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Posted: February 3, 2014
Eric McNulty

Eric J. McNulty is the director of research at the National Preparedness Leadership Initiative and writes frequently about leadership and resilience.

 


 
 

Why Is Wrong with Your Business Model?

Do not adjust your computer screen—that’s not a typo in the headline. Your instinct may be to change that why to a what, but why is actually the right question for leaders to ask themselves about their business models. The difference between why and what was nicely articulated by Simon Sinek in a TED Talk a couple of years back and came to mind again recently on the 30th anniversary of the Macintosh computer—Apple is one of the examples Sinek cites of a company that has mastered the why.

The Apple mystique is legendary: People line up overnight to buy its next product when they could buy electronics that do the same job for less money from other retailers and manufacturers. Although Apple has become an almost trite example of how to run a business, it is appropriate to look at the company with fresh eyes as we enter the third decade of success for a product that was predicted to fail.

In 1983, Steve Jobs expressed Apple’s why quite cogently: “I think as we look toward the next 50 to 100 years, if we really can come up with these machines that can capture an underlying spirit, or an underlying set of principles, or an underlying way of looking at the world so that then when the next Aristotle comes around, maybe if he carries around one these machines with him his whole life and types in all this stuff, then maybe someday after the person’s dead and gone we can ask this machine, ‘Hey, what would Aristotle have said…about this?’ And maybe we won’t get the right answer…but maybe we will. And that’s really exciting to me.”

That’s a lot of why—a clear and compelling purpose—and not a whole lot of what. The lessons are these: First, once you get the why right, the what will follow. Second, the what will change, but the why should transcend numerous strategic and tactical shifts. And, finally, the what is often easier to measure, but the why is more important to assess.

The topic arose again when I recently attended the Center for Higher Ambition Leadership’s annual CEO conference. The discussion there centered on how a company’s purpose shapes its culture and how culture, in turn, drives performance. For these companies, purpose is a source of differentiation and competitive advantage. Purpose is all about the why.

At the conference, Larry Senn presented data showing that top culture companies outperform bottom culture companies in everything from employee and customer engagement to financial results. Executives from companies such as healthcare-supply provider Henry Schein shared how the why of their business (“to be trusted advisors and consultants to our customers—enabling them to deliver the best-quality patient care and enhance their practice management and profitability,” in Henry Schein’s case) is more important than the what (“to provide innovative, integrated healthcare products and services”) to their competitive advantage and results.

It’s this distinction between why and what that makes all the difference. Being a “trusted advisor” is a compelling reason to go to work. It’s energizing to help patients get the best care and physicians run their practices more efficiently—much more so than “to be the premier supplier of widgets,” as many companies tend to describe their aspirations.

The essential questions leaders must ask themselves and challenge their teams with are all why questions: Why would a customer want to do business with us? Why would top talent want to come to work with us, and contribute their best to our efforts? Why would suppliers want to become our long-term strategic partners? Why would communities welcome our facilities? Why would institutional investors want to trust their money to us?

A what answer to any of these questions can disguise itself as a why: Customers choose us because we are the low-cost supplier. Talent is attracted to us because we offer a good salary. Suppliers had best stay in line or we’ll find others. Communities want the jobs. And investors will put their cash wherever they can get the best return.

Low cost, however, is a fleeting advantage unless you are prepared to join a race to the bottom. The best people are in demand and will find a great place to work. Smart suppliers, like Henry Schein, find ways to add value to their customers’ businesses beyond simply selling them things.

Smart suppliers find ways to add value to their customers’ businesses beyond selling them things.

How do you get the why right? One way is to challenge yourself to articulate how your company is going to change the world for the better. Not just increase revenues, but actually Change The World. That’s what Jobs was famous for, and it’s what drives many great entrepreneurs and leaders of established firms that continue to blaze paths forward.

A second way to find the why is to begin with your values and work your way there. Almost every organization has a lofty statement of its values, but for too many firms, these values don’t actually guide daily operations. Ask yourself how each of your values is manifest for your various stakeholders. How can it be made more integral and more apparent in your products, services, and even your internal processes? In other words, if your company espouses trust or placing your customer first, is it truly reflected in your contracts, privacy policy, human resource practices, and the rest? Does the plaque on the wall resonate with the reality on the ground?

We do business in a turbulent world. Some firms, however, find a way to succeed amidst the tumult. They inspire and cultivate stakeholder loyalty. Look closely and you’ll see they do it by spending more time focusing on the why of their business than the what. Make sure you know why is right with your business model.

 
 
 
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