Product Toolbox

Golden Circle


5 min


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You most probably already heard of it: Simon Sinek’s Golden Circle. Seems to be an old hat, yet so many companies don’t exactly know why they do what they do. So, let’s find out.

The whole hype started in 2009 when Simon Sinek’s TED talk on YouTube went viral and his book as well. So, what is it in brief terms?

The golden circle basically captures and old product management wisdom, namely: Start all your action by asking what’s the core problem are you trying to solve for you user. The golden circle just put’s this on a larger — and more fundamental — level and asks: “What is the problem people out there have, which gives our company (and it’s solution) the right to exist?”. And after answering this question, all the other questions of strategic positioning (=how) and solution you want to offer (=what) can be answered meaningfully.

So, let’s have a closer peep on the concept and how you can use it for your company.

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The Why

The same way your personal ‘Why’ should provide an answer to the question ‘why you even bother standing up every morning?’ (assumed that you’re lucky enough to earn your money by doing something that is meaningful to you), your company’s ‘Why’ should be the reason for it’s existence.

What the ‘Why’ is not

.a Now, here the first pitfall arises: Because the reason for your company’s existence should NOT be to ‘make $$$’ or to ‘improve some process’. That’s exactly the kind of company that nobody in this world called for. And this way your ‘Why’ will not unfold any power to motivate. Instead, in an ideal market, each player solves a problem for a group of others. Because it assumes that by going after a (user) problem relentlessly you will also automatically maximize your businesses’ chances of success. Sounds a little bit like Adam Smith invisible hand, right?  → Your ‘Why’ should be outward focused, not inward focused

.b Another pitfall is to confuse the ‘Why’ with a vision statement (= describes a future state of the world in which the problem is absent/solved). As Simon himself put it: “WHY is about who we are — not who we want to become in the future”. A vision statement is also great, but it steers your attention away from the people who currently have that problem and makes it harder for you to derive possible solutions from it.  → Your ‘Why’ is not your vision

.c Last, what many companies do is to write a Why-Statement that actually captures the ‘What’. Classic example: “We want to improve XYZ”. This actually describes the solution — the ‘What’. It hinders you to find a proper ‘How’ and your actual ‘What’. Usually these become platitudes then, such as “by using Agile methods” (How).  → Don’t mistake a Solution-Statement for your ‘Why’

What it actually is

Instead, the ‘Why’ asks for the core problem people out there (=your potential users) got and that you want to solve.

Simon himself puts it like this: “Put into words what an organization’s culture is about when working at its natural best.”

This means that your ‘Why’ can be empirically tested and it should be: Is this really a problem worth solving?

How to get to your organizations ‘Why?’

One way to find your ‘Why’ is to collect the stories of your co-workers on the company. It could be the reason why they joined. It could be a special moment that created a formative memory which gave them a reason to stand up for this job every morning. Maybe a user interview that made them realize what’s the actual problem worth solving. 

Out of these stories you usually find a set which expresses your ‘Why’ quite well. This collection of stories should express the common purpose of the company. And it should usually hint to the problem you solve out there for actual people — a higher purpose.

The How

The ‘How’ basically expresses your strategy. ‘Strategy’ is often used as a catch-all phrase and nobody actually knows what’s behind it, but it’s fairly simple. ‘Strategy’ consists of

  • Your target user group for whom your solve the problem and their painpoints/needs → your personas and they journeys

  • Your strategic positioning in the market against your competition

  • Your business model

Could be that we forgot one or two, but these are the strategic points we take a look at when building products.

Most often, a How-Statement captures at least one of these strategic aspects which make your solutions to the problem stand out. For example, in a highly-regulated market your ‘How’ could be to “provide best-in-class UX” if this is something that sets you apart from your competition. Or else, it could be “free to the end-user” if you get your money otherwise somehow and this sets you apart from anyone else.

Now, here’s the deal: The ‘How’ requires you to walk the talk. Because gaining from its long-term benefits (in terms of Marketing potential) you need to pay the price that comes with it. Take the ‘best-in-class UX’ example: Sometimes it will mean to put more effort into the product (= more ⌚ = more 💰) to fulfill it.

How to find your ‘How’?

Your ‘How’ is rarely found. You can narrow it down by applying strategy frameworks and doing competition analysis. But even after narrowing it down, it’s mostly a decision you take. And as with most strategic decisions: Many paths lead to Rome. Often, there’s no right and wrong. Just take a decision and stick with it.

The What

There are multiple ways to express your ‘What’. 

The classic is to think of the actual product / service you offer. Usually people start by thinking with the end in mind from which you can work backwards: Your product as it could / should be some day. A north star without any technical or business constraints. This is a good approach because it makes your ‘What’ very tangible. Downside might be that it limits your flexibility, because you already commit to a solution — not very agile.

Another — and in our opinion better — way to describe your ‘What’ is to use (measurable) goals or outcomes, which do not exactly describe the solution. Your BHAG (Big Hairy Audacious/Abstract Goal) is a perfect contender for your ‘What’. It can even be your mission statement. One of the reasons we like this is that it will not burden your teams. Instead it gives them total freedom in finding a great solution— that’s their job after all.

And that should be your Golden Circle. This article was less a how-to guide and more a what-is-that, but we hope it helped anyways.

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