Change is happening so fast these days, it seems like even the lightning-quick scribes in the blogosphere are running out of snappy metaphors to explain the mercurial business climate. Consumers’ habits are changing as quickly if not quicker than companies can roll out new products and services. At the same time, the margin between success and failure, particularly for companies seeking to compete in small to mid-markets (ie, those who can’t afford billion dollar missteps), is becoming a razor-thin wire to walk on.
Management is understandably under a lot of pressure in times like these, and the stakes are only getting higher. While the solution here is never simple, there’s a value system that’s getting overlooked by many. That system is far more intuitive, far more human in its essence, than any new trick or analytics tool. We’re talking about empathy—basic understanding and responsiveness to consumer need—which all competitive companies of the future will have to harness to sustain and drive up their market value.
The empathy we’re advocating is a systematic, scalable approach. It’s not about retrofitting a so-called friendlier face on an old system or sticking suggestion boxes, virtual and otherwise, around your enterprise. It’s not just about training customer service representatives. It’s what we call thinking round instead of linear—not focusing so much on production lines and bottom lines as focusing every aspect of your products, services and systems on the consumer. The ones who drive the top line.
It’s an intuitive and reasoned approach for us, but we’re not the only ones buying into it.
The Watermark Customer Experience Study showed that for 2007-2013 the average annual total stock market returns for companies that are accountable to their consumers’ experience were 8.6%, a substantial 2.5 percentage points better than the S&P average returns of 6.1%. But the real bell ringer is this: companies that lag in accountability to consumers had a negative 0.4% average annual return.
When companies truly employ empathy, they spread that ethos across the entire organization. They “get” their customers; not only is this visible in the products and services they offer, but you can see it in the actions of every employee. In order to be successful in any sustainable way, a company must make sure that this isn’t a top-down mandate, but a holistic, scaled strategy.
Across different market sectors, in fact, there are plenty of great examples of businesses waking up and responding to the true needs of the consumer. With the values and needs of the consumer at the center of each action, these companies are seeing noticeable ROI. Take, for instance, the changes that hospital systems are making— from storing and organizing data so doctors can connect more quickly to patient problems, to building more comfort into the system by not waking patients in the middle of the night when vital signs can wait until morning. These changes are proof positive that these organizations are setting up a system for success, one that’s built around accountability to their customers, the patients.
The customers aren’t the only ones demanding this kind of accountability. If you’re more comfortable taking the C-suite’s word for it, Forbes pointed out last month that Marc Benioff, CEO of Salesforce, has added his voice to the slew of leaders putting the stakeholder ahead of the shareholder. Benioff’s assertion rings loud and clear: “The business of business isn’t just about creating profits for shareholders — it’s also about improving the state of the world and driving stakeholder value.”
The empowering thing about empathy is that it’s possible for everyone. It’s in our nature. And for those who are looking to tap into the benefits of empathy and refocus 100% of their business on 100% of their consumers 100% of the time, it can certainly be achieved. By building responsive, consumer-accountable cultures where every employee is focused not on the production line or the product margins, but rather on how he or she can help to better understand and serve that consumer, empathy becomes an authentic and realistic tool to deploy.
CEOs looking to transform their corporate culture—from the factory floor to the top floor—need look no further than FedEx, for example. FedEx has built a brand around reliability, for one, and what customer doesn’t appreciate that? But looking even deeper, you can see that value system communicated is an intrinsic, authentic mission with the consumer at its center. Other gold standard companies like Apple, who reshaped the computing experience to be about a user’s creativity, or DeBeer’s, who understood how to affix a priceless value proposition to a pricey item, aren’t just star stock market performers—their cultures reflect the empathy they have for their consumers.
While any organization can set up this kind of expectation, it takes the work of re-prioritizing and re-focusing your energies to be the kind of company that can truly deliver on it. But when you do, the results get delivered too. By reorganizing yourself around the consumer, employing systems and processes to ensure he’s the center of your approach, you can begin to really live and breathe—not just pay lip service to—empathy. By making your starting point—your product or service—aligned with your consumer, you can begin to make a connection on every level, from the sales rep in your store to the campaigns in the media.
When you’ve broken down the old model, that rusty linear thing, you begin to Think Round. This results in a single mission (satisfying the needs of your customers) and a single shared plan with which to achieve that mission. With renewed focus and a systemic charge, the once siloed and stratified company can reshape itself into something far more powerful, effective, organic—and Round.