Start With Why

WHY, we couldn’t bring ourselves to buy products from them that went anything beyond WHAT they do. In this case, VW has a clear WHY, but WHAT they produced was completely misaligned. They failed the Celery Test.
    Toyota and Honda knew this better than Volkswagen. When they decided to add luxury models to their lineups, they created new brands, Lexus and Acura respectively, to do it. Toyota had become a symbol of efficiency and affordability to the general population. They had built their business on a suite of low-cost cars. They knew that the market would not pay a premium for a luxury car with the same name or with the same logo on the hood. Although a luxury car, Lexus is still another WHAT to Toyota’s WHY. It still embodies the same cause as the Toyota-branded cars, and the values of the company are the same. The only difference is WHAT they are doing to bring that cause to life.
    The good news is, VW hasn’t made the same mistake again, and their WHY remains clear. But if a company tries too many times to “seize market opportunities” inconsistent with their WHY over time, their WHY will go fuzzy and their ability to inspire and command loyalty will deteriorate.
    What companies say and do matters. A lot. It is at the WHAT level that a cause is brought to life. It is at this level that a company speaks to the outside world and it is then that we can learn what the company believes.

PART 5
    THE BIGGEST CHALLENGE IS SUCCESS

11
    WHEN WHY GOES FUZZY

Goliath Flinched
    “A lot of what goes on these days with high-flying companies and these overpaid CEOs, who’re really just looting from the top and aren’t watching out for anybody but themselves, really upsets me. It’s one of the main things wrong with American business today.” This is the sentiment passed down from the founder of one of the most vilified companies in recent history.
    Raised on a farm in America’s heartland, he came of age during the Great Depression. This probably explained his predisposition for frugality. Standing five feet nine inches and weighing only 130 pounds when he played football in high school, Sam Walton, the founder of Wal-Mart, learned early the value of working hard. Working hard leads to winning. And as the quarterback on his high school football team, he won a lot. In fact, they went on to become state champs. Whether through hard work, luck or just an unflappable optimism, Walton got so used to winning all the time that he couldn’t fully visualize what losing looked like. He simply couldn’t imagine it. Walton even philosophized that always thinking about winning probably became a self-fulfilling prophecy for him. Even during the Depression, he had a highly successful paper route that earned him a decent wage for the times.
    By the time Sam Walton died, he had taken Wal-Mart from a single store in Bentonville, Arkansas, and turned it into a retail colossus with $44 billion in annual sales with 40 million people shopping in the stores per week. But it takes more than a competitive nature, a strong work ethic and a sense of optimism to build a company big enough to equal the twenty-third-largest economy in the world.
    Walton wasn’t the first person with big dreams to start a small business. Many small business owners dream of making it big. I meet a lot of entrepreneurs and it is amazing how many of them tell me their goal is to build a billion-dollar company. The odds, however, are significantly stacked against them. There are 27.7 million registered businesses in the United States today and only a thousand of them get to be FORTUNE 1000 companies, which these days requires about $1.5 billion in annual revenues. That means that less than .004 percent of all companies make it to the illustrious list. To have such an impact, to build a company to a size where it can drive markets, requires something more.
    Sam Walton did not invent the low-cost shopping model. The five-and-dime variety store concept had existed for decades and Kmart and Target opened their doors the same year as Wal-Mart, in 1962. Discounting was already a $2 billion industry when Walton decided to build his first Wal-Mart. There was plenty of competition beyond Kmart and Target, some of it much better funded and with better locations and seemingly better opportunities for success than Wal-Mart. Sam Walton didn’t even invent a better way of doing things than everyone else. He admitted to “borrowing” many of his ideas about the business