The Business Case of Empathy

The more an organization can understand and empathize with the key motivators of their employees and customers, the more likely that organization will have sustainable success. ~ Chip Conley, author of PEAK

Especially in an uncertain economy, empathy seems like a soft skill for businesses to develop, but in fact it's a powerful source of new growth, innovation, and employee engagement that drives profits and sustainable results.

The more an organization demonstrates care for its customers and employees, the more potential for growth and better profits, better products and happier employees. Empathy might be the most underappreciated and overlooked strategic tactic in business.

Empathy is a powerful social force inherent in every individual.? Every human being is wired to care. In our brains specific cells called mirror neurons enable us to feel sensations and emotions of other people. It contributes to our intuition, care, and insight for others.

What's needed is a focus on recovering these basic abilities that become buried in our day-to-day business routines. Organizations can learn to become empathic, and use empathy to forge connections to customers and employees.

In Wired to Care: How Companies Prosper When They Create Widespread Empathy, authors Dev Patnaik and Peter Mortensen put forth a strong case for empathy on an organizational level. According to the authors:

Companies prosper when they tap into a power that every one of us already has – the ability to reach outside of ourselves and connect with other people.

Real People in the Information Age

The problem most organizations face is an over-reliance on data to the exclusion of face-to-face customer contact. Human beings are intrinsically social animals with innate abilities to sense what others are thinking and feeling.?

We rely on our intuitions to help make decisions. But in large groups, contact is lost and along with it our instincts for what is going on outside of the group. Corporations become insular.

When people in an organization stay in touch with their customers and with each other, they have a sense of what's going on in the world. They're able to see new opportunities faster than their competitors.

Large institutions easily lose their connection with their customers, relying on market research and data that doesn't communicate the full picture of human experiences. Because of their size, many businesses are far removed from the day-to-day lives of the people who buy from them. But not all.

Harley-Davidson's office is a shrine to the motorcycle culture that the company has helped to create. Offices display photos, memorabilia and banners from rallies. Harley-Davidson's customers and employees ride together. Engineers, accountants, and administration staff acquire an intuitive understanding of the customers who buy their products.?

The company mandates that leaders spend measurable time out with motorcycle riders. While many people at the company don't ride, the lifestyle and values are instilled in employees, even those who've never ridden a bike. Harley has made widespread empathy a key element of corporate strategy.

The Shoes of Your Customers

Modern technological improvements in data mining provide strategic plans, sales forecasts and manufacturing reports. Companies become so dependent on these models they can lose touch with reality. The map is not the territory.?

Firms use all this information to create other maps – market segmentations, research reports – of how customers use their products. These maps are poor substitutes for actual human contact. Many managers make critical decisions based on numbers without any personal feel for the people they serve. They fail to see new opportunities and innovative solutions for customers.

Nike has built an entire culture to celebrate the potential for athletic greatness in each of us. Nike's headquarters looks like an athletic center; its employees take breaks for running, basketball and soccer games. The people who develop running shoes are usually runners themselves. They possess a basic intuition for running that can't be captured in any market report. They aren't alone. Other companies have learned the value of empathy.

• IBM helps its customers to keep their information technology up and running by staying as close as possible to its business clientele.?
• Microsoft succeeded with the Xbox because it was designed for gamers by developers who love games.?
• Apple makes computers, iPhones, iPads and iPods for people who love cool, easy-to-use products. Their organizational culture reflects the lifestyle of their customers.

Business happens on the street, in stores and in homes. When companies have a real connection to users, they come up with better designs for their products. Harnessing the power of empathy corrects that gap between abstract data and reality. Having an informed intuition of other people can help overcome these challenges.

People don't buy things because of their demographics — nobody buys something because they're a 25-30 year old white male with a college degree. People go about living their life and some situation arises in which they need to solve a problem... and so they buy a product to do the job.?

The true power of this explanation of buying habits is in giving people in business a frame with which to exercise empathy.?

In fact, both Akio Morita of Sony and Steve Jobs of Apple were famous for never commissioning market research — instead, they'd just walk around the world watching what people did. They put themselves in the shoes of their customers.

When a Company Lacks Empathy

There are those business executives who dismiss empathy for the more concrete and defensible virtues of rational analysis. They have a point. So did the executives at Blockbuster when faced with the challenges of Netflix. No better example of this exists than the story of Blockbuster and its competitive tangle with Netflix.?

Blockbuster saw the rise of Netflix in the very early 2000s, and chose not to do anything about it. Why? Its management couldn't see the world from any perspective other than from the vantage point from which they sat: atop a $6 billion business with 60% margins, tens of thousands of employees and stores all across the country.?

Blockbuster's management certainly couldn't see the world from their customers' perspective: that late fees were driving folks up the wall, and that their range of movies eschewed anything that wasn't a new release.

In fact, this story seems to repeat itself over and over for disrupted companies: they go out of business wanting to sell to customers what they want to sell to customers, rather than what customers want to buy.

Connection with the people you serve can make the abstract more grounded and immediate because that information is connected to a real person you know. Face-to-face encounters with your customers provides context for the data.

The Way Things Used to Be

Overly simplified, abstract information often carries authority inside organizations; knowing and understanding your customers is the antidote.

"The problem with business today isn't a lack of innovation; it's a lack of empathy," writes Dev Patnaik in Wired to Care.

Empathy is the ability to step outside of yourself and see the world as other people do. For some companies, it's also a rarely talked about engine for growth.

Harley Davidson is a company that has a strong connection to its customers, their riders. They hire people who are fans. As such, it's a company that is valued for its connection with consumers. They stay in touch with what their people want.

This is the way business used to be done two centuries ago. For thousands of years, people made things for other people they knew. Tailors, cobblers, other trades- and craftsmen custom-made what their customers wanted.

All that ended with the industrial revolution. When goods became mass produced in factories, a rift grew between producers and consumers that we've been struggling to repair ever since. It's much harder to succeed when you create things for people you don't know and whose lives seem alien to your own, some of whom are half way around the globe.

Connecting through Social Media

Information technology is reshaping relationships between companies and customers, often bringing benefits to both. The misuse of technology, however, can erode customer care.?

Despite living in an age where technology has made always-on data connections ubiquitous, we are more disconnected from the people we impact than at any other time in history. Even with the opportunities provided by social media sites, we continue to miss opportunities for genuine dialogue.

Fortunately, many companies are changing that. They know that customers crave the ability to give immediate input on a company's products and services. People prefer to buy products from businesses that show real knowledge, interest and care of customers' needs.?

For a company to care for customers, its managers and front-line employees must listen empathetically to what they have to say. Social media sites allow open communication, when it's set up and managed properly.

A 2011 study conducted by Parasole Restaurant Holdings and newBrandAnalytics found what customers say online increases staff ownership of the relationship between employees and customers.?

Indeed, technology can actually enrich relationships with customers and employees. But it requires commitment from senior managers. What's need is for leaders to:?

1. Affirm their commitment to active, empathetic involvement with customers
2. Understand the ways in which current procedures and systems mediate interactions with customers
3. Promote the deployment of social networks and other technologies to help customers tell their stories?
4. Encourage and enable workers and managers alike to hear them?

Only when employees can step into their customers' shoes can companies add authenticity to the claim: "We care for you."

Inside the Empathic Organization

Authors Patnaik and Mortenson describe organizations that make empathy part of the way their employees work Open Empathy Organizations. Such companies depend on having employees at all levels genuinely interested in other people. They provide multiple ways to interact with each other and with customers.

They also provide ways for employees to become consumers of their own products and services. Netflix gives DVD players to employees along with a free subscription to their services. That way they know what the customer experience is like.

Smith & Hawken, a gardening tools company, provides a large garden at its headquarters for employees to work in. In that way, employees develop a better understanding of their products and how to use them.

People who work inside an empathic company understand how much their work plays a positive role in the lives of people. They become more attached to the results they see from their work.

Employees work better when they can see that their work makes a difference. When they are able to express care for customers, they become more engaged and energized. Social media sites and open communications with customers can help draw producers and consumers together.