The Importance of Why
“How do you explain when others are able to achieve things that seem to defy all of the assumptions?”
Simon Sinek starts his Ted talk with this question. He’s explaining the importance of starting with Why. How companies who clearly communicate their purpose and vision to employees and customers are inevitably successful. He calls his theory the Golden Circle – a set of concentric rings starting with Why and moving out to How and What.
You can watch the 18-minute talk or skip to the quick version here.
Sinek’s Golden Circle encompasses three sections:
What – is the product or service an organization sells
How – is the unique selling propositions of a product or service
Why – is the purpose, cause or belief, the very reason an organization exists
Take Apple for example. It reported record revenue of U.S.$74.6 billion and a 48% increase in earnings per share in December of 2014. Apple is the most profitable technology company in the U.S. – Its revenue is almost double its closest competitor, Microsoft.
How? Apple starts with Why. Look at their famous 1984 commercial, their Think Different campaign. Apple believes in challenging the status quo. The how (beautiful design) and what (personal devices) are secondary.
This is important because employees and customers relate to a brand, not because of it’s what, but because of it’s why. Anybody can buy a computer, but owning a Mac makes a statement about a person’s values and beliefs.
Whole Foods Market, America’s healthiest grocery store is a phenomenon in grocery shopping. The health food chain started with a single store in 1980s Austin Texas. Today the company generates U.S.$4.7 billion at more than 400 stores in North America. But performance started sliding in 2013. Whole Foods became associated with the tag line “whole paycheck” and competitors like Walmart and Kroger introduced cheaper organic options. Shares plunged 18% in May 2014, when Whole Foods admitted sales were slipping.
Then Whole Foods launched their “Value Matters” campaign. The title is self explanatory – a series of 22 videos showcase the fair trade, organic farming and distribution practices of the Whole Foods network. The grocer is shouting their why loud and clear. And performance is on the rise – revenue is 10% up year over year and share prices are nearing an all time high before the drop.
Let’s take a look at the car sharing industry. Uber stormed the scene in 2009 and is now valued at U.S. $41.2 Billion. Uber’s founders Travis Kalanick and Garrett Camp created the company to provide customers with their very own private driver. The duo wanted to ride around in style and thought customers would enjoy the same sense of glamour. Uber has raised U.S. $5.9 billion in funding, owns 46% of the transportation market in the U.S, employs as many as 5,000 drivers and is shaking up transportation regulations. Customers love Uber. But despite their meteoric rise, Uber has problems. They’ve been accused of price gouging, of sabotaging the competition and unethical PR stunts. When you speak to drivers, they’ll tell you: Uber’s in it for the money. They care less about the driver and more about disrupting the private car service industry.
Logan Green, Lyft’s CEO has a different mission. He grew up in LA, grew up sitting in traffic. He’s passionate about solving a greater social and environmental issue – how to decrease the number of cars on the road. He believes if less people drive (and if you listen to pundits they’ll tell you Millenials aren’t interested in owning a car), and share rides, there will be less gridlock, less pollution and a decrease in traffic accident fatalities. Lyft is a far second to Uber’s market dominance (U.S. $862.5 million in funding, $2.5 billion valuation), but their vision is grander. They demonstrate this by taking a smaller cut of the drivers fare and allowing riders to tip extra when they complete their ride. When you talk to drivers – especially the ones who use both– it’s clear that Lyft is their favorite.
There’s no telling who will win this battle. It’s possible that self-driving cars will put them both out of business, but in the meantime, Uber and Lyft are winning customers with two very different messages.