Lecture Notes: The Golden Circle and the Power of Why

Introduction

• Key Question: Why do some organizations and leaders inspire more than others?
• Examples: Apple’s innovation, Martin Luther King’s leadership in the civil rights movement, Wright brothers’ success in powered flight.

The Golden Circle

• Three Components: Why, How, What.
  • What: Every organization knows what they do (products/services).
  • How: Some know how they do it (unique selling propositions).
  • Why: Very few know why they do what they do (purpose, cause, belief).
• Direction of Communication: Most communicate from the outside in (What → How → Why), inspired leaders communicate from the inside out (Why → How → What).

i## Examples

• Apple’s Communication: Inside Out
  • Typical Marketing: “We make great computers. They’re beautifully designed. Want to buy one?”
  • Apple’s Marketing: “Everything we do, we believe in challenging the status quo. We make beautifully designed, simple-to-use products. Want to buy one?”
• Result: People buy why you do it, not what you do. Apple users are comfortable buying various Apple products.

Biological Basis

• Human Brain and Golden Circle: Correlation
  • Neocortex: Rational, analytical thought (What).
  • Limbic Brain: Emotions, behavior, decision-making (Why).
  • Communication Impact: Outside-in communication does not drive behavior; inside-out targets the decision-making part of the brain.
• Gut Feelings: Decisions often arise from the limbic brain, lacking language capacity: “It doesn’t feel right.”

Importance of Why

• In Business and Leadership:
  • Goal is not to do business with everyone who needs what you have but those who believe what you believe.
  • Hire people who believe what you believe, not just who need a job.

Case Studies

• Wright Brothers vs. Samuel Pierpont Langley:
  • Wright Brothers: Driven by a cause, motivated team, achieved flight first, no fame chased.
  • Langley: Financially backed, well-connected, motivated by fame, gave up after Wright brothers’ success.

Law of Diffusion of Innovation

• Proportions: Innovators (2.5%), Early Adopters (13.5%), Early Majority (34%), Late Majority, Laggards.
• Tipping Point: Mass-market success occurs between 15-18% market penetration.
• Examples:
  • TiVo: Failed commercially due to lack of inspiring why-message, despite a superior product.
  • Dr. King’s Speech: 250,000 people attended for what they believed in, not just for King.

Conclusion

• Leadership vs. Leaders:
  • Leaders hold power or authority.
  • Those who lead inspire others.
• Inspiration: Starts with ‘Why’ – inspires and aligns people for a cause.

Summary

• Main Message: People don’t buy what you do; they buy why you do it. Successful leaders and organizations communicate, act, and think from the inside out.

Key Takeaway: Always start with ‘Why’ to inspire and connect deeply with others.