WEBVTT

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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:

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Why is Apple so innovative?

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Year after year, after year,

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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,

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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?

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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

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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,

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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?

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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,

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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?

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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:

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"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."

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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,

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we say how we're different or better

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and we expect some sort of a behavior,

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a purchase, a vote, something like that.

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Here's our new law firm:

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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:

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It gets great gas mileage,
it has leather seats.

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Buy our car.

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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

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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?

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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;

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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,

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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.

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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 --

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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.

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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:

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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.

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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

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that correlate perfectly
with the golden circle.

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Our newest brain, our Homo sapien brain,

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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.

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It's also responsible
for all human behavior,

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all decision-making,

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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

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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.

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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.

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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,

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then how will you ever get people

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to vote for you,
or buy something from you,

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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.

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And Samuel Pierpont Langley
had, what we assume,

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to be the recipe for success.

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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

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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

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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.

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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

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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

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had a college education,

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not even Orville or Wilbur.

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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,

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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,

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he quit.

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He could have said,

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"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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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,

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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)

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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

00:11:29.504 --> 00:11:34.480 align:center
is that if you want mass-market success
or mass-market acceptance of an idea,

00:11:34.504 --> 00:11:38.480 align:center
you cannot have it
until you achieve this tipping point

00:11:38.504 --> 00:11:41.480 align:center
between 15 and 18 percent
market penetration,

00:11:41.504 --> 00:11:44.480 align:center
and then the system tips.

00:11:44.504 --> 00:11:47.749 align:center
I love asking businesses,
"What's your conversion on new business?"

00:11:47.773 --> 00:11:50.406 align:center
They love to tell you,
"It's about 10 percent," proudly.

00:11:50.430 --> 00:11:52.573 align:center
Well, you can trip
over 10% of the customers.

00:11:52.597 --> 00:11:54.543 align:center
We all have about 10% who just "get it."

00:11:54.567 --> 00:11:56.280 align:center
That's how we describe them, right?

00:11:56.304 --> 00:11:58.781 align:center
That's like that gut feeling,
"Oh, they just get it."

00:11:58.805 --> 00:12:01.241 align:center
The problem is: How do you
find the ones that get it

00:12:01.265 --> 00:12:03.909 align:center
before doing business
versus the ones who don't get it?

00:12:03.933 --> 00:12:07.480 align:center
So it's this here, this little gap
that you have to close,

00:12:07.504 --> 00:12:09.885 align:center
as Jeffrey Moore calls it,
"Crossing the Chasm" --

00:12:09.909 --> 00:12:13.480 align:center
because, you see, the early majority
will not try something

00:12:13.504 --> 00:12:17.480 align:center
until someone else has tried it first.

00:12:17.504 --> 00:12:20.480 align:center
And these guys, the innovators
and the early adopters,

00:12:20.504 --> 00:12:22.695 align:center
they're comfortable
making those gut decisions.

00:12:22.719 --> 00:12:25.480 align:center
They're more comfortable
making those intuitive decisions

00:12:25.504 --> 00:12:29.480 align:center
that are driven by what
they believe about the world

00:12:29.504 --> 00:12:31.480 align:center
and not just what product is available.

00:12:31.504 --> 00:12:34.151 align:center
These are the people who stood
in line for six hours

00:12:34.175 --> 00:12:36.311 align:center
to buy an iPhone when they first came out,

00:12:36.335 --> 00:12:39.480 align:center
when you could have bought one
off the shelf the next week.

00:12:39.504 --> 00:12:41.647 align:center
These are the people
who spent 40,000 dollars

00:12:41.671 --> 00:12:44.480 align:center
on flat-screen TVs
when they first came out,

00:12:44.504 --> 00:12:46.813 align:center
even though the technology
was substandard.

00:12:47.504 --> 00:12:51.480 align:center
And, by the way, they didn't do it
because the technology was so great;

00:12:51.504 --> 00:12:53.480 align:center
they did it for themselves.

00:12:53.504 --> 00:12:55.480 align:center
It's because they wanted to be first.

00:12:55.504 --> 00:12:57.981 align:center
People don't buy what you do;
they buy why you do it

00:12:58.005 --> 00:13:01.480 align:center
and what you do simply proves
what you believe.

00:13:01.504 --> 00:13:05.480 align:center
In fact, people will do the things
that prove what they believe.

00:13:05.504 --> 00:13:10.480 align:center
The reason that person bought the iPhone
in the first six hours,

00:13:10.504 --> 00:13:12.480 align:center
stood in line for six hours,

00:13:12.504 --> 00:13:14.885 align:center
was because of what they believed
about the world,

00:13:14.909 --> 00:13:16.909 align:center
and how they wanted everybody to see them:

00:13:16.933 --> 00:13:17.965 align:center
they were first.

00:13:17.989 --> 00:13:20.480 align:center
People don't buy what you do;
they buy why you do it.

00:13:20.504 --> 00:13:22.480 align:center
So let me give you a famous example,

00:13:22.504 --> 00:13:27.067 align:center
a famous failure and a famous success
of the law of diffusion of innovation.

00:13:27.091 --> 00:13:28.480 align:center
First, the famous failure.

00:13:28.504 --> 00:13:30.480 align:center
It's a commercial example.

00:13:30.504 --> 00:13:32.741 align:center
As we said before, the recipe for success

00:13:32.765 --> 00:13:36.157 align:center
is money and the right people
and the right market conditions.

00:13:36.181 --> 00:13:37.926 align:center
You should have success then.

00:13:37.950 --> 00:13:39.480 align:center
Look at TiVo.

00:13:39.504 --> 00:13:42.219 align:center
From the time TiVo came out
about eight or nine years ago

00:13:42.243 --> 00:13:43.481 align:center
to this current day,

00:13:43.505 --> 00:13:47.155 align:center
they are the single highest-quality
product on the market,

00:13:47.179 --> 00:13:49.052 align:center
hands down, there is no dispute.

00:13:50.099 --> 00:13:51.906 align:center
They were extremely well-funded.

00:13:51.930 --> 00:13:53.629 align:center
Market conditions were fantastic.

00:13:53.653 --> 00:13:55.480 align:center
I mean, we use TiVo as verb.

00:13:55.504 --> 00:13:58.763 align:center
I TiVo stuff on my piece-of-junk
Time Warner DVR all the time.

00:13:58.787 --> 00:14:00.830 align:center
(Laughter)

00:14:01.303 --> 00:14:03.480 align:center
But TiVo's a commercial failure.

00:14:03.504 --> 00:14:05.480 align:center
They've never made money.

00:14:05.504 --> 00:14:07.480 align:center
And when they went IPO,

00:14:07.504 --> 00:14:09.480 align:center
their stock was at about 30 or 40 dollars

00:14:09.504 --> 00:14:11.933 align:center
and then plummeted,
and it's never traded above 10.

00:14:11.957 --> 00:14:14.480 align:center
In fact, I don't think
it's even traded above six,

00:14:14.504 --> 00:14:16.480 align:center
except for a couple of little spikes.

00:14:16.504 --> 00:14:18.838 align:center
Because you see, when TiVo
launched their product,

00:14:18.862 --> 00:14:21.480 align:center
they told us all what they had.

00:14:21.504 --> 00:14:24.958 align:center
They said, "We have a product
that pauses live TV,

00:14:24.982 --> 00:14:29.480 align:center
skips commercials, rewinds live TV
and memorizes your viewing habits

00:14:29.504 --> 00:14:31.293 align:center
without you even asking."

00:14:32.679 --> 00:14:34.480 align:center
And the cynical majority said,

00:14:34.504 --> 00:14:36.480 align:center
"We don't believe you.

00:14:36.504 --> 00:14:39.052 align:center
We don't need it. We don't like it.

00:14:39.076 --> 00:14:40.139 align:center
You're scaring us."

00:14:41.195 --> 00:14:42.480 align:center
What if they had said,

00:14:42.504 --> 00:14:47.480 align:center
"If you're the kind of person
who likes to have total control

00:14:47.504 --> 00:14:50.480 align:center
over every aspect of your life,

00:14:50.504 --> 00:14:53.480 align:center
boy, do we have a product for you.

00:14:53.504 --> 00:14:55.482 align:center
It pauses live TV, skips commercials,

00:14:55.506 --> 00:14:57.666 align:center
memorizes your viewing habits, etc., etc."

00:14:58.362 --> 00:15:00.876 align:center
People don't buy what you do;
they buy why you do it,

00:15:00.900 --> 00:15:04.261 align:center
and what you do simply serves
as the proof of what you believe.

00:15:05.063 --> 00:15:09.107 align:center
Now let me give you a successful example
of the law of diffusion of innovation.

00:15:10.504 --> 00:15:13.480 align:center
In the summer of 1963,

00:15:13.504 --> 00:15:17.480 align:center
250,000 people showed up
on the mall in Washington

00:15:17.504 --> 00:15:19.156 align:center
to hear Dr. King speak.

00:15:20.658 --> 00:15:23.480 align:center
They sent out no invitations,

00:15:23.504 --> 00:15:26.480 align:center
and there was no website
to check the date.

00:15:26.504 --> 00:15:28.480 align:center
How do you do that?

00:15:28.504 --> 00:15:30.647 align:center
Well, Dr. King
wasn't the only man in America

00:15:30.671 --> 00:15:33.074 align:center
who was a great orator.

00:15:33.098 --> 00:15:35.264 align:center
He wasn't the only man
in America who suffered

00:15:35.288 --> 00:15:37.066 align:center
in a pre-civil rights America.

00:15:37.090 --> 00:15:39.480 align:center
In fact, some of his ideas were bad.

00:15:39.504 --> 00:15:40.527 align:center
But he had a gift.

00:15:41.464 --> 00:15:44.735 align:center
He didn't go around telling people
what needed to change in America.

00:15:44.759 --> 00:15:47.076 align:center
He went around
and told people what he believed.

00:15:47.100 --> 00:15:50.480 align:center
"I believe, I believe, I believe,"
he told people.

00:15:50.504 --> 00:15:53.035 align:center
And people who believed what he believed

00:15:53.059 --> 00:15:56.480 align:center
took his cause, and they made it
their own, and they told people.

00:15:56.504 --> 00:15:58.552 align:center
And some of those people
created structures

00:15:58.576 --> 00:16:01.071 align:center
to get the word out to even more people.

00:16:01.095 --> 00:16:04.480 align:center
And lo and behold,
250,000 people showed up

00:16:04.504 --> 00:16:08.750 align:center
on the right day at the right time
to hear him speak.

00:16:09.504 --> 00:16:12.006 align:center
How many of them showed up for him?

00:16:13.823 --> 00:16:14.855 align:center
Zero.

00:16:15.504 --> 00:16:17.480 align:center
They showed up for themselves.

00:16:17.504 --> 00:16:20.206 align:center
It's what they believed about America

00:16:20.230 --> 00:16:22.480 align:center
that got them to travel
in a bus for eight hours

00:16:22.504 --> 00:16:25.480 align:center
to stand in the sun in Washington
in the middle of August.

00:16:25.504 --> 00:16:28.552 align:center
It's what they believed,
and it wasn't about black versus white:

00:16:28.576 --> 00:16:30.889 align:center
25% of the audience was white.

00:16:31.901 --> 00:16:35.504 align:center
Dr. King believed that there are
two types of laws in this world:

00:16:35.528 --> 00:16:39.480 align:center
those that are made by a higher authority
and those that are made by men.

00:16:39.504 --> 00:16:42.480 align:center
And not until all the laws
that are made by men

00:16:42.504 --> 00:16:45.297 align:center
are consistent with the laws
made by the higher authority

00:16:45.321 --> 00:16:47.257 align:center
will we live in a just world.

00:16:47.281 --> 00:16:49.696 align:center
It just so happened
that the Civil Rights Movement

00:16:49.720 --> 00:16:53.480 align:center
was the perfect thing to help him
bring his cause to life.

00:16:53.504 --> 00:16:56.480 align:center
We followed, not for him,
but for ourselves.

00:16:56.504 --> 00:16:58.805 align:center
By the way, he gave
the "I have a dream" speech,

00:16:58.829 --> 00:17:00.814 align:center
not the "I have a plan" speech.

00:17:00.838 --> 00:17:04.480 align:center
(Laughter)

00:17:04.504 --> 00:17:07.695 align:center
Listen to politicians now,
with their comprehensive 12-point plans.

00:17:07.719 --> 00:17:09.480 align:center
They're not inspiring anybody.

00:17:09.504 --> 00:17:12.480 align:center
Because there are leaders
and there are those who lead.

00:17:12.504 --> 00:17:16.480 align:center
Leaders hold a position
of power or authority,

00:17:16.504 --> 00:17:19.504 align:center
but those who lead inspire us.

00:17:21.037 --> 00:17:23.388 align:center
Whether they're individuals
or organizations,

00:17:23.412 --> 00:17:26.480 align:center
we follow those who lead,
not because we have to,

00:17:26.504 --> 00:17:28.341 align:center
but because we want to.

00:17:29.289 --> 00:17:33.727 align:center
We follow those who lead, not for them,
but for ourselves.

00:17:34.988 --> 00:17:37.480 align:center
And it's those who start with "why"

00:17:37.504 --> 00:17:42.244 align:center
that have the ability
to inspire those around them

00:17:42.268 --> 00:17:44.479 align:center
or find others who inspire them.

00:17:45.720 --> 00:17:46.884 align:center
Thank you very much.

00:17:46.908 --> 00:17:48.504 align:center
(Applause)