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Why Knowing Who You Are Is So Important To Your Business

05/15/2014 05:26 EDT | Updated 07/15/2014 05:59 EDT

A memo written by Apple CEO Steve Jobs in 2010 but recently released during his company's legal war with Samsung starts with the question "Who are we?"

We'd like to think he asked that question because he read our blog post "Why knowing who you are is so critical to your future" but we're thinking that probably isn't the case. However, it is great to have the importance of knowing who you are as a company validated by one of the most successful leaders of our generation.

In the memo, Jobs worries about "founders' dilemma", the phenomenon in which a company is so trapped in its historical business paradigm, it can't see the threats and opportunities in the future it needs to adapt to in order to survive and thrive.

By example, Guy Kawasaki, an early Apple senior executive turned Silicon Valley venture capitalist and sage, often tells the story about how the shifts in the refrigeration business killed off so many companies and spawned the creation of new ones. Before electricity, there was a big business in cutting ice blocks out of lakes and shipping them around the continent to cool things that needed to be cooled. With the advent of electricity came electric refrigerators. The point of the story, Kawasaki points out, is that all of the companies in the ice block business died and a whole new community of companies were created to manufacture and sell fridges. In hindsight, all of the ice block companies should have seen that electric fridges were their future and made the transition from the past form of their business to the future form.

Why didn't the leaders of the ice block companies see the future of their industry and make that transition? Why didn't Kodak and Blockbuster, just to name a couple, see where the futures of their businesses were going and evolve? The answer is Jobs' big concern in his 2010 memo: founders' dilemma. None of these leaders could think outside of the current paradigm of their businesses and adapt in a way that would allow them to survive and thrive.

Overcome founder's dilemma by defining who you are at your core

Every CEO has a definition in his or her mind of what the company is (what business it is in). For most companies, this traditional/legacy definition limits its ability to grow because it doesn't capture its full value, capability and opportunity. In other words, the company is operating with blinders on that act as a constraint on growth (all companies wear blinders so it is just a question of whether or not they are wide enough). The area outside of a company's blinders is its blind spot and this is the very place that new opportunities for growth exist (e.g., Blockbuster could have seen buying Netflix in its early stages as the beginning of its evolution to a bigger future).

Having a clear, concise and compelling definition of who you are at your core does two inter-related things: it creates more focus for the organization which, in turn, enables you to see the full range of opportunities for the company (tightening the focus widens the blinders). This may seem counter-intuitive and contradictory but revealing the full value of the organization (identifying what business it is really in) exposes opportunities for revenue you never knew existed. Jobs knew this, which is why he started the memo with the question "Who are we?" Asking themselves the same question could have saved the CEOs of Blockbuster and Kodak from the perils of founder's dilemma.

Defining who you are at your core also makes you, as a CEO, more accountable to your senior executives and your board. When everyone shares the same definition of the company and articulates it in the same way, they all become accountable to that definition. What is and isn't right for the company comes into tight focus for all involved, which allows two things to happen that counteract founder's dilemma:

  • More good choices: Because everyone can see outside the company's blinders, they can be more creative in identifying new, innovative and relevant opportunities. If an idea is truly aligned with who the company is at its core, a person can make a stronger case for this new opportunity using the organization's self-definition as the basis for this argument without the fear that it will be rejected because of personal opinion, irrationality and power dynamics.
  • Fewer bad choices: All opportunities for the company are evaluated within the context of its tight self-definition. Is this idea aligned with who you are or isn't it? If someone, especially the CEO, proposes an idea passionately and forcefully that isn't aligned with who the company is, everyone else (senior executives and board members) can use the agreed-to self-definition to rationalize why this opportunity isn't right for the company, in spite of the CEO's passionate belief. It empowers everyone to speak up and defend the company against bad ideas, no matter where they come from. What usually happens when a company has such a clear self-definition is that bad ideas never get brought to the table because people self-censor using the core definition. They don't want to embarrass themselves by getting shot down - justifiably - when they propose something that isn't align with the organization's core definition.

In light of the number of companies that have gone bankrupt recently as a result of founder's dilemma, it is difficult to underestimate how dangerous a threat it is for all companies. Compounding this problem is that technological innovation accelerates the impact of founder's dilemma. Doing the hard work to create a clear, concise and compelling definition of who the company is -- what business it is really in -- is a tiny investment to inoculate a company from this potentially fatal disease.

If anyone has any question about why Steve Jobs was such a remarkable leader, part of the answer is that, as the founder, he was constantly fearful of the threat of founder's dilemma, even as he was basking in the glow of Apple's amazing success.

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