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

Manipulation and Inspiration Are Similar, but Not the Same

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

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

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

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

Doing Business Is Like Dating

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

"I am extremely rich."

"I have a big house and I drive a beautiful car."

"I know lots of famous people."

"I'm on TV all the time, which is good because I'm good-looking."

"I've actually done pretty well for myself."

The question is, does Brad get a second date?

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

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

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

"You know what I love about my life?" he starts this time. "I get to wake up every day to do something I love. I get to inspire people to do the things that inspire them. It's the most wonderful thing in the world. In fact, the best part is trying to figure out all the different ways I can do that. It really is amazing. And believe it or not, I've actually been able to make a lot of money from it. I bought a big house and a nice car. I get to meet lots of famous people and I get to be on TV all the time, which is fun, because I'm good-looking. I'm very lucky that I'm doing something that I love, I've actually been able to do pretty well because of it."

This time the chances Brad will get a second date, a.s.suming that whoever is sitting across from him believes what he believes, went up exponentially. More importantly, he's also laying a good foundation for a relationship, one based on values and beliefs. He said all the same things as on the first date; the only difference is he started with WHY, and all the WHATs, all the tangible benefits, served as proof of that WHY.

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

"Our company is extremely successful."

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

"We do business with all the biggest companies and brands."

"I'm sure you've seen our advertising."

"We're actually doing pretty well."

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

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

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

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

Now, how certain are you that the second pitch was better than the first?

Three Degrees of Certainty

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

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

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

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

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

PART 3.

LEADERS NEED A FOLLOWING.

6.

THE EMERGENCE OF TRUST.

To say that most of the company's employees were embarra.s.sed to work there was an understatement. It was no secret that the employees felt mistreated. And if a company mistreats their people, just watch how the employees treat their customers. Mud rolls down a hill, and if you're the one standing at the bottom, you get hit with the full brunt. In a company, that's usually the customer. Throughout the 1980s, this was life at Continental Airlines-the worst airline in the industry.

"I could see Continental's biggest problem the second I walked in the door in February of 1994," Gordon Bethune wrote in From Worst to First, the chief executive's firsthand account of Continental's turnaround. "It was a crummy place to work." Employees were "surly to customers, surly to each other, and ashamed of their company. And you can't have a good product without people who like coming to work. It just can't be done," he recounts.

Herb Kelleher, the head of Southwest for twenty years, was considered a heretic for positing the notion that it is a company's responsibility to look after the employees first. Happy employees ensure happy customers, he said. And happy customers ensure happy shareholders-in that order. Fortunately, Bethune shared this heretical belief.

Some would argue that the reason Continental's culture was so poisonous was that the company was struggling. They would tell you that it's hard for executives to focus on anything other than survival when a company is facing hard times. "Once we get profitable again," the logic went, "then we will take a look at everything else." And without a doubt, throughout the 1980s and early 1990s, Continental struggled. The company filed for Chapter 11 bankruptcy protection twice in eight years-once in 1983 and again in 1991-and managed to go through ten CEOs in a decade. In 1994, the year Bethune took over as the newest CEO, the company had lost $600 million and ranked last in every measurable performance category.

But all that didn't last long once Bethune arrived. The very next year Continental made $250 million and was soon ranked as one of the best companies to work for in America. And while Bethune made significant changes to improve the operations, the greatest gains were in a performance category that is nearly impossible to measure: trust.

Trust does not emerge simply because a seller makes a rational case why the customer should buy a product or service, or because an executive promises change. Trust is not a checklist. Fulfilling all your responsibilities does not create trust. Trust is a feeling, not a rational experience. We trust some people and companies even when things go wrong, and we don't trust others even though everything might have gone exactly as it should have. A completed checklist does not guarantee trust. Trust begins to emerge when we have a sense that another person or organization is driven by things other than their own self-gain.

With trust comes a sense of value-real value, not just value equated with money. Value, by definition, is the transference of trust. You can't convince someone you have value, just as you can't convince someone to trust you. You have to earn trust by communicating and demonstrating that you share the same values and beliefs. You have to talk about your WHY and prove it with WHAT you do. Again, a WHY is just a belief, HOWs are the actions we take to realize that belief, and WHATs are the results of those actions. When all three are in balance, trust is built and value is perceived. This is what Bethune was able to do.

There are many talented executives with the ability to manage operations, but great leadership is not based solely on great operational ability. Leading is not the same as being the leader. Being the leader means you hold the highest rank, either by earning it, good fortune or navigating internal politics. Leading, however, means that others willingly follow you-not because they have to, not because they are paid to, but because they want to. Frank Lorenzo, CEO before Bethune, may have been the leader of Continental, but Gordon Bethune knew how to lead the company. Those who lead are able to do so because those who follow trust that the decisions made at the top have the best interest of the group at heart. In turn, those who trust work hard because they feel like they are working for something bigger than themselves.

Prior to Bethune's arrival, the twentieth floor of the company's headquarters, the executive floor, was off-limits to most people. The executive suites were locked. Only those with a rank of senior vice president or higher were permitted to visit. Key cards were required to get onto the floor, security cameras were ubiquitous and armed guards roamed the floor to eliminate any doubt that the security was no joke. Clearly, the company suffered from trust issues. One story handed down was that Frank Lorenzo would not even drink a soda on a Continental plane if he didn't open the can himself. He didn't trust anyone, so it is no great leap of logic that no one trusted him. It's hard to lead when those whom you are supposed to be leading are not inclined to follow.

Bethune was very different. He understood that beyond the structure and systems a company is nothing more than a collection of people. "You don't lie to your own doctor," he says, "and you can't lie to your own employees." Bethune set out to change the culture by giving everyone something they could believe in. And what, specifically, did he give them to believe in that could turn the worst airline in the industry into the best airline in the industry with all the same people and all the same equipment?

In college I had a roommate named Howard Jeruchimowitz. Now an attorney in Chicago, Howard learned from an early age about a very simple human desire. Growing up in the suburbs of New York City, he played outfield on the worst team in the Little League. They lost nearly every game they played-and not by small margins either; they were regularly annihilated. Their coach was a good man and wanted to instill a positive att.i.tude in the young athletes. After one of their more embarra.s.sing losses, the coach pulled the team together and reminded them, "It doesn't matter who wins or loses, what matters is how you play the game." It was at this point that young Howard raised his hand and asked, "Then why do we keep score?"

Howard understood from a very young age the very human desire to win. No one likes to lose, and most healthy people live their life to win. The only variation is the score we use. For some it's money, for others it's fame or awards. For some it's power, love, a family or spiritual fulfillment. The metric is relative, but the desire is the same. A billionaire doesn't need to work. Money becomes a way to keep score-a relative account of how things are going. Even a billionaire who loses millions due to poor decisions can get depressed. Although the money may have zero impact on his lifestyle, no one likes to lose.

The drive to win is not, per se, a bad thing. Problems arise, however, when the metric becomes the only measure of success, when what you achieve is no longer tied to WHY you set out to achieve it in the first place.

Bethune set out to prove to everyone at Continental that if they wanted to win, they could win. And most of the employees stuck around to find out if he was right. There were a few exceptions. One executive who once held up a plane because he was running late was asked to leave, as were thirty-nine more of the top sixty executives who didn't believe. No matter how experienced they were or what they brought to the table, they were asked to leave if they weren't team players and weren't able to adapt to the new culture that Bethune was trying to build. There was no room for those who didn't believe in the new Continental.

Bethune knew that building a team to go out and win meant more than giving a few rah-rah speeches and bonuses for the top bra.s.s if they hit certain revenue targets. He knew that if he wanted to build a real, lasting success, people had to win not for him, not for the shareholders and not even for the customer. For the success to last the employees of Continental had to want to win for themselves.

Everything he talked about was in terms of how it benefited the employees. Instead of telling them to keep the planes clean for customers, he pointed out something more obvious. Every day they came to work on a plane. The pa.s.sengers left after their flight, but many of the flight attendants had to stay on for at least one more trip. It's just nicer to come to work when the environment is cleaner.

Bethune also got rid of all the security on the twentieth floor. He inst.i.tuted an open-door policy and made himself incredibly accessible. It was common for him to show up and sling bags with some of the baggage handlers at the airport. From now on, this was a family and everyone had to work together.

Bethune focused on the things they knew to be important, and to an airline the most important thing is to get the planes running on time. In the early 1990s, before Bethune arrived, Continental had the lowest on-time rating of the nation's ten largest airlines. So Bethune told employees that each month Continental's on-time percentage ranked in the top five, every employee would receive a check for $65. When you consider that Continental had 40,000 employees in 1995, every on-time month cost the airline a whopping $2.5 million, But Bethune knew he was getting a deal: being chronically late was costing it $5 million a month in expenses like missed connections and putting pa.s.sengers up overnight. But most important to Bethune was what the bonus program did for the company culture: it got tens of thousands of employees, including managers, all pointed in the same direction for the first time in years.

Gone were the days when only the bra.s.s would enjoy the benefits of success. Everyone got their $65 when the airline did well and no one got it when the airline missed its targets. Bethune even insisted that a separate check be sent out. It wasn't just added to their salary check. This was different. This was a symbol of winning. And on every check a message reminded them WHY they came to work: "Thank you for helping make Continental one of the best."

"We measured things the employees could truly control," Bethune said. "We made the stakes something the employees would win or lose on together, not separately."

Everything they did made people feel like they were in it together. And they were.

The Only Difference Between You and a Caveman Is the Car You Drive

The reason the human race has been so successful is not because we're the strongest animals-far from it. Size and might alone do not guarantee success. We've succeeded as a species because of our ability to form cultures. Cultures are groups of people who come together around a common set of values and beliefs. When we share values and beliefs with others, we form trust. Trust of others allows us to rely on others to help protect our children and ensure our personal survival. The ability to leave the den to hunt or explore with confidence that the community will protect your family and your stuff until you return is one of the most important factors in the survival of an individual and the advancement of our species.

That we trust people with common values and beliefs is not, in itself, a profound a.s.sertion. There is a reason we're not friends with everyone we meet. We're friends with people who see the world the way we see it, who share our views and our belief set. No matter how good a match someone looks on paper, that doesn't guarantee a friendship. You can think of it on a macro scale also. The world is filled with different cultures. Being American is not better than being French. They are just different cultures-not better or worse, just different. American culture strongly values ideals of entrepreneurship, independence and self-reliance. We call our WHY-the American Dream. French culture strongly values ideals of unified ident.i.ty, group reliance and joie de vivre. (Notice that we use the French word to describe the joy-of-life lifestyle. Coincidence? Perhaps.) Some people are good fits in French culture and some people are good fits in American culture. It is not a matter of better or worse, they are just different.

Most people who are born and raised in one culture will, for obvious reasons, end up being a reasonably good fit in that culture, but not always. There are people who grew up in France who never quite felt like they belonged; they were misfits in their own culture. So they moved, maybe to America. Drawn to the feelings they had for America's WHY, they followed the American Dream and emigrated.

It is always said that America is fueled in large part by immigrants. But it is completely false that all immigrants make productive members of a society. It's not true that all immigrants have an entrepreneurial spirit-just the ones that are viscerally drawn to America. That's what a WHY does. When it is clearly understood, it attracts people who believe the same thing. And a.s.suming they are good fits for what Americans believe and how they do things, those immigrants will say of America, "I love it here," or "I love this country." This visceral reaction has less to do with America and more to do with them. It's how they feel about their own opportunity and their own ability to thrive in a culture in which they feel like they belong versus the one they came from.

And within the big WHY that is America, it breaks down even further. Some people are better fits in New York and some are better fits in Minneapolis. One culture is not better or worse than the other, they are just different. Many people dream of moving to New York, for example, attracted to the glamour or the perception of opportunity. They arrive with aspirations of making it big, but they fail to consider whether they will fit into the culture before they make their move. Some make it. But so many don't. Over and over, I've seen people come to New York with big hopes and dreams, but either couldn't find the job they wanted or they found it but couldn't take the pressure. They are not dumb or bad or poor workers. They were just bad fits. They either stay in New York and exert more effort than they need to, hating their jobs and their lives, or they move. If they move to a city in which they are better fits-Chicago or San Francisco or somewhere else-they often end up much happier and more successful. New York is not rationally better than other cities, it's just not right for everyone. Like all cities, it's only right for those who are good fits.

The same can be said for any place that has a strong culture or recognizable personality. We do better in cultures in which we are good fits. We do better in places that reflect our own values and beliefs. Just as the goal is not to do business with anyone who simply wants what you have, but to do business with people who believe what you believe, so too is it beneficial to live and work in a place where you will naturally thrive because your values and beliefs align with the values and beliefs of that culture.

Now consider what a company is. A company is a culture. A group of people brought together around a common set of values and beliefs. It's not products or services that bind a company together. It's not size and might that make a company strong, it's the culture-the strong sense of beliefs and values that everyone, from the CEO to the receptionist, all share. So the logic follows, the goal is not to hire people who simply have a skill set you need, the goal is to hire people who believe what you believe.

Finding the People Who Believe What You Believe

Early in the twentieth century, the English adventurer Ernest Shackleton set out to explore the Antarctic. Roald Amundsen, a Norwegian, had only just become the first explorer ever to reach the South Pole, leaving one remaining conquest: the crossing of the continent via the southernmost tip of the earth.

The land part of the expedition would start at the frigid Weddell Sea, below South America, and travel 1,700 miles across the pole to the Ross Sea, below New Zealand. The cost, Shackleton estimated at the time, would be about $250,000. "The crossing of the south polar continent will be the biggest polar journey ever attempted," Shackleton told a reporter for the New York Times on December 29, 1913. "The unknown fields in the world which are still unconquered are narrowing down, but there still remains this great work."

On December 5, 1914, Shackleton and a crew of twenty-seven men set out for the Weddell Sea on the Endurance, a 350-ton ship that had been constructed with funds from private donors, the British government and the Royal Geographical Society. By then, World War I was raging in Europe, and money was growing more scarce. Donations from English schoolchildren paid for the dog teams.

But the crew of the Endurance would never reach the continent of Antarctica.

Just a few days out of South Georgia Island in the southern Atlantic, the ship encountered mile after mile of pack ice, and was soon trapped as winter moved in early and with fury. Ice closed in around the ship "like an almond in a piece of toffee," a crew member wrote. Shackleton and his crew were stranded in the Antarctic for ten months as the Endurance drifted slowly north, until the pressure of the ice floes finally crushed the ship. On November 21, 1915, the crew watched as she sank in the frigid waters of the Weddell Sea.

Stranded on the ice, the crew of the Endurance boarded their three lifeboats and landed on tiny Elephant Island. There Shackleton left behind all but five of his men and embarked on a hazardous journey across 800 miles of rough seas to find help. Which, eventually, they did.