People don’t buy what you do, they buy why you do it.

by ulrikz on October 3, 2011

The other day I looked at a speech by Simon Sinek on TED talks (for the second time). The speech was about why certain companies succeed where others fail. Simons point was that companies working & communicating from the inside out – meaning having a strong notion of why they are in business – have the best options to succeed. Let me develop this. All people working for a company know what the company does and most people how they do it. But, few people know why the company is in business, i.e. the idea behind company.

According to Simon, companies with a clear notion of why they are in business have a better option to succeed because:

  • Their products/ services are more driven by feeling & identification then by logics & have a greater potential to appeal to people
  • Employees are much more motivated, since they work for something they believe in not just the pay check

 

He gives some quite good examples; The Wright brothers were driven by a passion to fly, but their venture was far less financed and equipped that many other flying ventures. Still they were the first to ever achieve controlled manned flights. Why? Their main driver was not money & fame, but a genuine passion for flying & the people they hired were driven by the same passion. Apple is another popular example. Why is Apple, which is just another computer company so successful?  Their success also spells passion/ a clear idea – they actually communicate “We believe in challenging the status quo, we believe in thinking differently, we just happen to make beautifully designed computers”! Other companies communicate what they do and possible how successful they are in doing it, which is far less inspiring.

So, why is this essential? If you look at the law of diffusion of innovation you will get some of the answers. According to this law 2,5% of the population is what we call innovators, the next 13,5% is our early adopters, the next 34% our early majority, the next 34% late majority and the last 16% our laggards. To be able to reach mass market adoption of your products/ services you will need to reach 17-18% market penetration – you need to reach the tipping point or as Geoffrey Moore puts is “crossing the chasm”.

The early majority will not try anything until others have tried it first, they are your skeptics.  But, the early adopters are quite comfortable in trying out new things, in fact they love to be first with new things and that is what defines them. That’s why this group is so important. These people are more driven by believes and how they themselves see the world. They are purchasing your products because they believe the same things as you – as in the Apple example, people that stand in line for hours to get the latest Apple products believe that they are different. And if you are a company that challenges the status quo and believe in thinking differently, you are exactly what these people are looking for. Therefore, to reach mass market you need to capture the early adopters & through them build your market penetration. You need to be true to why you are in business to keep attracting this group.

I truly like this way of thinking & the way Simon is codifying it is intriguing (even though a bit simplified). What do you think?

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