll do
business with you over and over and over
again
loyalty means I’m willing to turn down a
better product at a better price to
continue to do business with you and
it’s the loyal ones those who feel like
they belong
those who doing business with you gives
them some sense of identity or belonging
those are the ones those are the ones
who do great and the reason is it
because it becomes personal it becomes
personal we use these symbols we use
these companies we use these leaders we
use these organizations as tangible ways
of saying something about who we are
this is why people with Macintosh
computers love opening their computers
in airports they love for us to see the
computer they’re using how many of you
love your Macintosh computer or know
someone who loves their Macintosh
computer ok rationally speaking based on
facts and figures data right factual
factually speaking
Mac’s are substandard computers they’re
at least 25% more expensive sometimes
double the price of their PC
counterparts there’s less software
there’s fewer peripherals and I know
because I switched to a Mac they’re
absolutely slower rationally speaking no
one should ever buy one but they do over
and over and over again and when they
decide they’re going to buy one they
don’t do any comparative competitive
comparisons they’re not comparing the
price and the date and the features from
one product to another they simply
decide that’s the one I want and they go
and choose it and if you ask somebody
who loves their Mac why do you love your
Mac they don’t tell you well you see I
see myself as somebody who likes to
challenge the status quo and so it’s
very important for me to surround myself
with all the people and the products and
the brands to prove to the outside world
Who I am because I’m using these things
as symbols to tell people about Who I am
in an attempt to attract people who
believe what I believe so that I can
start to form strong bonds of trust
because my own survival depends on it
biologically that’s what happened in the
part of the brain that controls behavior
but not language and so they rationalize
it’s the user interface it’s the
simplicity it’s the design and they say
things that don’t make sense I’m a
creative person whatever that means at
the end of the day what they’re doing is
they’re using this symbol to say
something about who they are which is
why people with Macs will never put big
stickers of their families over the tops
of their computers it’ll never happen
cover up that beautiful glowing Apple
never never and have you ever seen a
dirty Macintosh that’s because they
clean them how many of you broken out
the glass cleaner simply to clean your
HP it doesn’t happen never the people
with Macs will sit there and clean their
computers right because we have to keep
it clean we because it is a symbol of
Who I am
and when you tell them you know that you
bought a substandard computer they start
foaming at the mouth and they start
getting angry and they’ll probably call
you an idiot
and the reason they take it so
personally is because you didn’t insult
their computer you insulted them because
Apple is so clear about what they
believe
so discipline and how they do it and so
consistent in what they do that symbol
now serves as a representation of who I
believe I am and if I surround myself
with enough of these symbols that I’m
consistent enough you’ll know something
about me it’s the same thing as a flag
what’s a flag a flag is just a logo a
flag is just a symbol who cares about
the flag but we don’t we get angry when
we see people burning our flag why do we
get angry because you’re attacking me
I mean I’m attacking you I just burnt my
own property no we get angry because
it’s a symbol of our values and beliefs
and when you attack the flag it’s the
same as attacking me what do you think
the Mafia comes from you killed my
cousin now I have to kill your whole
family
you can do anything to me it’s because
we’re protective of those within our
community we’re protective of those who
believe what we believe so much so that
when you attack someone who believes
what I believe it’s as if you’re
attacking us says if you’re attacking me
and at the same time we will protect
each other this is what great
organizations are great organizations
are communities cultures common sets of
values and beliefs where we will go to
bat for each other and work for
each other and help each other even at
great personal sacrifice because
ironically my own survival depends on it
what we need more of today is not
talking just about the technology what
technology can do that’s all fine and
good but the question is why does that
technology exist in the first place why
do you have the technology what’s the
point of it why should I care how are
you helping me on a very very human
level innovation doesn’t come from
telling people to come up with a better
technology innovation comes from solving
problems that are deeply deeply personal
for me we hail Apple as this great
innovative organization the most
innovative organization in the world
blah blah blah where does it come from
Steve Jobs by the way do you know how
many of the ideas that Apple currently
sells how many Steve Jobs came up with
zero none of them he didn’t come up with
Apple Steve Wozniak came up with the
Apple he didn’t come up with iTunes or
the iPod or iPhone as all people within
his organization what Jobs was able to
do was put into words why they were
coming to work what he was able to put
into words was why the company exists he
gave people something to build this is
what they were looking for just as Neil
Armstrong talked about that yearning
give people some sort of yearning and
they will solve the problem this is what
entrepreneurship is entrepreneurship
isn’t starting a business
entrepreneurship is solving a problem 35
years ago when Apple before Apple even
existed Steve Jobs and Steve Wozniak
we’re standing in a garage in Cupertino
California and they made something that
they called the little blue box it
allowed people to avoid paying
long-distance rates on their phone bills
in a day and age when there was only one
long-distance phone company they were
challenging Ma Bell the existing status
quo phone monopoly and then they started
Apple and they challenged big blue IBM
the existing status quo monopoly
computer platform and then they
challenged Microsoft and then they
challenged the music industry and then
they challenged the phone industry now
their trouble it challenging publishing
and if you’re in television or movies
you’re next it is just a repeating
pattern it is other people in the
organization who came to work and looked
for things that restricted human
opportunity look for things
held the individual down and they gave
people they use the technology as a way
of people giving people to challenge
that giving them an option it’s
remarkable and it’s a repeating pattern
even if you look at all of their
advertising and all of their
communications for the past decades it’s
all exactly the same
that 1984 commercial that wonderful
Ridley Scott commercial that woman runs
into the Orwellian scene and throws the
hammer through the screen it’s one
individual challenging the status quo
and then you have hi I’m a Mac hi I’m a
PC an individual and you have one person
standing there listening to their iPod
it’s always an individual it’s always an
individual it’s always AI and Jobs is
constantly talking about the revolution
this and the revolution that it is a
cause think different is a belief it is
not a product differentiate err what
distinguishes one organization from
another it’s not simply what you do it’s
why you do it and if people believe what
you believe they’ll be drawn to you as
if you were their own the goal is not to
surround yourself with people who need
what you have the goal is to surround
yourself with people who believe what
you believe and the reason is because of
something called the law of diffusion of
innovations if you don’t know the law
you definitely know the terminology what
the law of diffusion tells us standard
deviation bell curve is that the first
two and a half percent of our population
are our innovators the next thirteen and
a half percent of our population are our
early adopters the next thirty four
percent are your early majority than
your late majority and the last 16
percent are your laggards the only
reason these people by touch-tone phones
is because you can’t buy rotary phones
anymore we all we all fit at various
times at various reasons across this
standard deviation what the law of
diffusion tells us is that this
population the innovator and the early
adopter population are very comfortable
trusting their guts they’re very
comfortable making intuitive decisions
remember that biology the part of the
brain that controls decision-making
doesn’t control language but it does
control feelings this is where gut
decisions come from there is no part of
your stomach that controls
decision-making and it’s not in your
blood and it’s not in your bones and
it’s not in your soul and you’re not
following your heart
you know let’s win hearts and minds it’s
winning minds and minds this is the
reason why we talk about decisions
feeling right we say just feels right
why would we use the verb to feel to
describe a decision it’s because the
part of the brain that controls feelings
controls decision-making that’s why it
just doesn’t control language and so we
ascribe it to different parts of the
body these people are very comfortable
trusting their guts and making those
intuitive decisions this population the
majority is more cynical more practical
they absolutely care about things like
price and quality and service and
features the problem is is that they
will not try something until someone
else has tried it first these are the
people we have to drop our price offer
value add and come up a little
promotions we have to reduce their risk
to try something unfamiliar these people
happily try new things that have never
been tried before simply to reflect
something what they believe the problem
is is that you cannot achieve
mass-market success or mass-market
acceptance for an idea until you achieve
between 15 and 18 percent market
penetration this is the tipping point
it’s a social phenomenon the problem is
is that it’s hard to get there and when
I talk about 15 to 18 percent I don’t
mean of the mass population I mean 15 to
18 percent of people who believe what
you believe it’s easy to get 10 percent
if you ignore everything I’m telling you
today I promise you you can get about 10
percent loyalty you have about 10
percent of your customers who love you
not like you like is rational love you
it’s emotional now you ask somebody do
you like your job I really like my job I
get paid well I like the people I work
with I like the challenge do you love
your job I wouldn’t go that far
like we know there’s a hierarchy like as
rational love is emotional right it’s
easy to get about 10 percent the law of
averages will say you have about 10
percent but it’s hard to get this
tipping point this is what Jeffrey Moore
in his book crossing the chasm talks
about this is the chasm so the question
is how do you get those people and this
is where leadership matters this is when
you talk about what you believe I’ll
give you two examples I’ll give you a
business example in a social example in
the United States we have a brand called
TiVo which is a brand of DVR TiVo
basically invented the category and
been around for about 11 or 12 years now
when you ask any company why did your
company fail or why did your product
fail they will usually give you some
combination of four reasons they’ll
either tell you that there was
undercapitalized didn’t have enough
money that’s very popular poorly
executed that’s common one you know we
didn’t have a good product with we had
bad people I had the wrong people or bad
market conditions that pretty much
explains absolutely every failure there
is TiVo had the recipe for success they
had everything that we consider what we
need for success when their product was
introduced about eleven years ago to
this current day it is the single
highest quality product on the market no
one will dispute that it’s incredibly
fantastic product so execution flawless
people they hire the best engineer as
money could buy market conditions the
unaided awareness of TiVo is through the
roof we use it like a verb by TiVo
things and they had venture capital up
the wazoo so money no problem money was
no problem TiVo is a commercial and
financial failure they’ve never made
money and when their company went public
the stock launched about 40 or 50
dollars and then very quickly plummeted
and except for a couple of little blips
has never traded above ten dollars and
the reason is because they took they
took this brilliant product this
brilliant piece of technology and they
attempted to tell the mass market what
the product does they attempted to
convince with facts and figures what the
product does they said to the mass
market we have a product that pauses
live TV skips commercials memorizes your
viewing habits and records on your
behalf without you even asking and the
cynical practical majority said I don’t
need it I don’t like it I don’t want it
you’re scaring me and they didn’t buy
one there are a few who did a few early
adopters who did but it didn’t make a
difference and the company has done very
poorly imagine if they ho told this
population why the product exists
imagine if they had said if you’re the
kind of person who wants to have total
control over every aspect of your life
boy do we have a product for you it
pauses live TV it skips commercials it
memorizes your viewing habits and we’re
cool
in your behalf without you even asking
in this instant what the product does
serves as the tangible reasons to
believe it they’re not the reasons you
use to convince somebody to choose you
of the competition in the first place
it’s not what you do that matters it’s
why you do it
and people don’t buy what you do they
buy why you do it I’ll give you my
favorite example it’s a social example
in the summer of 1963 250,000 people
showed up on the mall in Washington DC
to hear Martin Luther King give his
famous I have a dream speech there were
no invitation sent out and there was no
website to check the date how do you do
that how many emails did you get to be
here today and there’s only what a few
hundred people two hundred and fifty
thousand dr. King was not the only man
in that country who knew what had to
change to bring about civil rights over
there he wasn’t the only great orator he
wasn’t the only man who suffered in a
pre-civil Rights America in fact he
wasn’t even the perfect man he had his
complexities we just don’t talk about
those things the difference is he didn’t
go around telling people what we need to
do what we need to do what we need to do
he went around and told people I believe
I believe I believe and people who
believed what he believed took his cause
and made it their own and they told
people what they believed and those
people took that cause and made it their
own and they told people what they
believed and lo and behold on the right
day on the right time a quarter of a
million people showed up to hear him
speak how many of them showed up for him
zero they showed up for themselves it’s
what they believed about America it’s
the America that they wanted to live in
it was the country that they wanted to
raise their children and that inspired
them to get on a bus travel eight hours
and stand in the Sun in Washington in
August simply to hear him speak showing
up was one of the things that they did
to prove what they believed and by the
way he gave the I have a dream speech
not the I have a planned speech nobody
was inspired by any plan ever the goal
is not to talk about what you do the
goal is to talk about we can believe and
people who believe what you believe are
drawn to you as if you are their own
because you helped them put into words
the way they see themselves and the
things you say and the things you do
give them the ability to tell others
what they believe to make tangible
because those symbols and those products
and those services say something about
who they are and they will say with
pride I love working with that company
this is why we talk about in sales it’s
about relationships I love my guy we
always talk about when we have a good
relationship with a company because it’s
a human experience it’s a human
experience
make no mistake of it all of these
things were talking about like trust and
loyalty are human experiences technology
and the Internet are wonderful things to
speed up transactions there are
wonderful things to connect people to
spread information absolutely but it’s
very very difficult to form strong human
bonds through the internet just like we
talked about with blog world the
Internet can live alongside and
technology can live alongside the human
experience but it cannot replace the
human experience your friends are not on
you know and your your network isn’t on
LinkedIn and you’re not having any
conversations on a blog you know having
a dialogue on Twitter
those aren’t human experiences if you
compare the way we actually have
conversations where we interrupt each
other we advance ideas versus the way
people communicate online is sort of my
idea my idea my idea hey that’s a good
idea Steve that agrees with my idea my
idea my idea
hey you’re an idiot my idea my idea and
if you ask any retailer on the planet
who’s ever come out with a blog for
their customers to give feedback the
number of innovations that have come out
of the feedback from those blogs the
answer is zero none because people just
use it to complain and moan and there’s
no vulnerability and there’s no risk in
doing things online which is the reason
we put ourselves out there like that
risk requires this vulnerability
requires this and when you feel that
someone’s willing to tell you something
genuinely about who they are you can
start to form strong bonds of trust
there’s something called a Paris social
relationship a real relationship is when
we know a lot about each other we start
to learn about each other a parasocial
relationship is one person knows more
about the other person than they know
about you and you start to form a strong
bond except it’s one-sided this is what
happens with Fame with celebrities we
know all about them but they don’t know
even that we exist and we know about
their lives we know about their social
lives we know who they’re dating we know
about their careers and we follow them
as if they’re our friends and we call
them on that we’re on
first-name basis with them right we call
them by their first names as if we know
them it’s a Paris social relationship
where we feel that we know them but they
don’t know us the problem is all those
feelings associated are absolutely real
they feel absolutely real the
opportunity for innovation is not to
just tell people in the outside world
you know do this do that the
opportunities to bring people together
so the feeling is mutual so we work
together to advance a problem so we work
together to get to that fishing village
because our own survival depends on it
if people don’t feel that you’re in it
as well with them if they don’t believe
that you believe it they believe then
there’s not gonna be any strong human
bond the opportunity is to articulate
your vision of the future that does not
yet exist yet what is your vision
what is your fishing village and are you
putting it towards so clearly that other
people can understand it as clearly as
you can and they can tell others about
it and they want to go there and they
will risk blood and sweat and tears to
help you get there not that you would
prefer themselves and they will watch
your back and help you explore just like
that 16 year old that you hired to
babysit your children because they get
you they understand you they know that
you’re the same they know you believe
what you believe this is the goal human
relationships real trust real loyalty
that is not born out of products and
services but born out of beliefs and
values there are leaders and there are
those who lead leaders hold a position
of power or influence but those who lead
inspire us and whether they’re
individuals or organizations we follow
those who lead not because we have to
but because we want to we follow those
who lead not for them but for ourselves
this is for those who want to find
someone to inspire them this is for
those who want to inspire those around
them thank you very much
thank you very much we’ve left some time
for questions so you have any questions
you think Y has to be more at some point
already done this is CG and my single
question is gonna be where you haven’t
talked a lot about how yeah this is more
important than what’s in your background
yeah so can you sure so the questions in
the reverse order
how is about process and structure it’s
how we do things and in the business
world today you know this is tactics and
this is strategy you know or we set a
goal and we figure out the strategy to
get there and if we miss the goal we
either change the goal we change the
strategy and then that’s business right
but in reality what makes the great
organizations go is that they understand
this fishing village this place far from
the future this vision of the future why
did this purpose or cause and the
structures and the processes that they
build how they’re gonna do that what
they’re gonna do you know in terms of
actions is all driven by that not by the
goals right the goals of the Waypoint
and so I have a sort of a very different
read on on waypoints I don’t believe by
the way that any one of these pieces is
more or less important than each other
they’re all equally important the
difference is lots of people talk about
process and lots of people talk about
product right we don’t even have a word
for this
like I said strategy tactics we don’t
even have a word for this the point is
that every organization on the planet
functions on all three levels but most
of us are only even aware of two of them
and so the reason I talk primarily about
this one is because that’s the missing
piece and you need to have all three for
the system to be in balance but they’re
all how is not more important than what
what did Thomas Eddins Edison say vision
without execution is hallucination right
you can have all the vision in the world
but if you don’t execute who cares right
it’s like that fishing village example
you know somebody could have stood up in
with the same vision of that village and
just walked away no ability to
communicate it then there’s no value you
know he’s a visionary he’s not a leader
you know and there are plenty of people
who are great communicators you know but
no vision so they’re great communicators
but they’re not leaders they give a
great speech about how we need to work
together but then we don’t know how to
get off the island so
don’t think that it’s more important but
there are lots of people who talk about
these things and much more about these
things than I do so it’s all three
pieces and in terms of your first
question does the why evolve and the
answer is no you only have one why each
individual only has one why and your why
is born from from your upbringing you
know we are products of our childhood
you know who we are who we are which is
the sum total of all these three things
my beliefs my values and what I do to
the outside world who we are comes from
our teachers our parents and experiences
we had when we were young our wise are
fully formed probably by the time we’re
you know 18 or 19 and it never changes
the rest of our lives our opportunities
to either live in balance or not to
either feel fulfilled by the work that
we do or not and we sometimes make right
decisions and with companies it’s the
same which is the why of a company is
born at the founding of that company you
know at the founding that the company is
one of the things that an entrepreneur
has done to bring to life something they
believe the great companies usually
solved a real human problem the
companies that really struggle to
survive are the ones who are just
looking for some market opportunity and
they pour money into it because they
can’t rally people to commit to anything
they can’t rally people to sacrifice the
best they can do is offer them a big
bonus and that doesn’t really appeal to
everyone there’s a great story from the
space program it was November of 1963
but sorry November of 1969 and it was
Apollo 12 so Apollo 11 had already
landed on the moon in July and this was
the second lunar mission and so
obviously the press was all there and
everybody was excited and it was all
wonderful and a journalist was walking
through NASA and she finds somebody
wearing a NASA badge and she says can I
talk to you he said absolutely and she
starts asking him questions and he knew
everything about the Saturn 5 program
and he was excited and it was amazing
and and he talked about how they’re
putting a man on the moon and we’re
gonna do it again and and he knew
everything and after about half an hour
45 minutes she said so what specifically
do you do for NASA and he said oh I’m
the janitor the point is is when the
when the cause is clear everyone inside
the organization is equally emotionally
committed to it
and most of us we talk about superior
technology the only people who think
that’s cool are the engineers what about
if your receptionist isn’t as
emotionally involved in it then you
don’t have a clear why the CEO and the
receptionist and everyone in between
need to be committed to this they all
have different jobs they all have
different responsibilities you know the
CEOs job is not to control it the CEOs
job is to keep talking about the fishing
village and remind people why they come
to work then they have the the CEO or
the CFO who’s the operator the one who
figures out how we’re gonna bring that
vision to life we do ourselves a great
disservice in business by making one
line of leadership we say CEO is number
one and CFO or CEO is number two and all
these guys think that they’re in line
for this job right it’s not true it’s
one and a it’s parallel and this job is
about very very far in the future and
this job is about now how we’re gonna
build that you know these how types can
do very well in the world but they’ll
never change the world and they’ll never
build billion-euro businesses these guys
they can change the world or build
billion-euro businesses if only they
knew how all right and you see you see
always in great organizations any any
any social organization that ever
achieved anything big there’s always a
partnership between the why and the how
you know Steve Jobs and Steve Wozniak
Bill Gates Paul Allen and it was Bill
Gates who had the vision to put a PC on
every desk but it was Paul Allen who
built the company Walt Disney Roy Disney
Walt Disney was the one who talked about
good clean family fun but it was Roy
Disney who built the fed built the
company he came up with Buena Vista he
came up with a licensing and it goes on
and on and on and you see these these
kinds of partnerships everywhere what’s
amazing is when you look at the history
of the partnership Steve Jobs and Steve
Wozniak grew up together in height in
high school in California Bill Gates and
Paul Allen grew up together in Seattle
and dropped out of Harvard together Roy
Disney and Walt Disney were brothers
JFK RFK you they just go on and on and
on and what you see is that these great
partnerships they’re always either
childhood friends or family that doesn’t
mean you have to go into business with
childhood friends or family but it means
the quality of the relationship and the
trust and the fact that you share common
values and beliefs is much higher if you
grew up the same way
so we are all products of our upbringing
including a company a company comes from
its founders you know Richard Branson
has over 300 companies every single one
of those companies is his why we when
you see the word virgin
we know virgin Cola Virgin Trains virgin
weddings we know what to expect and it’s
a reflection of his own personality
because what his company is is one of
the things that he’s done in his own
life to say something about who he is
go listen to Bill Gates’s TED talk when
he talks about the Bill and Melinda
Gates Foundation he talked about he’s an
optimist he talks about productivity and
human potential and if you replace the
word mosquito nets with a PC it’s the
exact speech he gave in the 1970s what
he’s doing his difference
why is doing it as exactly the same a
company is born of the companies why is
born at the beginning whether it stays
clear or not is a different story
but it comes from the founding of the
organization and it never never changes
it can collapse and have to be rebuilt
at it collapses but it never changes
it’s silent you describe a lot of your
company to the why and you identify them
with one founder on one guy yeah other’s
company survives the founders do I’m is
great to the white workers oh that’s a
very good question you know the biggest
challenge that any organization has is
its own success right when a company is
founded it exists on some sort of metric
you know euros or money or any kind of
other metric or yen or dollars or
whatever or time right
well organizations exist on these two
planes and when they’re founded what
they do and why they do it are
inextricably linked and that’s because
the company is small and you know the
visionary founder or founders you know
they they have this crazy an idea and
they take a huge amount of risk and
passion alone is what drives them
because the likelihood of failure is
very high and they’re crazy and they’re
mad and they inspire their friends to
come join them which is also crazy and
everybody gets it because we all kind of
hang out together and you know and it
goes the big challenge is its own
success when it starts selling more and
doing very well and what they’re doing
starts to go like this and you have to
hire somebody who hires somebody who
hire somebody who hires someone who has
to make a decision based
what based on what and then the Y starts
to go like this we were just talking
about it before we were talking about
Dunbar’s number you know we know that
that humans can manage successfully a
hundred and fifty relationships and
beyond that it’s very difficult and even
online they found that Dunbar’s number
is clean where people still can only
manage 150 relationships online so it
raises the philosophical question does
this start to happen at 150 I don’t know
but this but this is called the split
and symptoms of a split is when you
start to become more obsessed with what
your competition is doing versus what
you are doing small companies don’t
obsess about their competition they
can’t afford to and the more successful
company does they literally become
obsessed with the competitors every
single morning everyone at Microsoft is
worrying what Apple is doing every
single morning everyone at Apple doesn’t
care what Microsoft is doing it’s true
they don’t you know how much market
research Apple does before they come out
with a product zero because they don’t
care because what they’re doing is
they’re taking their vision of the world
their beliefs about the world and
they’re bringing it to life and the
products they believe reflect that and
those who are drawn to those products
are drawn or drawn to them viscerally
and the whole concept of asking our
customers what they want that whole
process is inauthentic you know it’s
either what you believe so when you
start becoming more obsessed with the
competition when you start asking others
more about who you should be when the
old-timers the people who’ve been there
a while start saying yeah it’s not like
it used to be I mean I know we’re making
more money than we used to and I know
we’re growing faster than ever but ya
know I don’t know it’s just not the same
you know the young ones don’t get no no
no they can’t put it into words but it
feels different these are simply
symptoms of the Split stress goes up
passion goes down symptoms of the split
and so if you look at there’s a lot of
organizations where that have gone
through the split you know Steve Jobs
was thrown out of his own company in
1985 the company went like this and the
Steve Jobs came back and Mike Dell left
Dell and Mike Devils forced to come back
and Howard Schultz les Starbucks and
Howard Schultz was forced to come back
and it’s not that these guys are God’s
gift to management it’s that as they’re
the founders simply being there reminds
people why they come to work the the
whether they’re able to put it into
words or not as a different problem and
so the greatest challenge that most
companies have in succession is
not finding somebody to manage the
company which is its to lead the people
you know you can’t lead nobody leads a
company you lead people you manage a
company a company is nothing more than a
structure and the funny thing is when
companies start to have financial
problems they hire somebody to fix this
but it’s this that went fuzzy and so the
opportunity for succession is is not to
hire the brilliant engineer but to hire
somebody who doesn’t want to reinvent
the Y but simply take the torch that was
already lit and say now I will carry it
into the next generation it’s not lost
on me that the average lifespan of a
company on the Fortune 1000 list is
about 40 years and it’s not lost on me
that 80% of the DAO index are companies
that are 35 years or younger in other
words it’s about the lifespan of a
career you know about 40 years it’s not
lost on me that that companies do go
through the split and things start to
break up in other words very very few
companies have have gotten succession
down and the reason is because they take
these visionary CEOs and they replace
themselves with the CEO or the CFO they
take a visionary and replace it with a
structure builder and they always do
that even even at Apple they’re talking
about it you know they talk about Tim
Cook taking over and that makes me
nervous and jobs will say ah but he’s
been around forever and he knows the
business as well as I do and I rely on
him and it’s true because of that
partnership the problem is the guy is
not a visionary in the way he thinks he
sees the world and so yes he understands
the company but he can only think steps
ahead not leaps ahead and as soon as I
hear a CFO or CEO if they were good at
their job is taking over the company it
it’s going through a split I can promise
interestingly out just a quick aside
about Steve Jobs you know what why is
that this one guy is so special you know
he can’t really be the most amazing
leader in the world like Dell is a
pretty remarkable guy and you know Gates
is a pretty remarkable guy and they’re
all visionaries and they all built
remarkable organizations they all change
the way we live our lives every one of
those guys so what is it about this one
man Steve Jobs that he seems to continue
to do it where the others have lost it
Steve Jobs has won
thing that none of the others have he’s
dying
serious he’s dying think about the
people who take the big risks in the
world young people take big risks
because they’re oblivious of the risks
ahead right this is why entrepreneurs
you know have that youthful spirit or
they tend to be young and if you want to
get advice you always ask an old man
because old man’s no men don’t care
right so they’ll tell you exactly what
they think and so there’s this thing
that comes with youth or age where
you’re oblivious or you’re at peace with
your own mortality it’s this piece in
the middle where we worry about what our
friends will think what the magazine’s
will think what the press will think
what our colleagues will think what our
employers will think what I think this
is an insecurity I got to provide for my
family Steve Jobs doesn’t have that
because he’s dying and so he still acts
like a little boy or an old man ask you
know what is what what will Wall Street
think he doesn’t care what Wall Street
things just like somebody young or
somebody old doesn’t care what Wall
Street thinks so that’s I believe my my
theory one of the reasons that Steve
Jobs is such a remarkable executive is
not because he’s a genius it’s because
he’s dying seriously I mean we’re always
told what would you do if you would die
tomorrow right and when when we have
earth-shattering events like I went I
lived through September 11th I watched
those buildings fall down and it changes
you for a short time and then we go back
to the way things were and we come to
terms of their mortality and realize we
only have one life to live and why am I
doing this
I should just risk it all and have fun
and I should take three months off and
go on a holiday because we’ll imagine
having that every day it’s like why do
we get so much done the week before we
go on holiday because there’s a deadline a deadline I never thought about that
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