Lukas Vogt

Another book off that ‘best-of’ list for the beginning of 2018, I actually came across Simon Sinek for the first time when I saw a viral video of him discussing millennials in the workplace. I found it quite an entertaining and enlightening watch at the time, so when I started the book I had high hopes for a similar experience.

Written by the aforementioned Simon Sinek and first published in 2009, ‘Start with Why’ has become a massive bestseller with over a million copies sold (according to the book cover) and deals with the secret sauce of inspiration for leaders and organizations.

Key ideas:

• Golden Circle: Core to everything else, Sinek proposes a golden circle that explains how organizations (very broadly defined from corporations to social movements) behave. At its core is the ‘Why’, followed by the ‘How’ and finally the ‘What’ of what we do. Quite often, communication happens outside-in (focusing on features, price etc. of a product – the what), whereas true loyalty from those we’re trying to engage can only come from a shared Why.
• Biological foundations: Sinek argues that this Golden Circle is actually reflected in the biology of our brains. The limbic brain (the older, emotional part) drives the Why and the How, whereas the newer part of the brain, the neocortex (where our rationality lies), drives the What. The limbic brain drives our decisions and is powerful enough to sometimes even contradict our rational understanding of a situation.
• Tipping points: Using the Law of Diffusion of Innovations, Sinek suggests winning over the Innovators (the first 2.5% of customers) for a given idea through the Why and then expanding into additional segments from there. He views a market share of 10% for example as not very relevant and impressive as this can be achieved just by playing evenly across all segments (and should ideally be far exceeded for any given idea).
• Golden Cone: Organizations should reflect the Golden Circle in a three-dimensional way – with the Why driven by a leader (typicially the CEO), the How driven by senior executives and the What driven by the actions of the employees inspired by the Why. In this way, the organization can amplify the message of Why to a much larger extent than a single individual could ever hope for.
• How People: Many visionary leaders who are great at ‘Why’ often need to surround themselves with great ‘How’ people who understand and share the vision but have their own forte in great execution (e.g., Steve Jobs and Steve Wozniak). The leaders should be aware of their own blindspots and recruit accordingly.
• Succession planning: When looking for a successful replacement for a visionary Why leader (or founder), it would be wise to go for someone who shares the existing vision and caries it forward (rather than forcing their own, new vision onto the institution). Thus, the original spirit of, e.g., innovation can be preserved. (I actually witnessed in person a CEO succession where a great ‘Why’ leader was replaced by a strong ‘How’ leader and it was quite challenging – so this definitely rings true.)

As you can see by the relatively short list of key ideas that I’ve taken away from the book, this was rather light fare tome. The core idea sounds convincing and there are plenty of (very well known) historical examples connected to it (Sinek actually keeps coming back to some of the most famous leaders like Steve Jobs and Martin Luther King). However, beyond this core idea, there isn’t that much more meat in the book. As someone who’s comfortable with conceptual thinking, I feel like I get the idea the first time round and don’t need all the extra ‘filler’ examples. In fact, I couldn’t really point out very many noticeable differences if I had just watched the TedX talk (under 20 minutes) instead of reading the whole book (around 230 pages).

Would I read it again: No. Just watch the video of the TedX talk instead.

Recommended for: Leaders trying to engage others more convincingly and to generate true loyalty.

When I went on my first book ‘shopping spree’ of 2018 to find some promising reading material to prepare me for my transition from corporate to startup life, one of the few books that kept coming up in most ‘best-of’ lists was The Lean Startup.

Written by Eric Ries and first published in 2011, it lays out a scientific approach to new business building with the ambition of helping aspiring founders decrease waste and improve their chances of success. Ries has previously worked on quite a few startups and liberally shares from his experience as the CTO and co-founder at IMVU and as advisor to many other startups (including some rather well known ones like Dropbox).

Key ideas:

• Validated learning: Ries argues in favor of a new goal for startups operating under conditions of extreme uncertainty – validated learning. This means empirically discovering valuable truths about the business prospects of the company by measuring what’s really going on, especially around actual customer needs.
• Core assumptions: To get to validated learning, we should state our hypotheses clearly in advance and then test them. The two main hypotheses for most startups are the value hypothesis (will, and if yes, how will a new product or service deliver value to its customers) and the growth hypothesis (how will new customers discover the product or service).
• Build-Measure-Learn feedback loop: A key theme is getting to real-world evidence fast by completing something Ries calls the ‘Build-Measure-Learn’ feedback loop. This is also where the idea of the minimum viable product (MVP) is introduced – a concept that’s by now penetrated corporate thinking quite successfully. The goal behind an MVP is building a version of a new product that can go through the full feedback loop as quickly as possible and thus generate the desired evidence.
• Innovation accounting: Linked to the feedback loop is the concept of ‘innovation accounting’. Ries proposes a new kind of accounting for startups to replace traditional accounting (which is not really appropriate for a startup setting). The first step towards innovation accounting is to quickly build an MVP and establish a baseline for actionable metrics. After this comes ‘tuning the engine’ by rapidly and continuously optimizing the product aiming at improving those metrics. In the third step comes the moment of truth: pivot (i.e., adjust the strategy) or persevere. For all of these metrics, we should ideally use cohort analysis (looking at each batch of new customers as they come in) instead of traditional gross metrics.
• Engines of growth: Diving a bit deeper into the growth hypothesis from above, the book outlines 3 main possible engines of growth. First, there’s ‘sticky growth’ which focuses on customer retention. Second, there’s ‘viral growth’ were every new customer acquires additional new customers for the company (resulting in a ‘viral loop’). Finally, there’s paid growth which works if acquisition costs are smaller than a new customer’s lifetime value.
• Fives Whys: As a new business grows, the balance between continued speed and fixing newly developing problems requires a new approach to maintain the agility and responsiveness that comes with the methods presented. Here, the Lean principle of asking ‘why’ 5 times is introduced. This allows for identifying human root causes behind seemingly technical problems. By making ‘proportional investments’ into fixing problems (depending on how much pain an issue causes), a startup can stay nimble as it grows.
• Innovation sandboxes: In the end, Ries also discusses how to get the Lean Startup principles into a corporate environment and develop new business while protecting the existing core business as much as necessary. His favored setup are clearly defined innovation sandboxes where ever increasing aspects of a product or service (he uses the example of the pricing page in a sales process) are exposed to the new methods.

I’ve come across many of the concepts of The Lean Startup in the past few years – testament to the exceptional success the book and its ideas have enjoyed. At the same time, reading them in the original context and with vibrant examples did add quite a bit to my own understanding. I’m convinced I’ll be able to quickly apply many things, especially around testing leap-of-faith assumptions and cohort analyses. The latter comes somewhat unnaturally to classically trained managers and I remember quite a tough time trying to get them implemented and used at my last role.

The only bits that seemed a bit less thought through came in the end with the prescriptions (e.g., for expansive research programs). While I liked some ideas (such as the overall approach of a long-term stock market), I wasn’t fully convinced.

Would I read it again: Yes.

Recommended for: Entrepreneurs (or ‘innovation managers’) both in startups as well as established corporates.