Re:Focus

Upset The Apple Cart

One Saturday morning, a Saturday like all other Saturdays, two boys were sent out by their respective fathers to sell apples at the market.  And, like all other Saturdays, both fathers gave their boys the same instruction, "I want you to go to the market today, my son, and sell as many apples as you can. The apples you sell today," they explained, "will provide for the family for the whole week." And, like all other Saturdays, the boys looked up to their fathers and replied, "I will not let you down, papa."

Both boys stood on the same street, the same street they both stood on like all other Saturdays, and sold their apples.  Both offered the ripest, juiciest apples at the same price. And, like all other Saturdays, both boys sold about a third of the apples on their carts, just enough money to provide for their respective families for the week.

But this Saturday would not be like all other Saturdays. On this Saturday, one boy looked over to the other and said, "every Saturday we come to market to sell our apples.  And, like all other Saturdays, we both sell about a third of our ripe, juicy apples. I think we should try something different today - lets take our carts to a different street."

The other boy looked over and replied, "I promised my father I would not let him down and if I take my cart across the cobble stones in search of a better street that we may or may not find, apples will surely fall off my cart.  I don't want to risk losing any of my apples.  I'm going to stay here."

He was right, there was a risk that apples would fall off the cart - apples which could not then be sold. The first boy thought for a moment.  He looked at his cart, then he looked at the cobbled street, then he looked to the other boy and said, "I'm going."  And unlike all other Saturdays, off he went in search of a different street.

That evening, the two boys were reunited on the walk home.  The boy who stayed put for fear of losing some of his apples looked over to his friend and said, "I had a good day today, like all other Saturdays, I sold about a third of my apples, enough to provide for my family until next week."

The other boy reported on his day, "I spent some time looking for a busier street. My cart bounced around on the cobble stones and a few of my apples fell off the cart. But I did find a busier street and then sold all the rest of my apples and made enough money to provide for my family for three weeks. Next Saturday, "he went on, "will not be like all other Saturdays.  Next Saturday I'm going to risk losing some apples again."

How are you building your business? Are you willing to upset the apple cart?

Don't Strive To Be A Leading Company, Strive to Lead

Dell is a leading company but Apple leads.  American Airlines is a leading company but Southwest Airlines leads. Kroger's is a leading company with over 2,400 supermarkets, but with only 270 stores both in the US and UK combined, Whole Foods leads.

There is a difference between being a leading company and being a company that leads.  A leading company may have the biggest market share or have the most revenues, but they don't lead the industry.  A company that leads sets the tone for all others to follow.  Though leading companies may be bigger, companies that lead are more innovative, more profitable and command greater loyalty.  

Companies that lead always know WHY.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Slippery Numbers

There are two types of claims: those based on hard numbers and those based on slippery numbers. 

Hard numbers are facts that, when evaluated, lead to a logical conclusion...and a hard claim.  For example, the US Constitution is 222 years old and, as such, is the oldest written constitution still in use today.  Slippery numbers, in contrast, are used to support a claim that someone wants to make, regardless of the hard numbers. For example, George W. Bush was one of the most popular presidents in US history (when compared to presidents with under a 40% approval rating).  The claim is technically true...when based on slippery numbers. But the measurement is clearly manipulated to help make the claim.

Sadly, hard numbers and hard claims are often reserved for scientists and text books.  Slippery numbers, however, run rampant in politics and marketing. Here's a real ad that Continental Airlines is currently running as an example.  The headline says - "The newest jet fleet.  Not just a new paint job." The problem is, their claim is based on slippery numbers.  The fine print right beneath the headline says, "Continental Airlines flies the newest jet fleet among global airlines based in the US." (click here to see ad full size). 

They only compare themselves to US based global airlines.  In other words, they only compare the age of their fleet to American Airlines, Delta and United - the only other US based global airlines.  Their claim of "newest" is factually correct...when based on slippery numbers.  If you consider the hard numbers and the claim they are attempting to make, you'd have to compare them to all airlines flying in the US. The problem is, the truth would not be the version of truth that they like.

As consumers we have to look out for any company that claims to be the best, youngest, fastest, smartest or any other absolute.  Odds are, to be the absolute at something, they are using slippery numbers to make their claim. Slice the numbers a different way, and some other company can make virtually the exact same claim.

As companies, we need to be honest with ourselves about what's more important to us - manipulating numbers simply to appear to have an advantage that we don't really have. Or to be honest about the things we believe and the way we conduct business.  As the old Buddhist saying goes, "how you do anything is how you do everything." Any company willing to trick their consumers in advertising is probably willing to include hidden fees in their price, offer benefits that aren't really there and promise guarantees or protections that are hard to claim when you feel you deserve them.

By the way, Spirit Airlines has the youngest Airbus fleet in the Americas and AirTran flies the youngest all-Boeing fleet...and I write the most popular blog on the internet*

*comparison made to less popular blogs.

If You Want To Attract The Best Talent, Give Them A Cause To Champion

Wanted: Talented executive to rebuild the economy for the next 100 years.

Since the decline in our economy, a remarkable opportunity has arisen – to redefine how banking works in this country if not the world for decades to come. If you have ideas about  the ways a large US-based financial institution needs to change the way it operates to avoid another meltdown and sustain growth and lead the world into a new era, then we’d like to hear from you.  The pay is competitive and very handsome bonuses are available if sustainable success is achieved.  

Do you have what it takes?    

What kind of person do you think the above ad would attract?

Recently five executives at the AIG insurance company announced they would resign if the government restricted their pay to $500,000 per year.  Bank of America is complaining that unless they can pay whatever they want, they will not get the talent they need to right the company.

And that’s where they are completely wrong.

If money is the primary lure to get someone to join a company, then it will attract those candidates who are attracted to money as the primary incentive to show up and not for the real reason the company needs them - to change the way they do business.  Offer someone the opportunity to rebuild a company or reinvent an industry as the primary incentive and it will attract those drawn to the challenge first and the money second.  And which would you rather have running the company?  

More importantly, after an economic downturn caused in large part to a money-first mentality, who do you think we should hand the keys to now? The executive driven by the cause or the one driven by the money?

We're all so offended by how much bankers pay themselves that we've lost sight of the real issue. Money, even obscene amounts of it, is not the problem. But it should be the reward for building strong, long-term sustainable organizations and not given as the primary motivation for showing up or simply making the quarter or even the year. That's the strategy that drove Lehman Brothers into the ground and caused the mess in the first place.

There is nothing wrong with compensating someone handsomely for the work they do and the results they achieve, but not in a vacuum.  Money is a short-term result that incentivizes short-term decision making.  A cause is something that lasts and is the foundation of sustainability. 

As we’ve all had to suffer in the economic downturn, it falls to us to speak out louder and demand that the banks hire executives inspired to be a part of something bigger than themselves over those who demand something bigger  before they feel inspired.  If we don’t, start saving your pennies for the next collapse in 10 years time.  

As the would-be CEO of Bank of America, I'm pleased to hear the deal fell apart over a debate over compensation.  Though I'm disappointed to hear the executives at AIG won their argument – I hoped they would quit and find better paying jobs at less influential companies in less important industries.  That way we'd all get what we want. 

Back To Basics

There was a time when there was a GAP store on every block.  They were to retail clothing what Starbucks is to coffee.  Everyone had at least one GAP item in their closet – a plain white t-shirt or a pair of khakis.  And that was the problem.  GAP’s biggest challenge was its own success. The GAP thought that, because of their success, they no longer had to serve fashion – they could dictate it.  They stopped offering basic cuts and started selling low cut mini-skirts and candy colored shirts with puffy sleeves, for example. People would buy them, they thought, because the GAP was selling them. But their growth strategy (and their hubris) cost them. And cost them big.

They used to have 1,800 stores 7 years ago, these days they've got 1,084 - that's 40% fewer stores. And their stock price hasn't lifted above half of what it used to (it's hovered around $20 for the past 7 years when it used to trade at nearly $50).  Realizing that they had overextended the value of their brand, their CEO revealed their new, new strategy – “back to basics.”  Sadly, the GAP was not the first to go back to basics and they won’t be the last.

 Whenever a company starts to think they think they can do no wrong they start to overextend themselves. A fact they only discover when their grand plans for world domination either lose money or flat out fail. And when the inevitable collapse happens, they always invoke the same new strategy to right the ship:

"We’re going back-to-basics," they say.  And they’d be right.

 Back-to-basics is shorthand for a company’s strategic return to their cultural roots.  GAP was founded in 1969 by Don Fisher with the purpose of, as he put it, "a simple idea: to make it easier to find a pair of jeans." It was only when they forgot why they were founded and started pursuing random market opportunities that things started to go awry.  Market opportunities that, on paper or when delivered by consultants, I’m sure seemed like viable options.  Until, that is, you take a step back and realize that the company, its brand and its culture don't belong in those businesses.  It doesn’t make sense for GAP to be dictating new fashion trends...they are supposed to be the fashion staples in our closet.

 If basics is where so many company’s end up returning after they eat a big piece of humble pie, then why do they leave the basics in the first place?

The answer is surprisingly, well, basic.  They simply forget.  With great success, companies often forget why they were founded in the first place.  The best way to stick with the basics (thus avoiding ever having to return to them), is to talk about why the company was founded.  Constantly.  Write it on the walls.  Put it in your tag line. Tell the stories and pass on the folklore of when the company was founded.  Anything to keep the story alive, the message clear and in the forefront of everyone’s mind.

Takashimaya, the Japanese luxury department store, has a motto that sums it up best.  Though the company was founded in 1831 as a kimono shop, the live by the credo, “Never changing, always new.”  A perfect expression to always remember where you came from.  Though their products and their stores have remained new and modern, their Why, their founding purpose or cause, has never veered.  

If you never want to find yourself in a position in which you’re forced to implement a “back-to-basics” strategy, make sure you and everyone in your organization always know what the basics are…then remind them again everyday.   It's that basic.

Learn why the basics matter so much, read a free chapter from Simon's new book Start With Why

Read Now - http://bit.ly/L26zk

Twitter - @simonsinek

What The U.S. Special Forces Know That You Should Also

Somewhere a True Believer is training to kill you.  He is training with minimum food or water, in austere conditions.  He doesn’t worry about what workout to do – his rucksack weighs what it weighs and he runs until the enemy stops chasing him.  The True Believer doesn’t care “how hard it is”; he knows he either wins or he dies.  He doesn’t go home at 1700; he is home. He knows only the cause.

  Now, who wants to quit?   

These are  the words that hang on a nondescript door, in a nondescript hallway, in a nondescript building on a military base somewhere in the United States.  There is a small plaque next to the door with a room number embossed and the word: SOCom – military speak for Special Operations Command.   What the leadership of SOCom understands so well is that belief is more powerful than resources. Devotion is more potent than technology. And “the cause” is what inspires people to take extraordinary risks or suffer awful conditions for no other reason than to advance the cause.  

Business is no different. 

Apple, Southwest, Disney, Harley-Davidson, Container Store and the handful of other companies that seem to have mystical powers and unbalanced success all have something in common.  They are defined by their cause, not their products or technology. More importantly, they only want to hire “True Believers,” those who believe what they believe.  And for good reason. People who believe what you believe will work for you with blood and sweat and tears.  People who don’t believe what you believe work for your money. Customers who believe what you believe will pay you a premium, suffer inconvenience and give you a lifetime of loyalty.  Customers who don’t believe what you believe will demand that you offer them a cheaper price and even if you do, they’ll still never be satisfied.

A company of True Believers will always frustrate the competition, regardless of how well resourced the competition is.  Apple frustrates Microsoft.  Lexus frustrates GM. Google frustrates pretty much everyone.  And Obama’s grassroots $5 and $10 fund raising frustrated both the Clinton and McCain campaigns.

Being flush with resources does not guarantee success.  In fact, it seems the better resourced an organization is, the more its people seem to stop caring about the cause.  They become more concerned with how many hours they’ve worked, the size of their offices and the benefits they will get.  The huge advantage companies with a cause have over even much bigger competitors is that everyone who comes to work is there for the same reason - to be a part of something bigger than themselves. They have no resources.  They have no expense accounts.  They play the hand they are dealt and they will fight on for no other reason than because they believe. 

People who go to work to be a part of the cause don’t go home.  They are home.

Now - who wants to quit?

Are You A Product Or A Shelf?

Almost every business in existence is either a product or a shelf, an idea or a platform for ideas – they either have a thing or service to sell you or they are a place to buy things. Wal-Mart has shelves and Proctor and Gamble has products for those shelves. It is a beautiful and symbiotic relationship because all products need shelves and all shelves need products.

 

As a business model, the shelf is easier to scale because products have, please excuse the pun, a shorter shelf-life.  Things go stale, technology advances, new systems and processes are developed.  The products and services we buy are constantly being swapped out for something newer.  Better.  Faster.  Cheaper.  Whatever…

 

As a company you must decide if you want to be a product or a shelf.  It’s very hard to be great at both.  You can’t aim to have the best product and the best website to sell it on also, for example. How would you know where to allocate resourses?

 

Amazon is a shelf and they spend all their time and money making their shelf easy to use.  Their shelf even offers us new products they think we might like.  Starbucks is a shelf too.  It’s not about the coffee or the food or the logoed mugs they have for sale.  Starbucks is place to go to.  The minute they start trying to differentiate based on how good their coffee tastes they will stop focusing on their store experience.  Remember, it’s hard to truly excel at both.  Companies like Lavazza make much better coffee than Starbucks – but they don’t have a shelf – they rely on others to help them sell their product.

 

I’m a product.  I offer ideas.  The only ways I can share my ideas to more people is by looking for more shelves for my ideas.  I write a blog - typepad is the shelf I chose for that.  I wrote a book – it’s available on real and virtual shelves. I speak at companies and conferences who offer themselves as a shelf for me talk for an hour or two.  I teach - Columbia University is my academic shelf. I know as a product , the only way I can succeed is by finding more and more shelves.  But I’m not just interested in any shelf.  I only want to stand on shelves that help me spread my cause – to inspire people to do the things that inspire them.

 

But likewise, all the typepads, book stores, conferences, universities and other shelves need to stock the products that help them advance their causes also. Wal-Mart wouldn’t work if they sold $1,000 couture dresses.  If their products don’t serve to promote their own Why, then the perception of the value of their shelf goes down.  And that’s the perfect symbiotic relationship between the two models.

 

To be the best at whatever you do, first you have to decide which you want to be – a product or a shelf.  Then the focus has to be on being the best shelf or product you can be.