No Empathy, No Profits

A friend recently called to ask the name of the shovel we use to remove snow. It looks like a sled pushed by a bar, and it moves tremendous amounts of snow quickly.

Years ago I may have been stumped by the question. I may have gone to look at the shovel and found, as in this case, that its name was not stamped on the handle. I may have tried to remember the name of product and the store at which I purchased it. Even if we could remember that information, our friend may have found the product no longer available at a store near her.

But, this is not years ago; and we were able to find the answer very quickly. Why? I had purchased the product—the Suncast Big Scoop—at Amazon. As a consequence, within minutes, I was able to provide our friend the link to the shovel at Amazon; and she was able to order the product that same day without doing hours of her own research.

Indeed, if I am asked, I can tell you the date of my very first purchase at Amazon. It was March 6, 1997; I purchased four books for $57.01. How do I know? Amazon keeps the records for me and makes them readily accessible.

The same week, I needed to retrieve information for taxes. When I went online to my bank account, I found that the bank maintains only six months of my banking records. The cost of server space to maintain records is basically the same for the bank as it is for Amazon—zero.  Amazon chooses to make my shopping experience almost always delightful, and my bank choose otherwise.

During the 1996 Summer Olympic Games, my brother visited. He works in a technology field, and my wife remembers that he and I had a heated discussion about the commercial viability of Amazon. Amazon had sold its first books online in 1995, and my brother was certain they were doomed for failure. I thought otherwise; but unfortunately, when Amazon went public in May 1997, it didn’t register with me to begin to accumulate their stock.

In his seminal monograph Profit and Loss, Ludwig von Mises observes, “If all people were to correctly anticipate the future state of the market, the entrepreneurs would neither earn any profits nor suffer any losses.” Of course, it is literally impossible for that to happen; and that’s why there are disagreements about the viability of emerging companies.

Von Mises goes on to point out in Profit and Loss, “Profit and loss are generated by success or failure in adjusting the course of production activities to the most urgent demand of the consumers.” Yet, if you asked the management of my bank, they would tell you that they are as interested as Amazon is in meeting my most urgent needs. My bank, like almost any organization, would explain how they are committed to customer service. They would be blind to the fact that they don’t deliver.

So that brings up a question: How are Mises’s observations on profit and loss, which are admittedly written in the realm of economics, helpful to managerial decision-making? A recent book helps to bridge the gap. Author Dev Patnaik has probably never read Mises; but in his book Wired to Care: How Companies Prosper When They Create Widespread Empathy he writes, “If you want to create products and services that other people care about, you should put aside your problems and start caring about other people’s lives.”

This statement is operationally meaningful. Would a bank that cares about the lives of its customers post just six months of banking statements in order to save pennies in online storage space expense? The answer is of course not.

Patnaik gives the example of Harley-Davidson, a company that mandates “that leaders throughout the organization spend measureable amounts of times out with motorcycle riders.” No, they don’t mandate that their leaders ride a motorcycle—just that they take steps to increase their empathy for their customers.

There is no formula for how an organization creates a culture of empathy for their customers. But genuine willingness to be empathetic begins with a willingness to give before receiving. Most organizations cannot even get to the starting gate for a culture of empathy because there is no willingness to do the inner-work necessary to examine the dysfunctional beliefs that prevent empathetic behavior.

What are these dysfunctional beliefs? At their core is the belief in a static, win-lose world. In a static, win-lose world, receiving must come before giving, or at best, business is conducted like a hostage trade off—We’ll give you something, if give us something of the exact same or greater value. The individuals who work in such organizations battle with their colleagues to get ahead. What about me? is the mantra repeated silently throughout the day.

Why aren’t more organizations empathetic with customers? One could easily ask why aren’t more people empathetic with other people? The answer is very clear: When one chooses their ego for guidance, the world is evaluated through the ego’s lens whose central concern is What about me? The guidance that follows from that question is sure to be stingy and uncaring.

In my book The Inner-Work of Leadership I provide specific guidance for recognizing our ego and turning away from our ego. Importantly, I cover the specific ingredients that are necessary for an organizational culture to evolve to support the inner-work journeys of their employees. In a declining economy and an increasingly competitive global marketplace, an organizational culture of empathy with the customer is no longer optional: no empathy, no profits.

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3 Responses to No Empathy, No Profits

  1. […] This post was mentioned on Twitter by Glenn Donithan, Barry Brownstein. Barry Brownstein said: No Empathy, No Profits: http://wp.me/p3xtf-fU […]

  2. Andrew Grossman says:

    Student from your ECON 640 class here–

    I think you are making the mistake of assuming that the reason for the bank not showing old statement data is that the bank is being cheap about IT equipment. As someone who works in a technical department of a large company, my experience is that these things happen not due to explicitly poor choices in customer service, but rather due to failures in management, overly rigid procedure, and general ineptitude at any number of levels in the organization. In my organization, I’d expect the following sort of story to be responsible:

    1.Four years ago, someone in management decided that the existing customer website should provide bank statements.

    2. After many meetings, requirements are established and a release deadline is set. The requirements for the initial release includes only six months of history because some members of the team are concerned about hitting the deadline, so complete histories are moved to a future Phase II milestone.

    3. The project is produced on time. No one can believe it.

    4. Consultants are hired to streamline the company. One-third of the technical staff is cut. All spending must be approved by the company’s governance board.

    Additionally, another fifteen percent of the technical staff leaves. Another thirty percent are allocated full-time to long-term projects.

    5. Eighteen months pass. Requests for full histories pile up from customers. The remaining developers suggest continuing with Phase II to direct supervisors. Upper management is completely unaware of the customer concerns and unfinished plans for the project. Technical middle management is distracted with other projects and dismisses these concerns as low priority due to budget constraints and resource limitations.

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