Judy Murdoch

Owner, Highly Contagious Marketing

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How can you create a successful WHY-based small business?

I really enjoyed the talk, How Great Leaders Inspire Action. I'd love to hear some specific examples of successful small businesses that reflect a WHY-centered business.

I define "successful" as profitable and enabling the owner(s) and employees to earn enough to meet the needs of the business as well as the owner's personal needs.

This doesn't require the business to be earning 6-figures but it does require the business to have attained some kind of sustainable momentum and is past the "struggle for survival" stage.

  • Mar 20 2014: Note that any business which floats on the stock market becomes immediately at risk of collpase. This happens because of fear. Unfortunately, the stock market is run on fear meaning that if there is even a hint that a company may say not be able to produce a certain product or is facing some financial difficulties then it is quite possible that share holders will abandon the company, its share price will plummet, its value goes down and everyone leaves it like a sinking ship even if theassumed weakness of the company was not something real. In other words the stock market is based on instability. This is a very different story when the company is not listed on the stock market. While it may not be able to obtain the kind of financing that the stock market provides it does avoid such a collapse provided it still produces high quality goods at a reasonable price.
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      Mar 20 2014: I agree with a lot of what you wrote Frank. Early in my career I worked for a lot of large corporations listed on the stock exchange. I wasn't so troubled by the crazy reactions of the stock market as I was troubled by the lengths my employers went to to spin the story and present the most positive picture they could. I also never liked how everything was about making the next quarter look good. It draws attention away from the larger picture where the more interesting opportunities lie.

      At the same time publicly issued stock can be a good way to finance your company. You have a wider pool of owners many of whom are taking less risk and a smaller reward.

      issuing public stock also makes the company open to public scrutiny. It's easier to see what's really going on behind the public relations spin. In some ways then publically traded companies are held at a higher level of accountability.

      Businesses that aren't publicly traded have privacy and are subject to all the craziness. At the same time their financing options are more limited. A lot of times that's fine.

      It comes down to the values and preferences of the leaders of the company.

      What's interesting in all of this is this takes us back to the WHY of the business owner(s) which will be reflected in financing choices.

      Do you know of any small businesses you admire and see as successful and reflect the WHY of the owner?
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    Mar 24 2014: @Random, thanks for sharing your thoughts.

    Your wrote:

    "I think one way to lead people to fuller hearts and spirits to fill their bellies, make sure their needs are met."

    I agree. I was definitely writing from the perspective as someone living in a prosperous country in which my survival needs are always well met.

    What I'm not clear on is how you're answering the question I posed. My question is how can someone interested in creating a WHY-based company do so. And I'm also interested in examples of successful WHY-based companies.

    I believe WHY-based companies CAN make positive contributions to begin to address the ills you describe in your response.

    If you disagree, what solution do you propose? What are you, yourself doing currently to contribute to a solution?
  • Mar 23 2014: I think what you are asking is if a company understands their fundamental skill/expertise/goal and their customers. Many years ago I visited the headquarters of Honda and in large Kanji characters in the entry way was the phrase "We make motors." Think that phrase drove all the decisions made by Honda for many years.
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    Mar 21 2014: @Random. Thank you for your comment.

    I don't mind you asking although I wonder how open you are to positions that differ from your own.

    I would say my position is slowly evolving as I've grown as a person. The more nourished and full my heart and spirit are the less stuff i seem to need. However, I personally enjoy beautiful, well made things and I like being comfortable.

    It has not been my personal experience that money usually leads to wrong, unethical and corrupt decisions. Money is a tool and like any other tool it can be well-used or misused depending on the person using it.

    I believe overall, we live in a consumer-based economy that sends a message that people are "not enough" and that if they just buy a gadget or service somehow they will finally be "enough" (worthy of being loved).

    I don't think this is healthy for human beings at any level and is not sustainable.

    I believe when people have fuller hearts and spirits they naturally need less material goods. I don't have a good answer for how to lead people to experiencing fuller hearts and spirits.

    What's interesting is that it was my own desire to do better in my business that was the impetus for my spiritual growth. My desire for more money and recognition actually lead me to need less of both and to want success more as a way to make a difference.

    In my experience, my approach has been to focus on my own issues and to work on my own growth so that I'm better able to help others. I am only able to lead to the extent of my own growth. I find getting pissed and angry at what other people are doing distracts me from changing the only thing I really have power to change...myself.
    • Mar 23 2014: Hi Judy.
      I first wrote my comments from a somewhat emotional state without first going through
      many of your comments or those of others. So please allow me that weakness from
      time to time. I usually try and catch what I am feeling or thinking and calm it first, edit my words
      and look for areas that might seem or are confrontational, but I don't want to let go of any passion
      I do feel. Sometimes it's hard to come by.
      Anyway, I do commend you on your ideas and interest and desire to do something such as business
      differently.
      While there have been studies done for close to 100 years concerning money and crime, there is a direct
      connection between the two for well over 90% of all crime, world-wide. And of course, the cost of crime
      to the human race is past astronomical, which ends up sounding like the word, comical.
      You say, "I believe when people have fuller hearts and spirits... they naturally need less material goods"
      I don't know if I would fully agree with that seeing as how there are now billions starving, dying, thirsty and so on, so I would think that it is true when people's needs are met, they need less, feel less lack and also are less prone to violence, crime and corruption and the other negatives that are part and parcel of all monetary systems.
      I agree with you that our system/s send a message that hue-mans then manifest in some way, that some are more valuable than others when that is not the case, and we parse out that value accordingly, dutifully following the party lines we have been told to follow.
      I think one way to lead people to fuller hearts and spirits to fill their bellies, make sure their needs are met.
      The resources of the earth are what everyone works for and they are immorally mismanaged.
      They cannot be morally managed until they are free in the same way that a human cannot become a moral person until and unless they are a free person. To see becoming moral as a form of healing can be applied to the resources of the earth we are destroying
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    Mar 24 2014: @Wayne - what I'm asking is WHY the company is using their skill, expertise, and goal. "We make motors" is Honda's what. It's great, focused WHAT. But Why does Honda make motors to begin with? What goal drove the founders?

    There's a great case study I read years ago that documented Japan's early forays into motorcycle manufacturing. Way back in the 1950s and 60's executives came to the United States and closely observed everything successful manufacturers were doing. Their circumstances were very humble and I believe they stayed at cheap motels sharing a single room.

    My recollection was Japan's burning desire was to build their economy and become a respected player in the global market. Manufactured more complex products like cars, motorcycles and construction equipment and later consumer and business electronics was their long term plan.

    For me that WHY then feels like it was a matter of national pride and prestige. Nothing at all wrong with this WHY. It obviously worked for many Japanese companies.

    Hope this clarifies.
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    Mar 21 2014: Thank you for the recommendations Robert. And thank you for pointing out the common elements that would provide clues re a Why-based company. Another company that comes to mind is Design Within Reach which sells furniture, home accessories, and textiles based on or influenced by classic 20th century designers.
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    Mar 21 2014: Hello Judy,
    From the U.K I would look at Scott Bader, John Lewis Partnership, and Suma Wholefoods. All three were founded as WHY based companies (though in different eras). All three do not have external shareholders.
    I would comment along the lines of Frank. My take on it is that "If those who work in a company don't own it, and those who own it don't work in it" (ie: the standard shareholder model) then it is very hard to sustain a WHY based culture and mentality in a business.
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      Mar 21 2014: @Joshua, thanks for the suggestions. I'll check them out. I'm also wondering if there are alternatives to the standard shareholder model that would be as effective in terms of incentivizing employees. Not my area of expertise but something I'm curious about.
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        Mar 22 2014: Hello Judy,
        As far as I remember, Scott-Bader is a "common ownership model" of business; indeed, it fought for a change in the law (in the 1970s I think) in order for such a model to be made legal, and after the change in law was achieved it became the first company to be so certified.
        John Lewis is a "Partnership" model of business, and a certain percentage of profits are distributed once a year to all its employees as a bonus (instead of giving that money to "distant shareholders").
        Suma Wholefoods is a co-operative model of business, which is different again. Co-operatives tend to be limited in size due to their tendency to use all-inclusive decision-making processes.
        I'm not an expert in these matters, but it was an interest for me when I was in my 20s, driven by my first experiences as an "employee" working for anonymous shareholders.
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          Mar 24 2014: Thank you for the examples, Joshua. Much appreciated and very helpful.
  • Mar 21 2014: Judy:
    "I define "successful" as profitable and enabling the owner(s) and employees to earn enough to meet the needs of the business as well as the owner's personal needs."
    What about employee's needs in which the employee's needs are met so well that they are able to look forward to
    going to work because the worry about whether or not their job will actually take care of them has been
    removed? Thus, they can truly focus on their job because if they take care of it (and the boss and business),
    it will take care of them, beyond simple and mere survival?
    I honestly cannot understand how people can think certain jobs and individuals are more important than others.
    I would like to see surgeons, and lawyers and others eat from filthy dishes that an unimportant dishwasher
    failed to clean properly because it barely pays to, and time is money.
    Do you see success as not being polluting nor matter what, or destructive to environments,
    earth resources, or important human connections like trust, honesty, integrity, ethics, support, inclusiveness,
    acceptance and tolerance with an almost total absence of competitive fire and energy to survive at all costs?
    I'm interested in knowing what you actually think is important because growth is directly linked to a faster use
    of the earth's resources while mainstream media and "important, influential people" prime-the-mind of the populace
    that our problems are almost all due to over-population, something that is far from the truth.
    Where does ethics enter your world if you need to make an ethical decision rather than a business one?
    If you need to choose between money and nature? Profit and pollution?
    Where will your idea of success fall then?
    When money is involved, humans almost always make the wrong, unethical and corrupt decision working
    overtime to find some way to justify it.
    Where do you stand there?
    If you don't mind my asking.
    Some businesses should be in business in order to go out of business, if successful.
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    Mar 21 2014: A few surf shops I admire. The owners started out needing enough profit to surf when the waves break. Then started helping out youngsters around town. Great vibes.
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      Mar 21 2014: Nice! Thanks Michael. That's really inspiring. And you gave me some ideas for finding more "WHY"-centered businesses. Much appreciated.
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    Mar 21 2014: Thanks Robert. Your clarifications are very helpful. I agree.

    Based on the description you've helped clarify, do any actual businesses come to mind for you?

    An additional business I would add, is Zappos, at least the Zappos that was described by Tony Hsieh in his book, Delivering Happiness. I'm not up on what's going on at Zappos currently.

    Thanks again for your thoughts and for clarifying.
    • Mar 21 2014: Businesses where good health and outdoor fun are the answer to the 'Why" question seem like candidates. I would look at the employers where I think I would enjoy going work leap to mind. Places that make or sell fishing equipment, hunting equipment, golf equipment, Engineering software, or marine robots might fall in that category. A company dedicated to teaching engineers about design engineering is a current passion and might fill a niche as we continue to export production and design related jobs out of our country.

      iRobot might be one example, although arguably borderline small business. The Tabasco company is another, after hearing the 60 min program last week. I like the idea of Sybaris Pool Suites and think that is an idea ripe for potential. There are other businesses like these, but a lot depends on the person making the assessment.
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    Mar 21 2014: It's as simple as being a solution to a problem; meeting a societal need.
    With our economic system and the principles of demand and supply, one still has to think about money and profit.
    If not, the WHY business would crash like a house of cards.
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      Mar 21 2014: @Feyisay, oh for sure. I didn't mean to imply that profit isn't important. Otherwise you don't really have a business do you? What I'm getting at here is a balance so that the values of the owner aren't constantly being pushed aside in service of making a profit.

      In my experience you can sell just about anything if you can make a believable case that your product or service enables your customers to have something they really want. I was in US consumer products for 15 years in the personal care sector. All shampoo is pretty much the same: detergent in a bottle. The rest is branding and positioning.

      Are thoughts re businesses you admire for being profitable and for contributing to the public good?
  • Mar 20 2014: How do you define a "Why-based" small business?
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      Mar 20 2014: I define a "why-based small business" as one that puts it's core "why we're in business" as the starting point for decision-making and action. In the "Great Leaders" talk Sinek used Apple as an example.

      I'm paraphrasing here but Apple's big why is "designing tools that help people who think different make their dent in the universe." From their WHY flows HOW "beautifully designed, user-friendly information technology" and finally from their HOW flows their WHAT "computers, mobile phones, and mp3 players"

      This contrasts with most companies you might call "what-based companies" "We sell computers, phones, and mp3 players" HOW using cost-effective manufacturing processes and just in time inventory control processes, WHY We have strong relationships with component manufacturers and we can do this cheaper than our competitors.

      Obviously this is not an apples to apples comparison (no pun intended) but even if you were to substitute Apples How and Why into the what-based equation, most buyers are going to focus on value for the money. Not bad or unusual. But all things being equal, it's hard to compete on why.

      If your customers resonate with your why, you have a competitive advantage that is very difficult to replicate.

      It's easier for a small business to be WHY-based because there are fewer people who have to be in consensus about the Why. Still most small businesses I see emulate what large businesses do.

      I'd also guess most small businesses go the what-based route because it's the norm. It takes courage and a lot of conviction to put your values first assuming your values have to do with doing well by doing good which is the way in which I aspire to run my business.

      As a final point, what-based businesses tend to be fear and ego-based. It becomes about looking good to other people rather than feeling like you're in integrity with what's most important to you.

      Hope this answers your question, Robert. Let me know if you want more clarification.
      • Mar 21 2014: Judy-Thanks for the clarification. It was informative and interesting.

        Relative to your definition, i think you should add another criteria for a successful, that being the "why" needs to be purpose driven and in alignment with the values of employees and business owner. I think you would also need to enjoy the product or delivering the product to the customers in order to not seem insincere or fake. I think it might be very difficult to get customers to resonate with your 'why' unless you believe it that deeply. Since the purpose of a business is to make a profit, the value you select to turn into a business should have the potential to yield a profit. If you can tap into this and get employees that share the dream or value, then you can have a happy workforce that is driven by the passion of performing work they see as both meaningful, and a means to sustain a good quality of life. Seeking just the profit is great as long as the money is good and the employees driven by greed, but few businesses have this sort of constant high income flow.

        I think some one examples of 'why' type businesses are those where the answer is "Because it is fun". Things in this category include hobby or sports based businesses(hunting, fishing, golf, etc.). Such themes might be well suited to a small business model. Another might be "Because it is needed". Things in this category would include services, basic needs (food, shelter clothing), and perhaps businesses that do something that is related to some unique geographic feature or characteristic of an area that people wish to take advantage of (like the mountains or the beach) or exploit (like oil, coal or some strategic mineral). Services could be good small businesses and perhaps some of the beach shops, but small business might be better suited to support of large businesses involved in energy or mining.
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    Mar 20 2014: @Eugene - maybe, it depends on the size of the business both in terms of employees and in terms of revenue. Profit sharing is always an option regardless of size. I like the idea of always looking for ways that let everyone working in the business share the rewards. It's interesting that often money isn't the main motivator. Money paired with recognition and meaningful assignments is much more fulfilling.

    Any small businesses you admire for having a strong why and are doing well?
  • Mar 18 2014: Well there is something called a employee stock ownership plan which would help