Simon Sinek's talk and full interview at the London Science Museum

[Music] we welcome simon Sinek to the stage Simon welcome thanks I thought what I do is share with you a little bit about what I'm working on now I'm actually writing a new book that's completely fascinated me I've become completely engrossed with this subject it's all based on game theory in game theory there are two types of games there are finite games and there are infinite games a finite game is defined as known players fixed rules and an agreed upon objective like football we all agree what the rules are at the end of the game whoever has more points as the winner and we all go home then you have an infinite game an infinite game is defined as known and unknown players the rules are changeable and the objective is to perpetuate the game to keep the game in play when you pit a finite player versus a finite player the system is stable football is stable when you pit an infinite player versus an infinite player the system is also stable like the Cold War was stable because there cannot be a winner or a loser the goal is to just keep the game and play and because there are no winners or losers in an infinite contest what happens as players drop out of the game when they run out of the will or the resources to play and other players will replace them but the game keeps going with or without them problems emerge when you pit a finite player versus an infinite player because a finite player is playing to win and an infinite player is playing to keep playing so this is what happened with the United States and Vietnam then Americans were trying to beat the Viet Cong and the North Vietnamese would fight for as long as is necessary and America found itself necessarily in quagmire this is the Soviet Union in Afghanistan where the Soviets are trying to win and the Mujahideen were fighting for their lives and necessarily the Soviet Union find themselves in quagmire until they ran out of the will or the resources to play and they left the game is what happens so if you think about the game of business the game of business is an infinite contest there's no such thing as winning the game of business right it doesn't exist the game of business has existed longer than every single company that exists on the planet today and it will outlast every single company that exists on the planet today but if you listen to the language that most companies use they don't know the game they're playing they talk about beating their competition they talk about being number one based on what agreed-upon metrics profits revenue market share number of employees square footage over what agreed-upon time frame a quarter a year three years five years ten years I didn't agree to your standards so how can you declare yourself the winner how can you declare yourself number one in other words companies can say whatever they wanted we haven't agreed to the standards every single bankruptcy is a company that is run out of the will or the resources to play and they drop out of the game that doesn't mean the game ends another company will replace them almost every merger and acquisition are when companies declare that we no longer have the will or the resources to continue to play by ourselves we have to merge our resources within other companies so that we can stay in the game in other words most companies don't last because they are playing the wrong game the infinite players are the ones that frustrate their competitors so I spoke at an education summit for Microsoft I also spoke at an education summit for Apple at the Microsoft summit I would say that 80% of the executives spent the vast majority of their presentations talking about how to beat Apple at the Apple summit a hundred percent of the executives spent a hundred percent of their presentations talking about how to help teachers teach and how to help students learn one was obsessed with their vision one was obsessed with where they were going the other one was obsessed with beating their competition guesses guess which one is fresh in this competition because the finite player is playing against its competitors and the infinite player is playing against themselves the infinite player wakes up every single day and says how do we be better this week than we were last week how do we perform better next month than we did this month it's a it's a game of constant improvement it is totally fine to study our competition for tactical reasons but the number of companies that study their competition for strategic reasons is scary which means they react strategically to their competition and will change entire business models on a basically on a whim which means the company has no stability is going all over the place in other words you're wasting time and resources and you're frustrating the people on the inside because they don't know where they're going it's a constant game of reaction a long time ago in a previous life I used to work at an ad agency and I was a junior kid and I worked in the competitive analysis department and I worked on one of the telco telephone company clients that we had and my job was to report to the client on what the competition was doing now the number of other telephone companies that existed in America that day was quite a long list and we the client couldn't afford to study them all so we studied a handful of them so think about that for a second they're studying their competition but they're only studying some of their competition well what about all the others not to mention the fact that in the infinite game it's usually the competitors we don't know about that take us down not the ones we do know about myspace had no idea that Facebook even existed until it completely destroyed their company because they were so focused on the ones they do new it did know about it and I find that fascinating because remember in the infinite game we don't always know who all the competitors are so at the end of my talk at Microsoft they gave me a gift they gave me the new Zune when it was a thing Zune was the competitors of the iPod and this thing was gorgeous an absolutely spectacular piece of technology beautifully designed the user interface was beautiful it was intuitive and simple there's a really remarkable piece of technology it didn't work with iTunes which means I couldn't use it which is a different problem but the technology itself was really quite sophisticated and quite stunning so after I got done with my talk at Apple I'm in the back of a taxi with a very senior Apple executive sort of employee number twelve kind of guy and I decided decided to stir the pot and I turned him I said you know Microsoft gave me their new Zune I said to him and it is so much better than your iPod touch to which he responded I have no doubt conversation over because the infinite player understands that sometimes your head and sometimes your behind and sometimes your product is better and sometimes it's not the goal is not to win every battle the goal is to outlast the competition you let the competitor compete against itself and drive itself down to zero while you're out there improving your systems constantly this is what it means to play the infinite game and I've become totally fascinated by this because the companies that frustrate their competitors the ones that seemed unbeatable the ones that everybody targets but seems unable to reach accidentally are playing the infinite game so in the US Costco frustrates Walmart but if you listen to Jim Senegal the founder of Costco he talks about building a business for the next 50 or 100 years not for the next one year or one quarter for Wall Street he talks about the need to take care of his employees first his customers second his shareholders third because that's the way he will build a long-lasting company and it is true when we prioritize the needs of the shareholders which by the way is the equivalent of a coach prioritizing the needs the sorry prioritizing the once of the fans over the needs of the players that's what shareholder supremacy is that doesn't build a strong stable team you may win a game you may even win a tournament but you won't build a team that can win year after year after year after year Southwest Airlines frustrates all the other airlines in America because they're competing against themselves they put their employee number one they put their customer number two they put their shareholder number three that is the order in which you play the infinite game because that is the order in which you build stability but companies that have it in the reverse order go out of business or are merged or acquired because they run out of the will or the resources to compete by themselves I'm totally fascinated by this the vast vast vast majority of businesses don't know the game that they're playing don't know the game that they're in which means we're all playing by the wrong rules this has completely changed the way we do business and our company where we've adjusted and are adjusting and learning to adjust our systems for a more infinite scenario so for example think about how we incentivize behavior right usually what we do is we give someone an arbitrary target to hit usually in an arbitrary time frame it's usually a year and the reason it's a year's because that's when we pay taxes and we pay taxes every 18 months those would be our arbitrary dates right but there's nothing magical about 12 months it's arbitrary right so we give somebody an arbitrary target sales revenues whatever it is on an arbitrary date see in a year from now and if they hit that target we bonus them and say good job and if they miss that target we say better luck next time right but if we're playing the infinite game this is what we started doing we become more preoccupied with the trend over the absolute target that they hit so for example what if somebody's building really good solid systems that are showing really good incremental growth really stable good solid incremental growth but by the time we hit twelve months they're short they miss the target you're damn right I'm gonna bonus that person because what they're doing is they're building the right systems that I can see will hit the target I can see it will hit the target 15 months from now in other words we got the date wrong it's the date that should adjust not the other way around versus somebody who hits the target but if I go back and look at what they did and it looks like their performance is this and they're stabbing people in the back and there you know beg borrowing and stealing dropping the price and doing whatever it takes to make the sale because I got to hit the target got to hit the target and on the right day on the right time we bonus them which is rewarding them for building an unstable company the trend matters sometimes it hits the date sometimes it doesn't the dates are there to help guide us to help set a pace and a tempo but if you're running a marathon and you want to run a four hour marathon and at your half marathon you've got an hour and 57 minutes you're happy but if you're two hours and 13 minutes you don't quit you just got the pace wrong and we don't do this in business we put the date instead of the system's I don't understand that we were adjusting even the way we talk about money has changed for us so if you look at our P&L we actually do not have a line on our P&L that says profit doesn't exist we have a line that says freedom right because money buys us freedom the freedom to say no to clients we don't to work with the freedom to say yes to clients we do want to work with we don't have any money it gives us the freedom to take a holiday to pay our staff better to give it away to support charities whatever we want to do and you're damn right I want more freedom next month than I do this month then I have this month yeah damn right and that's what money affords us but it's all contextualized and what the amazing thing is it does is it gels the company together because now our whole team is working towards the opportunity to give rather than the opportunity to reward themselves our team because we're much more interested in the systems and the trend they find we find that they were much better helping each other hit goals and targets because absolutes no longer get you rewards it's the underlying systems which is super stable and for entrepreneurs we all live with the fear or at least the acknowledgement that our companies are very much built on us if you if you're the founder it's my personality it's me my idea you know those kinds of things and if I were to get hit by a bus the likelihood of the company closing is very very high that's called finally the question is have you built a company that could survive you getting hit by a bus that the employees believe in the cause and the vision so much that the systems are so stable you've built redundancy into the system that anybody can do somebody else's job you there's at least one person who can do somebody else's job that the company can sale sustain and the employees would want to keep the business going without you because they believe that the cause is big enough that they would continue without you I can say with absolute certainty that if anything were to happen to me my entire team would continue working they would continue working to see this vision that we have come to life and figure out new ways without me I play one piece in the machine that's it just one it might be the most public one but it's only one piece and I'm like I said I've become absolutely fascinated by how can we compete in a game if we don't even know what game we're in and then we drop out and somebody else replaces us and nobody's sorry or and nobody nobody calls you a loser you haven't lost anything but you're not a winner if you stay in the game either this is wonderful so the question is how do you do this what is it require so as is my nature I have to write things on boards that's a joke the so the infinite game exists up here finite game exists down here all right the infinite game is will includes the Y what I call our purpose cause or belief it's the vision of the company it's where we're going it's something that we will never practically reach in our lifetimes or ever but we will die trying that's the point right it's different from a big hairy audacious goal which for all practical purposes you could reach it may be difficult but you could reach it this is an ideal something it's a vision of the world so my vision I imagine a world in which the vast majority of people wake up every single morning inspired to go to work feel safe when they're there and return home fulfilled at the end of the day that is my vision right we will never practically get there but we will die trying the United States was founded with a document called the Declaration of Independence in which the document stated all men are created equal now the United States has not achieved that and will never achieve that but it the country is at its best when we're trying to achieve that civil rights women's suffrage gay rights the you know universal education universal health care etc etc this is where our values exist our values are timeless they do not change every year whenever we have a strategic off-site and if they do you have a problem that happens in big companies every few years a new CEO comes in and I have a values thing and they change it and they change and they change no no your values are your values right and they're based on your founders and they exist from patterns of how you operate when you are operating at your natural best when your company is operating at its natural best when all cylinders are firing when you're in the flow whatever euphemism you want to use there is a pattern that emerges and that pattern are your values there's a minimum of three there's no more than five if there's more than five there's usually redundancy you can find overlap that you can find lowest common denominators and they are intractable these things are inherently intangible and hard to measure right which is why they often get brushed aside it's not that they don't exist they're just hard to measure then down here you have the finance what I call the what it's all the tangible stuff right things like our interests exist down here because they are tangible they are inherently easy to see and easy to measure like products sold money taken in things like that right number of clients we have the way you build an infinite business is you want to run all decisions first through your values and your cause and then through your interests that's how it works so what does a values based decision look like so when we send our our military to battle they will go into the battlefield and if they wound a bad guy we will send our medics onto the battlefield to pull the wounded enemy off the battlefield we will put them in our helicopters fly them to our hospitals put them in our hospital beds and our adopters will use our medicine to nurse them back to health that is not in our interest but it's kinda who we are that's why there are scandals when we find out that our military desecrated dead bodies of our enemies it's because it violates our values it makes us upset to know that our guys did that that is not in keeping with we say things like who we are that's what we're talking about right that's why we do something that is not in our interest because it reflects our values in the United States we had a scandal with torture right now the reason we tortured offshore and the reason we tried to keep it a secret is because we knew it violated our values if it was well within our values we would be totally open about it and we just do it back home we hide things that we know are uncomfortable and violate our values in other words you don't have to think very hard about whether this is in our values or not we know it's it we know right now our interests lie down here so we make decisions every single day right new client should we take their business sure they're gonna pay us a ton of money take it right do ad campaign what should we say in it hey we can use clickbait and we can drive we can drive sales hard over here and we make all these decisions based on what numbers are and we're making all decisions that are in our interest and those the arguments we make we make financial debates and we don't consider this stuff right now in a vacuum any one of these decisions may be just fine but the problem is when we pull back and we look at all of our decisions nobody knows what we stand for because we are all over the place that is perceived by employees and as customers behind by customers as selfishness in other words as highly tuned social animals which we are we will perceive this behavior as not trustworthy and we may do business with you that's called transaction but we'll never give you our loyalty and we will never trust you employees are the same way I will work for you as long as you keep paying me but I will be open to other opportunities elsewhere and I will not give you my best and brightest because I don't know that I'm safe here because you I see the way you make decisions now if we make values based decisions means we run all of our decisions through here first occasionally we might make less money than we could have we made that decision occasionally we make mistakes but what starts to happen is all of our decisions start to look mostly consistent and if you pull back everyone can say aha I know what you stand for I know what you believe they use words like authentic or they say you have high integrity or you are of hiked moral fiber or character all of these words that we use to describe people used to describe companies as well I trust you knowing very little other than I know how you make decisions so take us for example right we work with some very dysfunctional companies but at the core the executives who bring us in are trying to do the right thing we have been offered to go work with companies who when we talk to them we know they only want to use our stuff to drive short-term gains and they offer us a lot of money to work with them we turn them down because we have a vision and our vision is a people based vision and we want to work with companies that will transform their cultures that will produce cultures that people are inspired to come to work every day and if I help this company I may help them drive their numbers but it won't it helped advance my vision for the short-term gain of only the money which I can make somewhere else and if I'm going to tell my people this is our vision and they see me make these decisions and I cannot justify them then what starts to happen is they start to think that what I was saying was and then they stop trusting everything I said even if I'm saying the right thing that's the point our friends are the same way if our friends only made decisions based on their own interests do you think you would trust your friends right if they would never come to your house you always have to go to their house because they're lazy there's no sacrifice there's no giving everything is in their interest we wouldn't want to be friends with them in other words as these highly trained and highly tuned social animals were constantly evaluating the words the actions the behaviors of politicians of executives of our colleagues of our friends and of companies to determine whether we can trust them and work with them we will do transactions with them but this is where loyalty love and this is where the infinite game lies it's the only way to build an infinitely built company it has to be built on values on the intangibles I spent time with the United States Marine Corps and they talk all the time they actually say these words they say the reason the United States Marine Corps is what it is the reason its culture is so strong is because of the intangibles they literally talk about the intangibles all the time which are the emotional bond the love the vision the standard switch they hold each other the intangibles we don't like the intangibles in business we love the tangibles which is fine then you have to be satisfied that when you run out of the will of the resources to play you move on right there is no winning the game of business okay love it Simon thank you very much indeed for that I love replacing with profit with freedom and may we all be the freest people in the okay so I'm Oliver John is our interviewer for today Amal is the BBC media editor he reports on Keith's breakthroughs in the media industry whether global M&A disruptive technologies but he doesn't just report on them he also analyzes them and tells them what it means for the viewers their world and the world around them he is also a massive cricket fan so much so that he wrote a book once called twirly men the unlikely history of cricket is greatest spin bowlers not too much cooker today I'm all but welcome sir thank you thank you very much indeed Simon I'm gonna see how long it takes me to get the word intangibles onto the BBC news I think we have to do it in a week I'm gonna ask you a couple of questions about the stuff that you've said so far and then we going to talk a bit more broadly about your book start with why and about leadership that sound good sure exit so can we just understand you mentioned Apple the company Apple which is a good company to analyze giving it to the wealthiest company in the world and I just want to try and understand that in terms of your finite and infinite axes now Steve Jobs said before he died that the genius of what he achieved was that he never had an original idea because there were music players before there was an iPod and he designed an iPod that was three clicks to your favorite song there were desktop computers before there was an Apple Mac but an Apple Mac was the best to use and there were smartphones before the iPhone and he just took brilliant ideas and he made the mutt much better so with Steve Jobs playing the finite game because he was crushing the competition or was he playing the in finite game because he just did his own thing so Jobs had a very clear vision and it was to give the individual the power to stand up to Big Brother he was at his heart a rebel he grew up in Northern California during the Vietnam War which is the where the beginning of the anti-establishment revolution sort of started him yeah and that was his childhood and so he really he really stood for the individual standing up to to the man he had a big spiritual side who's a yeah yeah and if you look at the decisions he made he made decisions like this he ran decisions through his vision before he got to the interests right so there's a very famous story of when he went to Xerox PARC do you know this one so jobs they just come up for the success of the Apple one and the Apple two it's already a big company he's already well known it's a it's he's already the darling of business and their next big push is gonna be into a technology they called the Lisa that was their next computer that they're gonna launch and just as executives do they visit each other's companies and jobs in a few of his colleagues went to visit Xerox PARC xerox showed them a new technology that they had invented called the graphic user interface right now remember Jobs believed in the individual standing up to Big Brother so the reason they made their computers beautiful was not arbitrary it's because if you had them if they were pretty looking you put them in the living room if they're ugly you put them in the basement and you're more likely to use something that's in the living room than if it's in the basement right the reason you make them simple is because more people can then use them and so when he saw this thing called a graphic user interface he thought this is a better technology it's a leapfrog to make it easier for more individuals to access the power of the personal computer then what we have in the Lisa so that's an infinite game because he's thinking about what's right for the long term rather than what he's accomplished and as they left direct part Jub says we have to invest in this and his colleague said we're crazy we've invested millions of dollars millions of man-hours already in Lisa if we do this if we invest in this we're gonna blow up our own company to which jobs replied better we should blow it up than someone else that decision became the Mack the the Macintosh that decision was the Macintosh of which remember Windows is an interface designed to copy the Macintosh in other words he completely changed the way computers work to the point where now any individual can easily use a computer and he always made decisions that way he made decisions always empowering the individual so he was asked a question about the movie industry cinemas and the decline of cinemas and he replied that the the cinemas were making the same mistake the movie industry was making the same mistake that the music industry made which is the munich music industry falsely believed that their customer was Tower Records and Virgin Megastore and not the person who actually spent money on buying the album he says you've confused your customer with your distribution channel and it's the same in television you know the wrong people have the influence his priority was the person who spent the money and the dispersed of power you know when Steve Jobs died Apple on their homepage put up a video of him in which he talks about his favorite quote from Wayne Gretzky an ice hockey player and he says it's favorite quote is that he doesn't go to where the puck is he goes to where it's going my anticipation is everything and that time is what you were saying about the trend is about planning for the trend what the leaders of which there are many gathered here today what the leaders need to do to understand the trends in their industry better because it's very easy to say this is where this business or this is where this competition is going it's actually that's what everyone else is doing so how can you get ahead of a trend in the way that Steve Jobs was able to look at where the puck is going so trend data is very dangerous because all it does is report a trend that doesn't report if it's positive or negative and everyone else has got it and everybody else has got it so for example you know kids these days are all using apps to do everything we should make more apps but nobody says it's healthy right in the 1980s you needed to do cocaine to get through the business day you know does that that's a trend that's a trend you know cocaine usage was up in the 1980s in businesses if you work in investment bank you know I was i I was I was definitely not doing that so the point is the point is it the point is it's a trend yeah that doesn't mean we should invest in it right so trend data is I think the way people rush towards a trend because they think that's where the market is going is very dangerous because it's incredibly unstable information but you have to as a leader anticipate where your market is going and make three or five year plans and the way you do it is with vision right so for some reason somebody keeps telling me that I just mic publisher said this to me that I'm good at understanding the zeitgeist and he's wrong I have no clue about what people are thinking all I know is where I want to go that's it as I said before I have a vision of a world in which the vast majority of people wake up every single morning inspired to go to work feel safe when they're there and return home fulfilled at the end of the day so I can make certain guesses and predictions about things I have to do to get there you know on what basis do you make your vision so is your if there's someone here who works in thought leadership in consumer brands where does their vision for where the industry is going come from is it come from conversations they have with people here does it come from an understanding of their business and their consumers where does that vision come from because I'm sure lots of the leaders here today are thinking how can i where my business is going three to five years from now and get ahead of the competition so you're asking me you're putting the cart before the horse right vision is an internal thing right it is the world that you want to live in right Jobs was the rebel and he always was against big business right all the visionaries that we know have some sort of personal experience and imagine a world that is different to the one they live in now and will use their businesses to help build that world that doesn't mean they're the only ones doing it but what makes them a leader is they're the one leading towards that place right so vision has to come from you if you're the founder of a company your business is not the only way you do it what have you quit your business and start another one it doesn't matter they should all be contributing towards this vision and you're not the only one doing it but if you're the one preaching it and you're using your company to advance it that makes you the leader yeah that's what everybody copies you but it's not about anticipating the market trend which is an interest thing you're asking me it's got to start with values the interest come second they're definitely there but they definitely come yeah I wonder if the implication of what you're saying is that Steve Jobs I mean who's we right to focus on him because he was a visionary was an effective leader but a bad manager talk let's talk a bit about the difference between leadership and management because there is a sort of theory that people here may subscribe to that leadership is is that vision thing you know it's a it's a destination it's a shining city upon a hill that you want to get to yeah and management is the daily sort of charge of trailing up the mountain yeah is it often the case in your experience that you do get people who are bad leaders and good managers or vice versa yeah for sure and it's rare that you get someone who's both an excellent leader and an excellent manager incredibly rare I'm a terrible manager what do you like to work for you have to ask the people who work for me what do you like to work for who'd what I'm asking you what you like to work for what I like to work oh yeah what do you like to work for what sort of manager right I'm very laissez-faire [Laughter] sound like a great manager to me you know but sometimes to a fault leadership versus management more so so it's it's like mum and dad it's a partnership you want that you want the visionary and you want the what the leader in you what the managers not a better or worse thing and we have a we have a we have a misconceived notion of hierarchy and most businesses which is ceo's usually the number one job and then CFO or CEO is usually the number two job that's how we think of it and a lot of CFOs or CEOs are hoping one day to get the number one job but it's not one and two it's one in a yeah they're different skill sets and in every single c-level job we have articulated what the job responsibilities is so you have your chief operations officer chief operating officer chief financial officer chief technology officer what the hell's a chief executive officer it's the only job that has no description of it it should be a CVO a cheap visionary officer someone who is responsible for setting the long term vision and instructing my finance guy my operator students guy my tech guy to help figure out all the systems that we need to get there and all the great visionaries that we've had ostensibly have been not CEOs but cvos what you say cuz I think a CEOs job as far as I understand in my knowledge of business which is obviously very limited given I shot a newspaper CEOs who didn't see that trend coming no we did Lisa our Andy Mullins who sat in the front as my boss for some that time and there's a reason many of you here did see the trend coming in fact he is a visionary leader he came up with the idea to launch a new newspaper called I he came up with the idea of taking the Evening Standard free I think the long-term trend in daily printed news is it's kaput and so we went online right and was a smart thing to do but as I understand exactly CEOs and people that execute plans our people ultimately have to make decisions and I spend a huge amount of my life probably too much reading political biographies yeah and it's interesting that if you look at the names of political biographies as you read them what they tend to be all about is the absolute avalanche of decisions that political leaders have to make yeah Tony Blair's big stick is that if you're a political leader you can make a decision or you can not make a decision but if you don't make a decision that's the last consequences Barack Obama would often say in interviews that what struck you most when he became president which is how many decisions he had to make each day george w bush's memoirs are called decision points Hillary Clinton's are called hard choices the people in this room have to make decisions all the time probably a huge number of decisions how does that graph two girls there help us make decisions well that's that's exactly the point which is what are we running the decision set through and do we run it through our values first or we do run it through our interests first the United States isn't a bad example because from a decision-making standpoint foreign policy has been an absolute disaster for the past 20 years I don't care what can a Democrat wear it's been too much interest based and look what's happened the world doesn't trust America like it used to you know and America is not seen as the holder and keeper of democracy you know like like it used to in the past even even the relationship between this country and the US is weaker than it's ever been which is not good right so I would argue that American foreign policy if we're using foreign policy hasn't followed that we haven't been making decisions through that filter but that is how that is how effective decisions are made I believe which is they have to run through values and cause first its interests because when you mention that part of your very engaging talk I was thinking there's a lot of decisions a lot of businesses which may not be the businesses that you would work with but there's a lot of businesses perhaps some of them are represented here today we're actually doing the short-term thing for financial gain is smart business it's not it is yeah you do need because you're working at a public company which reports quarterly because you need to keep shareholders on-site maybe you're worried about losing your job if you don't hit a certain target in March or April or May isn't there a fundamental conflict between the demands of some businesses which are short-term interests based and your vision of business so the argument you're making is is the argument you're making is a short-term based company should make short-term based decisions which means they'll last for the short term I'm actually making I'm not actually making an argument of any kind I just wonder whether or not actually the reality is maybe this is why you make the point that I'm arranging against reality I think that the systems we have in play do not support capitalism I think we have corrupted capitalism which is capitalism at its best doesn't follow the rules that we follow today the concept of Cheryl to supremacy was a theory proposed by a Harvard professor in the late 1970s popularized in the 80s and 90s by basses like Jack Welch right the concept of using mass layoffs to balance the books mastered Endon because we missed our numbers this is the Mitt Romney school right did not exist as a standard way of doing business prior to the 1980s it was a it was popularized in the 80s and 90s let's look at the 80s and 90s these were boom years of relative peace without the internet right now that world does not exist we no longer live in boom times there is no longer relative peace and the infinite and the Internet has profoundly changed the way business operates today in other words what work then cannot work now GE needed a three hundred billion dollar bailout in 2008 because that company was not built to last what I'm saying is the systems that we consider normal ways of doing business Sharyl to supremacy using master tendencies and other philosophies and how we incentivize people how we hire people etc etc they are outdated and outmoded and they are a race to zero and the companies that continue to embrace those philosophies big or small are struggling with engagement they're struggling with innovation they go through people like nobody's business and the executives keep getting fired or quitting right unceremoniously and by the way their shareholder value is unstable remember shareholders are a fickle Bunch if you do well regardless of what you stand for they'll invest in you and if you do badly regardless of what you stand for they'll abandon you but it's the P it's the shareholders who believe what you believe that stick with you through thick and thin while the others come and go people don't drop Disney because Disney had a bad quarter the fickle do but there's loyal ones too to those businesses all the companies that I mentioned Southwest Costco the companies we love they have a solid base of really really loyal investors who are not there because of the whims it's because Berkshire Hathaway Berkshire Hathaway does not report quarterly because there's no legal requirement to do so it's just a matter of convention now I don't see people abandoning Berkshire Hathaway even if they have a bad year exactly this resonates with the central argument of your book start with why and I think it's worth just for a moment for people who haven't read that book though they will do time they're finished today or haven't seen your TED talk on it could you just briefly explain the three circles of what how and why and how starting with why helps you build a good business because I think it's very pertinent to what you're saying about values driven decisions so every single organization on the planet even our own careers always function on the same three levels what we do how we do it and why we do it everybody knows what they do these are the products we sell the services we offer some know how they do it these are these are the things we call our unique selling propositions or you know our differentiating value problems the things that we think make us stand out from the crowd but very very few people and very very few organizations can clearly articulate why they do what they do and by why I don't mean to make money that's a result by why I mean what is your purpose what is your cause what is your belief why does your company exist why did you get out of bed this morning and why should anyone care and what I learned is that organizations or leaders that start with by telling you what they do are less able to inspire people to do business with them inspire loyalty where those who start with why whether it's Steve Jobs or Matt McGann D are able to command loyalty and are able to innovate in ways that others cannot and the reason I say that every company functions this way is because the model is not based on some highfalutin management theory it's based on the biology of human decision making this is how the brain works that when you start with Y talks to the part of brain of the brain that is responsible for decision making and feelings like trust and loyalty but it's not responsible for language which is why it's hard to put into words whereas the part of the brain that controls rational like numbers and products and benefits and features doesn't affect decision-making but when you say start with y I hear as a suspicious journalist alright well I start with why should I believe you so if you say you know Google has this phrase don't be evil there's a lot of people out there at the moment particular people that work in the UK newspaper industry who feel that they're being undermined fatally by Google who say Google say don't be evil that's their why you know because we want to be a values driven organization or take Facebook whenever I speak to Facebook Facebook say we are a mission driven company we're about an open and connected world and a lot of people say well that's just marked nonsense so my question to you is even if someone can give us an account of why why should we believe him how do we know it's not just empty marketing jargon and spin your cynicism is well-placed the the you should be a journalist the well I'm inherently cynical and I think that's sort of said all three not to me somewhere we've been so deprived I can still believe that the world is good which is your right all those pieces that I talk about why how and what all have to be there you have to have balance in all three you have to have purpose and vision you have to have values and guiding principles and you have to have ultimately decisions product and service and numbers that that prove it so if you only talk about the why but you don't actually do it it is just marketing jargon a hundred percent agree if all you have is good product but you don't have any sense of purpose or cause it's just an unstable thing and it's a it's a it's a very hard thing to differentiate based on features and benefits for any length of time and it doesn't come out loyalty it just drives transactions and when you have all three of those things perfectly in line then it hums now arguably III hate the fact that Google describes itself as do no evil because the human brain has no capacity for negative and I can prove it to you you know don't think of an elephant right can't do it alright so we can we don't have the capacity for negative thought we only the capacity for positive thought which is why you're supposed to tell your children you're not supposed to tell your children don't eat on the couch you're supposed to tell you doesn't eat at the table right you tell them what to do so I would prefer that Google say do good rather than do no evil it's a bias but that they're there why is not do good they're wise to organize the world's information yeah I mean Google is a very very well Tibet is a very very powerful company but are they powerful because they're a values driven company or are they better software engineers who develop better technology at making search results appear very quickly and they've built the world's most effective advertising machine around it I mean I would I just want to dig down into your analysis of why there's a causal link between values-driven companies and long-term success so it's Sergey and Larry are both still there so we won't really know until they leave yes I was going to us about us yeah right I mean we didn't like Sam Walton built an amazing company and he left he died and it ran okay after the first CEO took over from him because that guy worked right under him by the time you got to Mike Duke is a horrible horrible company that people hate working for and hate working with so the people who work at Google seem to really like Google you know they seem to have a more sophisticated way of hiring you've seen their want ads they're different they're different they're trying to hire devalues have they made mistakes absolutely are they perfect far from it are there things that I wish they would do differently yes but I can't really I can't really tell you until those founder leaders just like I was saying before are gone and let's see what kind of company they've built I had the chance to sit down with Richard Branson and I asked him how should we judge you when you die I said how what did you do at virgin that if I were to look at your company and say he was a good man like tell me what what about your culture that you built that I should judge you by and he didn't he didn't he didn't even pause he didn't wait a second he said do not judge me by anything that I've done at virgin you judge me by the quality of my children right which is a very infinite perspective and I you know although he didn't although he didn't talk about it I got the district's distinct sense that unless his kids are involved in virgin I don't think he really cares a virgin survives for a hundred years beyond his death you know unless his kids are involved in it I'm just thinking my son's an absolute nightmare so I've got work to do but yeah crying endlessly yeah older kid he's um he's just turned one okay I think you're okay you are okay let's talk briefly the time we've got left we'll talk it will have this interview again in 19 years yeah yeah exactly go well maybe not let's talk briefly the time we got left about you mentioned the word entrepreneurs and one of the things I'm fascinated by Nano have you seen your talks and read some of your books you're fascinated by is what it takes to be an entrepreneur um if you could describe I know you've talked brought about sustainable businesses driven by values but if you could describe what are the sort of characteristics that have tended to make affect of entrepreneurs in your time that'd be wonderful and yeah there was a very very famous academic paper in the 1980s published in England that said that the qualities of a entrepreneur were a bit like that of a white-collar criminal it was someone in a mischievous like looking for opportunities and sometimes had a sort of slightly naughty sense so what are the qualities that you think it takes to be an entrepreneur is one thing and the other things how could you encourage the people here to have the confidence to take risks there are a lot of people who grow through a business they've been there 20 30 years they've always dreamt of being the CEO and they've come through the finance division whatever it might be and they get to the top and they're at the top and they were in charge I've got all this power and actually they become very cautious because they want to consolidate that power so how do you encourage people to have the courage and confidence to take risks in in order to make that business continue growing related questions so that's two the first one so I think the word entrepreneur is bandied about too loosely mmm that not everyone who owns a small business as an entrepreneur there are small business owners and they're entrepreneurs what's no one's pretty and you can find entrepreneurs in big companies it doesn't means that they're small business owners right I think entrepreneurs are problem solvers I think rather than risk takers yeah I think fundamentally there are plenty of risk takers I think there's a risk taker of your small business owner right you went out to start the business but they're not the same I don't think and entrepreneurs are those ones who they're constantly looking to solve problems and that's where I think they perceive opportunity or the mischief you describe I don't think it's I don't think inherently it's a sense of mischief they're not trying to stir the pot for the sake of stirring the pot I think that they see something and they're like we can make that better or we can fill that hole and that's very much the way the famous entrepreneurs the Elon Musk's and the Richard Branson's operate they see gaps they see things that don't work as it jobs as did jobs they see things that could be better or they it I mean Elon Musk was just interviewed by Chris Anderson at Ted last week and Chris Anderson and sort of near the end of the interview its online go watch it it's really great Chris Anderson asks Elon Musk's something to the effect of why why are you doing all these things like why didn't just stick with Tesla and be done with it like why do all the other stuff and you look at and musk you can see this look on his face and he takes a long time to answer he actually doesn't understand the question he cannot understand why you wouldn't do that and he sort of gets emphatic which meal and musk is pretty amazing because he doesn't get him Phatak but that's basically what it is he gets some fatik and says cuz i want to live in a world that's better than this two words to that effect you know where I'm not where the world that we're living right now makes us unhappy why don't we want to live in a world that makes us happy you know he gets sort of he kind understand and again it's vision first and that's why he doesn't understand why you wouldn't try and solve problems yeah and how can you encourage those who the more cautious amongst those gathered here today how can you persuade them that sometimes being cautious is actually the more risky path and how can people develop the confidence and the courage to make yeah make take risks so I don't I've learned that courage is not some deep internal fortitude that you don't dig down deep and find the courage you know that courage is external courage comes from the relationships we have with those around us a partner in business a personal relationship our team right that's why what we want to build good cultures because our team believes in us which gives us courage to do difficult things so a trapeze artist a world-famous trapeze artist would never try a brand new death-defying act for the very first time without a net right now all that courage they did they're the world's greatest repeat artist but for the they need at something external before they do something very dangerous yeah and it's the same for the rest of us so when we have someone who says I believe in you I got your back even if this doesn't work out I'm here with you I know so when you survive so were you in nervous public speaker before we became a famous public speaker sure yeah you don't see me know what I mean you get you get better at things with practice exactly I got one final question before we break for a comfort break talked a lot about vision it's about inspiring action to change people to take control of their business what if they're people some of them they're looking slightly more vacant right now who think actually to know what I've got a big problem which is it I don't have a vision what if you don't know your values what if what if you've just gone through a career to do basically trying to do what your boss wanted you to do make sure you didn't stab anyone in the back what if you can people find a vision no I know there's some people who basically get through life without vision and some who do because I just worry that it's a bit easy to talk about yeah inspiring change yes big vision actually there's a lot of people go through life thinking I want to go home and watch Strictly Come Dancing on MasterChef and make sure my kids are in bed by eight o'clock maybe some people don't do the vision thing ya know I think you're how to present right and I think society and folks like me put an unfair pressure on people to have a vision yeah right and I think that's true we're not all Steve Jobs we don't all have big world-changing visions to your point I do believe however you can find a vision right in other words it doesn't have to be yours it can be someone else's we found Martin Luther King we found Mahatma Gandhi we found Steve Jobs we found Richard Branson whoever you Elan musk the visionaries and people go I loved his vision so organize your business around that right you don't have to have a vision but I do believe you have to find one people find it in religion you know you follow whatever you follow right you you become a follower of so you can say I bear as yours I believe in that and we're organizing our our company around helping to build that world yeah so I don't believe you have to have one now do you believe you have to find one Yeah right and it doesn't have to always operate at a macro level it absolutely can operate at a micro level right it can be the way you raise your family the way you treat your friends you raise another point which is getting in you know when people get more senior they sort of seemed to become more risk-averse when I what I my own findings are mirror that which is when when people are young in their careers every new promotion is like the most incredible thing in the world and the first bonus and the first client you win the first big business you land the first big product you launch it's like the most amazing thing in the world and that's thrill keeps you excited to stay in the career just you just keeps motivated but after you've had a bunch of bonuses and written a bunch of articles and been on TV a bunch it's it gets it's whatever it's not what drives the excitement anymore well I still quite like yes right yeah you might enjoy it but the thrill yeah it's gone or at least its subdued yeah right if you don't get the same nerves as you're getting wired up to go on TV you know yeah it becomes part of the process and when I start to see his executives later in their careers actually struggle to find the same inspiration that they found when they were younger and so they resort to the things that inspired them when they were younger I remember the first million we made so if I make another million I remember the first big client so I glandt another big client they keep trying to repeat what worked when they were younger that no longer works when they're senior and they actually I find senior executives to be less fulfilled and less inspired by their work than junior people well that won't be the case if they come back from this come for break and they've asked you lots of cuesta can we thank Simon 40 said so far and also can we thank and we'll very much indeed for every [Applause] [Music]

Channel: LeadersIn

Views: 205,635

Rating: 4.8169012 out of 5

Keywords: Simon Sinek, London, Start with Why, inspirational, leadership, Apple, Microsoft, Business, Vision, Elon Musk, Richard Branson, entrepreneurship, Google, Facebook, Marketing, Science Museum, Amol Rajan

Id: vGz-iNrtjW8

Length: 54min 36sec (3276 seconds)

Published: Mon Jan 22 2018