One Sentence Summary:
Narrative read on learning to apply judgment, no matter how irrational, and identifying purpose behind any action.
Below are notes I've taken while reading the book. This is not a comprehensive summary but thoughts and ideas I've found valuable. I recommend reading these notes after you've read the book first to compare our thoughts. I can't stop you if you don't want to so I guess you can use the below as an idea of what you may get out of the book yourself if you read it... though if it ain't clear it's cause you didn't listen to me.
Food for Thought
First flight was on December 17, 1903. It has only been 100 years since people have been able to freely explore the world.
Apple has been able to challenge the computer industry, small electronics industry, music industry, mobile phone industry and the entertainment world in general. It has evolved from a computer desktop company to a luxury brand company that is focused on cellphones. That in itself is a highly unusual feat that is seldom appreciated.
"In nearly every circumstance, the companies that are forced to treat their products as commodities brought it upon themselves."
Most companies don't know why their customers are their customers. Consequently they don't know why employees would choose them. With both the case, the won't know how to attract and retain customers and employees.
Loyalty and repeat business are different things. One needs to be won, the other can be manipulated
"Only companies that act like commodities are the ones who wake up every day with the challenge of how to differentiate. Companies and organizations with a clear sense of WHY never worry about it." Plays on the adage of "what do you do better or cheaper than the competition?"
"If people made only rational decisions, and did all the research before making a purchase, no one would ever buy a Mac." -> It's not that Apple has "best-quality/product/feature/service/price". The loyalty comes from the deeply personal place of what Apple is for them. It's always about what the customers feels personally, not about Apple. People then just rationalize the purchase reason with the Neocortex. No data can discuss this. It's qualitative. - pg. 63
"Differentiation happens in WHY and HOW you do it." -> Delta and United tried copying Southwest's model but they failed because all they copied was the HOW. The What turned out to be very different results.
The company may have a clear WHY. But the customer will choose the company for how he interprets the WHY to his own life. NOT because he interprets the Why the same way the CEO does.
"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." -> Should always have a win-win relationship. It also means, it's okay to fire bad-fit clients because they will only give short-term gain for long-term pain. pg. 80
Being customer focused is good. But focus on service to your loyal customers and fire those who shouldn't be your customers. Southwest Airlines is customer focused but they focus on employees first, then customers.
"Employees come first and if employees are treated right, they treat the outside world right, the outside world uses the company's product again, and that makes the shareholders happy. That really is the way that it works and it's not a conundrum at all." - Herb Kelleher, CEO of Southwest Airlines
Decentralization works as an organization grows because you start letting people implement their own "why" and "how". This is imperative for an organization to succeed because it not only develops new leaders but continues to build trust internally. Decentralization is the way to create one team, centralization is just one person.
You can't just copy what top companies just "do" as part of their processes. You have to let it grow organically focusing on the core of the business and what the business is trying to achieve. Just copying the How and What is hollow and unsustainable. Need purpose. So don't blindly follow. Think first as to why what others do may work for you.
Sam Walton didn't invent the low cost model. What he did well was investing in his people, trusting them and he was rewarded in return.
Jim Senegal drew a salary of $430,000 at Costco and Sal Walton drew no more than $350,000 per year. Leaders set the tone of the company. Costco also paid 40% above average wage compared to competitors and that led to 5x lower turnover than competitors.
Leaders inspire people to act by giving them a sense of belonging + purpose.
"It is not the systems that fail but the ability to maintain them."
Golden Circle framework is Why, then How, then What. Most go opposite. But start with Why. Why you get out of bed, Why you are doing the what, and Why people should even care. Starting with Why is how you communicate from the inside to out. The What is the tangible proof (fact/data) of the Why (the belief). People buy the Why, not the What.
Humans love to belong. Koreans in Korea don't all love each other but when they leave Korea and go to a foreign country they gather up and form a community and everyone becomes friends automatically. It's natural.
Limbic bran is the reptilian part that makes emotional decisions. It is then rationalized by the Neocortex which is the language processing area. Limbic makes the decision and Neocortex explains why with facts/data/rationalization.
"When you force people to make decisions with only the rational part of their brain, they almost invariably end up "overthinking." These rational decisions tend to take longer to make, says Richard Restak, and can often be of lower quality. ~ gut decisions, tend to be faster, higher-quality decisions." - pg 57
"If we were all rational, there would be no small businesses, there would be no exploration, there would be very little innovation and there would be no great leaders to inspire all those things." -> The idea of leaving home, leaving safety, taking risks, are all considered irrational by society. It's all gut that makes people do it and that is driven by the limbic brain with a rationalizing neocortex. pg. 62
The WHY builds the brand as a symbol. No one notices the number of Dell PCs open in a cafe. But they are notice the glowing apples.
"Trust is a feeling, not a rational experience." -> You can't pre-meditatively calculate for it. It builds because you earned it.
People don't follow an influencer for the influencer's passion and beliefs. They do it because the influencer resonates with their own passion and beliefs in their own interpreted way.
Illogical actions and beliefs of the status quo are not based on stupidity but rather ignorance of the alternative. Providing new information and perspectives may be the important solution to letting people slowly make the shift until the majority adopts a new status quo due to the proverbial weakness of FOMO.
Staying cognizant of your Why will keep you from making short-term decisions that give immediate pleasure but are not in-line with your Why, which is long term in nature.
Trust is not rational
"Great leaders are those who trust their gut. They are those who understand the art before the science. They win hearts before minds. They are the ones who start with WHY." -pg. 60
"I can make a decision with 30% of the information," said former secretary of state Colin Powell. "Anything more than 80% is too much." -> There is always a degree of certainty required with decision making but it's never absolute. It is more so the case that making decisions based on facts but are against our gut make end to poor outcomes.
Achievement is the milestone you hit, like a goal. Success is a state of being where you wake up pursuing Why you do What you do. Success comes about from designing the right system and you need achievement as feedback for whether the system is working.
"When you compete against everyone else, no one wants to help you. But when you compete against yourself, everyone wants to help you."
"Leadership requires two things: a vision of the world that does not yet exist and the ability to communicate it."
"For values or guiding principles to be truly effective they have to be verbs. It's not "integrity," it's "always do the right thing." -> Build systems and adhere to them with discipline to make the WHY work. These will require short-term costs and investments for long-term gain.
"Only way people will know what you believe is the things you say and do." -> Why is internal. The How is the process. The What is the result from both.
Continental airline's Gordon Bethune focused on setting a goal that was measurable and controllable by the employees. One of them was the on-time rate of planes. This cost approx. $5MM if the planes were late and when he got everyone focused on improving this, he would also reward all employees with a separate cheque for the benefit the company received from improving the on-time rate. I found having a separate tangible cheque as being quite significant.
When hiring, hire those that believe in the same WHY. Even the job ad should say WHY and not WHAT.
"As Herb Kelleher, founder of Southwest Airlines, famously said, "You don't hire for skills, you hire for attitude. You can always teach skills."" -> Southwest focused on understanding why people were such good fits and developing a system to find more of them.
I believe organization hierarchy should be project dependent with leaders/managers selected from within by the project participants. The salaries and pay should be based on the amount of value they add to the company, not what they did prior to.
"I didn't find a way to make a light bulb, I found a thousand ways how not to make one." - Thomas Edison
"Remove the net and he will only do the safe tricks, the ones he knows he can land." -> In reference to a trapeze artist practicing tricks. It's true. I will only try setting a new PR in training if I know I have a spotter there who can bail me out if I were to fail. But having a safety net makes a huge psychological difference in taking risks. This is especially the case in situations where you not attempting it won't result in any negative outcome to others and yourself. In cases where the inaction results in an adverse outcome, then the fear of failing in taking the risk can be a motivator
"Only when individuals can trust the culture or organization will they take personal risks in order to advance that culture or organization as a whole." -> FYI, take care of your people first!
"What's the difference between Sir Richard Branson's personality and Virgin's personality? Nothing. As a company grows, the CEO's job is to personify the WHY."
Honore Construction requires strict clock in and clock out time. Like Basecamp, a constrained working model focuses on employee effectiveness and wasted time has hence dropped to a minimum.
Leadership changes should be viewed as a succession and not replacement of the old leader. Successions should come organically from within by someone who already embraces the Why.