The Golden Circle is a powerful tool that helps you run inspirational companies or become a great leader. But The Golden Circle only works if all three elements--the WHY, HOW, and WHAT--are in balance and used in the right order.
Let’s start by talking more about three key principles of the Golden Circle.
Starting with WHY means that leaders need to be able to clearly articulate why they do what they do.
Without a WHY, you have to resort to manipulations to get people to engage with your products or services, which only leads to short-term results.
Leaders who start with WHY get people to follow them willingly instead.
Discipline kicks in during the HOW phase. (Remember that HOW applies to the values, principles, and operational structures that help you achieve your WHY.)
HOW you work lets you make decisions that support your WHY, like hiring the right people, creating purposeful policies, and finding partners that support your vision.
But in order to do that, you have to have discipline. You need to hold every team member accountable to the principles and never veer from your direction. Counter-intuitively, discovering the WHY is relatively easy - it’s living it, day in and day out, with discipline, that’s the hard part.
Many companies espouse their values in the form of nouns - “Honesty. Customer Service. Innovation.” But effective discipline comes from articulating your values as verbs. Instead of “Integrity,” say “Do the right thing.” Instead of “Innovation,” say “Ask how everyone else is wrong.”
These verbs help people understand how they should act, which in turn, helps them make better decisions in pursuit of the WHY.
If a WHY is a belief and a HOW is an action, the WHAT is the product. It’s what you produce and everything you say and do, including your marketing and hiring practices.
To maintain the public’s belief in your WHY, your WHAT needs needs to be consistent with how you live the WHY. All of your actions--from the products you put on the market to the way you treat your employees--should support your WHY. That level of consistency proves to outsiders looking in that you actually believe in your WHY.
If you betray your WHY and are inconsistent in how you follow your principles, people won’t know what you stand for. If you say your company questions the status quo as a WHY, but you put out me-too products indistinguishable from the rest of the market, you sound inauthentic.
Authenticity is also important when it comes to sales because it helps people believe in what they’re selling. By being authentic and honest (and appealing to the limbic brain), you can build customer relationships that are based on trust, not manipulation. Consistency and the authenticity that comes from it create long-lasting relationships and long-term success.
Authenticity In Action: Apple Versus Dell
Apple believed--and continues to believe--that its products like the Mac, iPod, and iTunes challenge the status quo. As a result, people understand WHY Apple does what it does, which is what makes their products authentic.
To compete with Apple, Dell released its own MP3 players and PDAs. But Dell doesn’t communicate its WHY, which means that consumers have no idea why Dell made those products other than to compete with Apple. This translates to a lack of authenticity, which makes entering a new market segment more expensive and harder.
The takeaways from this example are 1) that authenticity comes from having a clear WHY that you believe in, 2) authenticity is important to consumers, and 3) cultivating authenticity is important to sustained success.
Once you have clarity in WHY, discipline in WHAT, and consistency in HOW, it’s time to make sure you deploy them in the right order.
Remember: great leaders and organizations work The Golden Circle from the inside out, not from the outside in. That means you have to start with WHY, which provides the framework for the HOW and the WHAT.
By keeping each step in order, you inspire people by connecting with who they are on a much deeper level.
This creates reciprocity. Because you start with WHY, your product (or WHAT) becomes a representation of your beliefs. Customers that share your beliefs will be drawn to your products, which in turn serve as an outward representation of their own WHY, too. Starting with WHY turns people who might say “I think this is the right decision,” into those who say “I know this is the right decision.”
And when you’re able to create a situation where people are able to verbalize their rationale for making a gut decision. This is powerful, and it’s also an example of balance in action.
As a thought experiment, consider Tom, a man going on a date. When he sits down, he starts with his WHAT: “I’m a really successful person. I own a BMW and my best friends are all CEOs or models. I’m rich and I can buy you lots of nice things.”
Obviously, Tom sounds obnoxious, the kind of person who wouldn’t get a second date. Surprisingly, companies communicate exactly like this: “Our product has the best features. Our customers are the biggest companies in the world. We’re making a lot of money, and you should buy our product too.”
Now think about Tom starting with WHY: “What gets me out of bed every morning is making an impact on people by solving their problems. It’s the best feeling in the world. I’m also super lucky to get career success doing what I love. I’ve gotten to know lots of interesting people and I’m fortunate to be able to buy nice things.”
Instantly, by starting with WHY, then putting the WHAT after, Tom becomes less obnoxious.
Likewise, companies should message the same way: “We come to work everyday to solve our customers’ problems. This is the best feeling in the world. And this is good for business. We’re very successful, and we have the world’s biggest companies as our customers. Our company has never been doing better.”
Southwest Airlines was founded by Herb Kelleher and Rollin King in 1967 in order to make low-cost air travel available to everyone. At the time, only 15 percent of Americans traveled by air because it was so expensive.
Here’s how they used The Golden Circle in order:
The WHY, HOW, and WHAT all came together in a balanced mix, which led to amazing customer loyalty.
People heard Southwest’s message loud and clear, saw that the company supported their WHY in every aspect of the business, which created authenticity and trust. It came through in their tagline: “you are now free to move about the country.”
That’s the reason competitor airlines like Ted and Song--which were created by United Airlines and Delta to compete with Southwest--ultimately failed within four years of launching. While it was clear their WHAT was to provide cheap flights, they lacked a WHY. It felt inauthentic - these were just old airlines trying to grab a share of the market. As a result, they became commodities competing on price, rather than inspiring loyal customers.
Embracing the three principles of The Golden Circle--and keeping them balanced--has had a hugely positive impact on Southwest Airlines’ business. Now, people choose to fly Southwest for more than just their low fares. They choose Southwest because it’s a company that inspires them. Southwest’s WHY is clear, which means even when their routes and prices aren’t the best, people still choose to fly them over the competition.