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How do you explain when
things don't go as we assume?

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Or better, how do you explain

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when others are able to achieve things
that seem to defy all of the assumptions?

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For example: Why is Apple so innovative?

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Year after year, after year, they're more
innovative than all their competition.

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And yet, they're just a computer company.

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They're just like everyone else.

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They have the same access to the
same talent, the same agencies,

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the same consultants, the same media.

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Then why is it that they seem
to have something different?

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Why is it that Martin Luther King
led the Civil Rights Movement?

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He wasn't the only man who suffered
in pre-civil rights America,

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and he certainly wasn't
the only great orator of the day.

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Why him? And why is it
that the Wright brothers

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were able to figure out
controlled, powered man flight

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when there were certainly other teams who
were better qualified, better funded --

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and they didn't achieve
powered man flight,

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and the Wright brothers beat them to it.

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There's something else at play here.

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About three and a half years
ago, I made a discovery.

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And this discovery profoundly changed
my view on how I thought the world worked,

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and it even profoundly changed
the way in which I operate in it.

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As it turns out, there's a pattern.

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As it turns out, all the great inspiring
leaders and organizations in the world,

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whether it's Apple or Martin
Luther King or the Wright brothers,

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they all think,
act and communicate the exact same way.

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And it's the complete
opposite to everyone else.

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All I did was codify it, and it's
probably the world's simplest idea.

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I call it the golden circle.

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Why? How? What? This little idea explains

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why some organizations and some leaders
are able to inspire where others aren't.

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Let me define the terms really quickly.

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Every single person, every
single organization on the planet

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knows what they do, 100 percent.

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Some know how they do it, whether you call
it your differentiated value proposition

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or your proprietary process or your USP.

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But very, very few people or organizations
know why they do what they do.

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And by "why" I don't
mean "to make a profit."

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That's a result. It's always a result.

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By "why," I mean: What's your purpose?

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What's your cause? What's your belief?

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Why does your organization exist?

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Why do you get out of bed in the morning?

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And why should anyone care?
As a result, the way we think, we act,

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the way we communicate is from
the outside in, it's obvious.

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We go from the clearest
thing to the fuzziest thing.

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But the inspired leaders
and the inspired organizations --

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regardless of their size,
regardless of their industry --

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all think, act and communicate
from the inside out.

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Let me give you an example.

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I use Apple because they're easy
to understand and everybody gets it.

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If Apple were like everyone else,

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a marketing message from them might
sound like this: "We make great computers.

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They're beautifully designed,
simple to use and user friendly.

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Want to buy one?"

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"Meh." That's how most of us communicate.

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That's how most marketing
and sales are done,

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that's how we communicate interpersonally.

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We say what we do, we say
how we're different or better

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and we expect some sort of a behavior,
a purchase, a vote, something like that.

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Here's our new law firm: We have
the best lawyers with the biggest clients,

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we always perform for our clients.

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Here's our new car: It gets great
gas mileage, it has leather seats.

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Buy our car. But it's uninspiring.

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Here's how Apple actually communicates.

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"Everything we do, we believe
in challenging the status quo.

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We believe in thinking differently.

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The way we challenge the status quo is by
making our products beautifully designed,

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simple to use and user friendly.

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We just happen to make great computers.

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Want to buy one?"

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Totally different, right?
You're ready to buy a computer from me.

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I just reversed the order
of the information.

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What it proves to us is that people don't
buy what you do; people buy why you do it.

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This explains why every
single person in this room

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is perfectly comfortable
buying a computer from Apple.

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But we're also perfectly comfortable

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buying an MP3 player from Apple, or a
phone from Apple, or a DVR from Apple.

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As I said before, Apple's
just a computer company.

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Nothing distinguishes them structurally
from any of their competitors.

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Their competitors are equally
qualified to make all of these products.

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In fact, they tried. A few years ago,
Gateway came out with flat-screen TVs.

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They're eminently qualified
to make flat-screen TVs.

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They've been making
flat-screen monitors for years.

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Nobody bought one.

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Dell came out with MP3 players and PDAs,

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and they make great quality products,

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and they can make perfectly well-designed
products -- and nobody bought one.

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In fact, talking about it
now, we can't even imagine

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buying an MP3 player from Dell.

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Why would you buy one
from a computer company?

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But we do it every day. People don't
buy what you do; they buy why you do it.

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The goal is not to do business
with everybody who needs what you have.

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The goal is to do business with people
who believe what you believe.

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Here's the best part: None of what
I'm telling you is my opinion.

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It's all grounded
in the tenets of biology.

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Not psychology, biology. If you look
at a cross-section of the human brain,

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from the top down,
the human brain is actually broken

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into three major components that correlate
perfectly with the golden circle.

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Our newest brain, our Homo
sapien brain, our neocortex,

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corresponds with the "what" level.

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The neocortex is responsible

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for all of our rational
and analytical thought and language.

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The middle two sections
make up our limbic brains,

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and our limbic brains are
responsible for all of our feelings,

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like trust and loyalty. It's also
responsible for all human behavior,

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all decision-making, and it
has no capacity for language.

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In other words, when we
communicate from the outside in,

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yes, people can understand vast
amounts of complicated information

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like features and benefits
and facts and figures.

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It just doesn't drive behavior.

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When we can communicate
from the inside out,

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we're talking directly to the part
of the brain that controls behavior,

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and then we allow people to rationalize
it with the tangible things we say and do.

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This is where gut decisions come from.

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Sometimes you can give somebody
all the facts and figures,

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and they say, "I know what
all the facts and details say,

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but it just doesn't feel right."

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Why would we use that verb,
it doesn't "feel" right?

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Because the part of the brain
that controls decision-making

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doesn't control language.
The best we can muster up is,

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"I don't know.
It just doesn't feel right."

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Or sometimes you say you're
leading with your heart or soul.

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I hate to break it to you,
those aren't other body parts

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controlling your behavior. It's all
happening here in your limbic brain,

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the part of the brain that controls
decision-making and not language.

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But if you don't know
why you do what you do,

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and people respond to why you do what
you do, then how will you ever get people

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to vote for you, or buy something
from you, or, more importantly, be loyal

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and want to be a part
of what it is that you do.

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The goal is not just to sell
to people who need what you have;

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the goal is to sell to people
who believe what you believe.

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The goal is not just to hire
people who need a job;

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it's to hire people who
believe what you believe.

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I always say that, you know,

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if you hire people just because they can
do a job, they'll work for your money,

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but if they believe what you believe,

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they'll work for you with
blood and sweat and tears.

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Nowhere else is there a better
example than with the Wright brothers.

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Most people don't know about
Samuel Pierpont Langley.

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And back in the early 20th century,

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the pursuit of powered man flight
was like the dot com of the day.

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Everybody was trying it. And Samuel
Pierpont Langley had, what we assume,

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to be the recipe for success.
Even now, you ask people,

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"Why did your product or why
did your company fail?"

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and people always give you the same
permutation of the same three things:

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under-capitalized, the wrong
people, bad market conditions.

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It's always the same three
things, so let's explore that.

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Samuel Pierpont Langley was given
50,000 dollars by the War Department

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to figure out this flying machine.

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Money was no problem.
He held a seat at Harvard

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and worked at the Smithsonian
and was extremely well-connected;

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he knew all the big minds of the day.

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He hired the best minds money could find
and the market conditions were fantastic.

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The New York Times followed
him around everywhere,

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and everyone was rooting for Langley.

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Then how come we've never heard
of Samuel Pierpont Langley?

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A few hundred miles away in Dayton, Ohio,

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Orville and Wilbur Wright,

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they had none of what we consider
to be the recipe for success.

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They had no money;

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they paid for their dream with the
proceeds from their bicycle shop.

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Not a single person on the Wright
brothers' team had a college education,

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not even Orville or Wilbur. And The New
York Times followed them around nowhere.

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The difference was,

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Orville and Wilbur were driven
by a cause, by a purpose, by a belief.

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They believed that if they could
figure out this flying machine,

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it'll change the course of the world.

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Samuel Pierpont Langley was different.

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He wanted to be rich,
and he wanted to be famous.

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He was in pursuit of the result.

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He was in pursuit of the riches.

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And lo and behold, look what happened.

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The people who believed
in the Wright brothers' dream

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worked with them with blood
and sweat and tears.

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The others just worked for the paycheck.

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They tell stories of how every
time the Wright brothers went out,

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they would have to take
five sets of parts,

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because that's how many times
they would crash before supper.

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And, eventually, on December 17th,
1903, the Wright brothers took flight,

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and no one was there
to even experience it.

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We found out about it a few days later.

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And further proof that Langley
was motivated by the wrong thing:

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the day the Wright brothers
took flight, he quit.

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He could have said, "That's
an amazing discovery, guys,

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and I will improve upon
your technology," but he didn't.

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He wasn't first, he didn't get rich,
he didn't get famous, so he quit.

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People don't buy what you do;
they buy why you do it.

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If you talk about what you believe,

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you will attract those who
believe what you believe.

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00:11:02,260 --> 00:11:05,760
But why is it important to attract
those who believe what you believe?

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Something called the law
of diffusion of innovation,

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if you don't know the law,
you know the terminology.

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The first 2.5% of our population
are our innovators.

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The next 13.5% of our population
are our early adopters.

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The next 34% are your early majority,
your late majority and your laggards.

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The only reason these
people buy touch-tone phones

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is because you can't buy
rotary phones anymore.

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(Laughter) We all sit at various
places at various times on this scale,

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but what the law of diffusion
of innovation tells us

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is that if you want mass-market success
or mass-market acceptance of an idea,

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you cannot have it until you
achieve this tipping point

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between 15 and 18 percent market
penetration, and then the system tips.

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I love asking businesses, "What's
your conversion on new business?"

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00:11:58,520 --> 00:12:01,107
They love to tell you,
"It's about 10 percent," proudly.

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00:12:01,190 --> 00:12:03,277
Well, you can trip over
10% of the customers.

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00:12:03,360 --> 00:12:05,237
We all have about 10% who just "get it."

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00:12:05,320 --> 00:12:06,977
That's how we describe them, right?

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That's like that gut feeling,
"Oh, they just get it."

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00:12:09,560 --> 00:12:11,937
The problem is: How do you
find the ones that get it

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00:12:12,020 --> 00:12:14,607
before doing business versus
the ones who don't get it?

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So it's this here, this little
gap that you have to close,

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as Jeffrey Moore calls it,
"Crossing the Chasm" --

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because, you see, the early
majority will not try something

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00:12:24,260 --> 00:12:28,177
until someone else has tried it first.

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00:12:28,260 --> 00:12:31,177
And these guys, the innovators
and the early adopters,

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they're comfortable
making those gut decisions.

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They're more comfortable
making those intuitive decisions

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that are driven by what
they believe about the world

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and not just what product is available.

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00:12:42,260 --> 00:12:44,837
These are the people who
stood in line for six hours

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00:12:44,920 --> 00:12:47,007
to buy an iPhone when they first came out,

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00:12:47,090 --> 00:12:50,177
when you could have bought one
off the shelf the next week.

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These are the people
who spent 40,000 dollars

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00:12:52,420 --> 00:12:55,177
on flat-screen TVs when
they first came out,

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00:12:55,260 --> 00:12:57,560
even though the technology
was substandard.

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And, by the way, they didn't do it
because the technology was so great;

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00:13:02,260 --> 00:13:06,177
they did it for themselves.
It's because they wanted to be first.

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People don't buy what you do;
they buy why you do it

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and what you do simply
proves what you believe.

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In fact, people will do the things
that prove what they believe.

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The reason that person bought
the iPhone in the first six hours,

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stood in line for six hours, was because
of what they believed about the world,

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and how they wanted everybody
to see them: they were first.

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People don't buy what you do;
they buy why you do it.

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So let me give you a famous example,

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a famous failure and a famous success
of the law of diffusion of innovation.

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First, the famous failure.
It's a commercial example.

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As we said before, the recipe for success

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is money and the right people
and the right market conditions.

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You should have success then.
Look at TiVo.

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From the time TiVo came out about eight
or nine years ago to this current day,

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they are the single highest-quality
product on the market,

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hands down, there is no dispute.

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They were extremely well-funded.

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Market conditions were fantastic.

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I mean, we use TiVo as verb.

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I TiVo stuff on my piece-of-junk
Time Warner DVR all the time.

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(Laughter) But TiVo's
a commercial failure.

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They've never made money.
And when they went IPO,

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their stock was at about 30 or 40 dollars

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and then plummeted,
and it's never traded above 10.

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In fact, I don't think
it's even traded above six,

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except for a couple of little spikes.

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Because you see, when TiVo launched their
product, they told us all what they had.

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They said, "We have
a product that pauses live TV,

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skips commercials, rewinds live TV
and memorizes your viewing habits

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without you even asking."

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And the cynical majority said,
"We don't believe you.

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We don't need it. We don't like it.

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You're scaring us."

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What if they had said, "If you're the kind
of person who likes to have total control

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over every aspect of your life,
boy, do we have a product for you.

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It pauses live TV, skips commercials,
memorizes your viewing habits, etc., etc."

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People don't buy what you do;
they buy why you do it,

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and what you do simply serves
as the proof of what you believe.

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Now let me give you a successful example
of the law of diffusion of innovation.

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In the summer of 1963, 250,000 people
showed up on the mall in Washington

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to hear Dr. King speak.

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They sent out no invitations, and there
was no website to check the date.

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How do you do that? Well, Dr.
King wasn't the only man in America

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who was a great orator. He wasn't
the only man in America who suffered

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in a pre-civil rights America.

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In fact, some of his ideas were bad.

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But he had a gift.

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He didn't go around telling people
what needed to change in America.

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He went around and told
people what he believed.

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"I believe, I believe,
I believe," he told people.

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And people who believed what he believed

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took his cause, and they made it
their own, and they told people.

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And some of those
people created structures

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to get the word out to even more people.

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And lo and behold,
250,000 people showed up

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on the right day at the right
time to hear him speak.

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How many of them showed up for him?

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Zero.

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They showed up for themselves.

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It's what they believed about America

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that got them to travel
in a bus for eight hours

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to stand in the sun in Washington
in the middle of August.

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It's what they believed, and it
wasn't about black versus white:

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25% of the audience was white.

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Dr. King believed that there are
two types of laws in this world:

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those that are made by a higher
authority and those that are made by men.

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And not until all the laws
that are made by men

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are consistent with the laws
made by the higher authority

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will we live in a just world. It just so
happened that the Civil Rights Movement

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was the perfect thing to help
him bring his cause to life.

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We followed, not for him,
but for ourselves.

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By the way, he gave the "I have a dream"
speech, not the "I have a plan" speech.

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(Laughter) Listen to politicians now,
with their comprehensive 12-point plans.

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They're not inspiring anybody.

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Because there are leaders
and there are those who lead.

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Leaders hold a position of power or
authority, but those who lead inspire us.

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Whether they're individuals
or organizations,

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we follow those who lead, not because
we have to, but because we want to.

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We follow those who lead,
not for them, but for ourselves.

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And it's those who start with "why"

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that have the ability
to inspire those around them

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or find others who inspire them.

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Thank you very much. (Applause)