The Open Empathy Organization

In 1986, manager Jack Stack and twelve coworkers staged a successful buyout of Springfield Remanufacturing Center from its parent company, International Harvester. The engine rebuilder had been losing money to the tune of $2 million a year, and Stack and his team believed that they could revive the moribund unit. Realizing the need to make massive operational changes, they revamped SRC’s system for financial reporting and decision making, and in the process, they helped spawn a management revolution: open-book management.

Stack and his colleagues realized that the only way to successfully make a multitude of changes quickly was to enlist the help of every single person in the company. Every employee needed to think and act like an owner. They needed to understand the business consequences of their actions and make better decisions.

To achieve this, each employee was taught how to read the company’s financial statements, including all the numbers that were critical to tracking performance.

Then the managers made the books public. Stack posted the company’s financials on breakroom walls, in handouts, and on the computer network. Training courses and regular meetings taught everyone what the numbers meant. Suddenly, a machinist on the shop floor could see the effect of finishing a part faster, reducing raw material, or shaving some time off of a job. The results were astounding: SRC’s sales grew 40 percent a year in the first three years, and operating income rose by 11 percent. When other manufacturers heard of SRC’s turnaround, they too overhauled their decision structures. By 1995, Inc. magazine had devoted an entire issue to the phenomenon called open-book management.

As successful as open-book management has been, it’s clear that numbers aren’t everything. Short-term financial success doesn’t prevent a firm from being blindsided by new threats, especially in a fast-moving sector; operational efficiency doesn’t guarantee a firm’s ability to discover and leverage new ways of providing value to the customer; and acumen alone can’t mobilize a large group of people. For today’s companies, value creation depends on knowing as much as they can about the people they serve. More complex than providing an open book, creating value for people requires the creation of an open channel to the outside world.

Empathy = Growth

Companies prosper when they tap into a power that each one of us already possesses: empathy, the ability to reach beyond ourselves and connect with other people. Human beings are intrinsically social animals. Our brains have developed subtle and sophisticated ways to understand what other people are thinking and feeling. Simply put, we are ‘wired to care’.

We rely on this instinct to help us make better decisions in situations that affect the people around us. Unfortunately, this instinct seems to get short circuited when we get together in large groups. We lose our intuition, our gut sense for what’s going on outside of that group: corporations become more insular; colleges start to feel like ivory towers; and political campaigns take on a ‘bunker mentality’. This sort of isolation can have disastrous effects, because institutions depend on the outside world for revenues, reputation and votes.

By contrast, people in organizations with a widespread sense of empathy possess a shared and intuitive vibe for what’s going on in the world that helps them see new opportunities faster than their competitors, long before that information becomes explicit enough to read about in the Wall Street Journal. They have the courage of their convictions to take a risk on something new, and the gut-level intuition to see how their actions impact the people who matter most: the folks who buy their products, interact with their brand, and ultimately fund their 401(k) plans. This intuition transcends what is traditionally referred to as market research.

A widespread sense of empathy starts to influence the culture of a place, giving it a sense of clarity and mission. People spend less time arguing about things that ultimately don’t matter. Empathy can even start to ensure more ethical behaviour in a way that no policies and procedures manual ever could.

The Open-Empathy Organization

The idea of creating an Open-Empathy Organization is to build and propagate a system of human information. It entails every member of an organization having a first-hand sense of what people need, how their company solves those needs, and how what they do as individuals can add or subtract value. When employees can see that their daily activities have an impact on people outside the company, they often become inspired to create more positive impacts.

Most of us are reasonably good at figuring out how to make each other happier, but those instincts can’t kick in if we can’t see the people we’re trying to help. Widespread empathy restores that connection. That’s why, just as with open-book management, people in Open-Empathy Organizations make better decisions. When they can see who they’re really working for, they know why their work matters and how to do it better. Instead of realizing how finishing a project faster will make the company more profitable, people in Open-Empathy Organizations know exactly where value resides in the world of customers and potential customers.

In our research at Jump Associates, we’ve had the chance to meet a few such organizations. Harley-Davidson fills its head- quarters with tangible reminders of the shared story of motorcycle riding. Everyone who works at Harley need only look around them to understand exactly what riders genuinely value. Likewise, Nike has built an entire culture to celebrate the potential for athletic greatness in each of us. IBM helps its customers keep their information technology up and running, which is why the company stays as close as possible to its clientele, using its services division, direct sales force and online portals to connect employees with customers on a daily basis.

For these companies and others like them, empathy is an intangible-but-important asset, and a significant engine for growth. Open-Empathy Organizations outperform their competitors and consistently add value to the top line because they understand how the work they do affects the people they serve. Generating widespread empathy throughout a company requires the active involvement of senior leadership. It can demand changes in how employees are trained; what facilities look like; or even how managers are incentivized.

The over-arching goal is to improve the thousands of decisions people make every day. This might sound like a daunting undertaking, but any company can take steps in the right direction with a few small changes. Organizations that make empathy an easy, everyday and experiential part of the way that their employees work will succeed in making empathy widespread.

1. Make it Easy

Open-Empathy Organizations depend on having employees at all levels who are genuinely interested in other people. This can be difficult, especially since no one likes to take on a bunch of extra work. Everyone has enough to do as it is – mandating ethnographic field research visits for all employees simply adds to their workload. Open-Empathy Organizations don’t make their employees work hard to develop empathy for their customers – instead they provide lots of easy ways to interact. Although every business needs to walk many miles in the shoes of its customers, few have the time or budget to travel thousands of miles to take that walk. Following are some tips for develop- ing empathy in your organization.

Use the language of your customers

One straightforward way to determine the level of empathy that an organization has is to listen to the language it uses. It’s easy for corporations to develop language and behavior that distances them from their customers. In fact, the more successful a company becomes, the more likely it is to become removed from customer segments and purchasing decision makers.

One straightforward way to determine the level of empathy that an organization has is to listen to the language it uses. It’s easy for corporations to develop language and behavior that distances them from their customers. In fact, the more successful a company becomes, the more likely it is to become removed from customer segments and purchasing decision makers.

Open-Empathy Organizations instead always talk about their own work using the same terms that their customers do. Cars should be called ‘cars’, not ‘C-class Vehicles’. Chairs should be called ‘chairs’, not ‘seating’. By doing this, any organization can get a little closer to its customers.

Dress like your customers

Another easy way to reflect the outlook of your customers is to dress the way they do. Target stores used to get this right. Target shoppers tend to be middle-class folks with an appreciation for both style and low prices. When they shop at Target, they wear the casual, fashionable clothes sold at the retailer. Target corporate headquarters used to be the same way. It wasn’t unusual to see executives wearing the same clothes that they helped put on the shelves. That changed in 2004 when Target created a strict dress code requiring formal business attire.

Changing the dress code created two obstacles to empathy. First, Targeteers no longer looked like their customers. Second, and more important, they now had to shop at other stores to buy clothing that was more suitable for work. Local newspapers even noted a marked increase in sales for menswear stores serving Target employees in need of sharper clothes. By becoming ‘more professional’, Target lost an easy way to walk in the shoes of its customers.

Use your own products and services

Ask your employees to use the company’s own products. Mail-order video rental service Netflix gets this right. When you start as a new coder, marketer, or even line worker at Netflix, you’re given a DVD player if you don’t already own one. As an employee, you also get a free subscription to the company’s service. As DVDs begin to arrive in your mailbox at home, you experience what all Netflix subscribers experience. You learn how to change the order of the films that you want to watch on your online queue, you anticipate the arrival of new discs, and you learn how to repackage the discs to ship them back to Netflix. People at Netflix don’t have to wonder what it’s like to be a Netflix customer: they are customers, too. Subscribing to their own service allows everyone at Netflix to see constant areas for improvement and to envision new services to add value to their existing offering.

2. Make it Everyday

At first, the novelty of empathy-building activities can make the initiative seem special, a break from the usual routine. That’s a bad sign. Open Empathy Organizations avoid the kind of ‘big empathy building events’ that leaders love to kick off. While they can create a lot of excitement, these one-off events rarely have lasting impact. It’s far more important to insert empathic information into the work place on a daily basis. To really stick, empathy needs to be part of the everyday routine: accessible, quick and a constant presence. Here are some ideas.

Get senior leadership to model behavior

One of the most essential characteristics of an Open-Empathy Organization is a leadership team that demonstrates empathic behavior in its everyday work. For example, when David Neeleman was CEO of JetBlue Airways, he flew around the coun- try several times per week. But he never flew on executive jets or in first class – he rode in coach class on regularly-scheduled JetBlue flights. Once the plane reached cruising altitude, David would get up and join the flight crew to pass out snacks and drinks. When the plane landed, he would pitch in to clean up after the flight. This first- hand exposure to his offering and his customers provided David with a strong sense of empathy. More importantly, his visible activi- ties were well-known throughout the company, and people at all levels replicated his interest in the company’s customers. Even now that he has left JetBlue, David’s commitment to develop empathy for his customers has set the tone for the rest of the organization.

Hire your customers

There is no more effective way to get closer to your customers than to have them come to work alongside you. Every single day, you will have the opportunity to learn about the people you serve just by chatting with a co-worker. Better still, all such employees have a great intuitive sense for customers. Years ago, upon realizing that it didn’t understand a generation of kids who had grown up with PCs, cell phones, and the Internet, Casio hired teenagers to help design its products. This gave the company instant, actionable feedback from its target group. Using the same logic, The Container Store figured its best holiday retail employees would be the same folks who regularly bought holiday products. The company sent invitations to its best gift-wrap customers to help sell wrapping paper and other holiday items and was greeted with an overwhelmingly-positive response.

Surround yourself with empathic information

The final key to making empathy an everyday part of working is to fill the workplace with information about your customers. We came across a good method for making empathy an everyday part of working several years ago while visiting semiconductor giant Intel. The company has a robust ethnography team that conducts extensive interviews with ordinary people in their homes to figure out what sorts of devices Intel and its partners should create next. But Intel is a large company, and the ethnog- raphy group is small. To widen its impact, the group translates what it learns about people into end-user ‘personas’ – fictional people whose demographics, personality traits, and habits are based on those of real people the team has met. Such personas can provide touchstones in the product development process, but they wouldn’t have any impact unless people read them. That’s why Intel’s ethnography group has created a unique method for spreading personas throughout the organization. The team has hit upon one of the rare moments when people sit down and have some time to themselves: in the bathroom. Intel posts the personas inside restroom stalls, where they’re easy to access and read. After all, people are going to spend time in there anyway. Why not help them learn something in the process?

3. Make it Experiential

Finally, it’s important to make empathic information experiential. The emotional centers of our brains aren’t easily triggered by Excel spreadsheets. Open-Empathy Organizations work to create ways for employees to interact with customers and environments for themselves. Sometimes that means encouraging employees to get out into the world. Other times, it means bringing the outside world into the office.

Routinely visit real customers

Too many leaders only understand their customers in the form of market research about their purchasing habits. They don’t know them as people. Open-Empathy Organizations instead encourage employees to regularly meet the actual folks that they serve. When Lou Gerstner became IBM’s CEO in 1993, he launched ‘Operation Bear Hug’ to meet this goal. The program required each of his 50 top managers to meet with at least five of IBM’s biggest customers in the span of three months. Managers weren’t supposed to sell product in those meetings. Instead, they were to listen to customer concerns and think about how IBM might help. All of those executives’ 200 direct reports then had to do the same thing. Gerstner demanded short written reports on the outcomes of each Bear Hug meeting, and he personally read every single one. As a result of this process, Gerstner saw the opportunity to dramatically grow IBM’s business by moving into professional services, a shift that restored the once-beleaguered firm to profitability and growth.

Bring the outside in

Many companies are insulated from what life is like for their customers. Open-Empathy Organizations blur the line between their company and the rest of the world. One great way to do this is by finding ways to bring the outside in. Gardening tools company Smith & Hawken does a great job of this. Everyone in the company is required to take rotations working in the garden – to literally get down in the dirt. It’s the company’s way of helping its employees develop a better gut sense for how real gardeners view the world. The gardening program helped Smith & Hawken create an empathic connection that helped employees quadruple the com- pany in size and expand from a mail-order business into one of the fastest-growing retail companies on the planet.

Communicate through high-bandwidth media

Though it’s easy to boil down information about customers’ lives to a single bullet on a PowerPoint slide, Open-Empathy Organizations recognize that too much gets lost in the process. Instead, they rely on storytelling, video, and even immersive spaces to communicate data about the people that they serve. No one does this better than Nike.

A major brand in the United States, Nike is also a big name in Japan, a notoriously difficult market for American companies to crack. Experiential empathy has made this possible. At the beginning of a project for Japan, Nike designers visit the country in person to gain inspiration by hanging out with teenagers. The designers see their homes, go to school with them and get a sense for what ‘cool’ means to them. Upon returning home to Beaverton, Oregon, designers recreate the environments they’ve visited overseas: they build rooms that look like the teenagers’ bedrooms they saw in Japan, right down to the posters on the walls and the colour palette of the furniture. They even turn on the same Japanese TV shows that teenagers there like to watch. These rooms serve as an immersive space to help designers and marketers create offerings for Japan. They sketch, brainstorm, and debate a product’s look or positioning while immersed in the world of the people they want to connect with. This way, even someone who didn’t go to Japan can experience what they missed.

Use consumer-insight people as coaches, not experts

Consumer insight departments are often the keepers of information about the people a company serves. By contrast, in Open-Empathy Organizations these folks act as coaches and facilitators who create opportunities to learn about customers for everyone else in the organization.

Procter & Gamble exemplifies this principle. In 2001, it created the ‘Living It’ program, in which its consumer insight division arranges for managers and other employees to live for a few days in the homes of lower-income consumers. The same group also developed ‘Working It’, which allows employees to work behind the counters of small stores to see consumers up close and personal. On numerous occasions, P&G employees have come up with breakthrough ideas for products in response to needs that they discovered through time spent outside of the organization. While these experiences are set up by the insights department, the people who go through them work in every function and at every level of the company.

In closing

Creating an Open-Empathy Organization entails a long-term process of organizational change, but the first steps are simple: take the way that you already work today and add in easy, everyday, experiential activities that put you in the shoes of the people you serve. Companies can begin to change by filling just one wing of the building with fresh air. If even a single unit develops wide- spread empathy, that group’s enthusiasm for the people it serves can spread throughout the company.

Over time, any organization can learn to hear what people out- side of its walls are talking about, feel what they are feeling, and see the world through their eyes. Open-Empathy Organizations see the world as it really is: rich with life and overflowing with unseen opportunities for growth.