THE EMPATHY ECONOMY !

[Anonymous]

The Empathy Economy

“Design thinking” can create rewarding experiences for consumers–the key to earnings growth and an edge that outsourcing can’t beat

You can’t Six Sigma your way to high-impact
innovation, but you can design your company to generate products and services
that provide great consumer experiences, top-line revenue growth, and fat profit
margins. That’s the sometimes-painful message CEOs in America are learning
today.

Quality-management programs can’t give you the kind of empathetic
connection to consumers that increasingly is the key to opening up new business
opportunities. All the B-school-educated managers you hire won’t automatically
get you the outside-the-box thinking you need to build new brands — or create
new experiences for old brands. The truth is we’re moving from a knowledge
economy that was dominated by technology into an experience economy controlled
by consumers and the corporations who empathize with them.

“MASTERS OF HEURISTICS.”  Indian and Chinese engineers and
manufacturers are doing more and more of the old cost- and quality-control
Six-Sigma stuff (you haven’t seen anything yet in outsourcing), leaving U.S.
corporations to build new business models around customer culture. America’s
customer culture is a divide that foreigners have a hard time penetrating —
which gives U.S. companies their best, and perhaps only, shot for growth. And
design thinking is increasingly the discipline managers are embracing to
penetrate this culture.

Roger Martin, dean of the Rotman School of
Management at the University of Toronto, is reshaping his entire MBA program
around the principle that “businesspeople will have to become more ‘masters of
heuristics’ than ‘managers of algorithms,'” that “design skills and business
skills are converging,” as he said in the Winter, 2004, edition of the school’s
alumni publication. It’s time to embrace a new value proposition based on
creating — indeed, often co-creating — new products and services with
customers that fill their needs, make them happy, and make companies and
shareholders rich.

Understanding, empathy, problem-solving — these are
the heuristic managerial skills needed today, argues Martin, who advises Procter
& Gamble (PG ) CEO A.G.
Lafley. That should tell you a lot. Lafley is using design thinking to transform
P&G into an innovation powerhouse. Managers who want to “get” the new
innovation paradigm should check out Martin’s MBA and exec-ed programs.

RIGHT-BRAIN GAINS.  Martin isn’t the only one
who understands this major shift in the economy and why CEOs must respond. In
his new book, A Whole New Mind: Moving from the Information Age to the
Conceptual Age, Daniel Pink argues that left-brain linear, analytical, and
computer-like thinking are being replaced by right-brain empathy, inventiveness,
and understanding as skills most needed by business.

Pink points to
Asia, automation, and abundance as the reasons behind the shift. What does this
mean for future jobs? Winners are designers, inventors, counselors,
ethnographers, social psychologists, and other right-brain folks, while losers
will be lawyers, engineers, accountants, and other left-brainers who will see
their jobs migrate across the Pacific. There’s also, of course, C.K. Prahalad’s
terrific book The Future of Competition: Co-Creating Unique Value with
Customers.

If you still harbor doubts about what’s happening, check
out the job boards of two of my favorite design sites: idsa.org and core77.com.
The Industrial Designers Society of America runs one of the best design contests
in the world (which BusinessWeek supports and publishes the results of
every June) and core77 is one of the coolest, most informative design sites
around.

RISING TO THE TOP.  In December of
last year, ZIBA Design in Portland, Ore., a top design consultancy, ran an ad
for a “visualization specialist.” ZIBA advertised itself as “an international
design consultancy that helps companies create meaningful ideas, designs, and
experiences that customers crave.” It says it’s a company driven by an obsession
“for understanding people, brands and technology.” “ZIBA innovates with soul.”
Is that heuristic enough for you?

That same month, Palo Alto
(Calif.)-based IDEO (see BW, 5/17/04, “The Power of Design”) ran an ad for a
conceptual designer. It read: “You bring…a holistic approach to process:
Formulating cultural and user insights, mapping opportunity spaces through
strategic frameworks, and expressing compelling solutions.” Ask yourself this:
Who in your company at this moment is mapping out opportunity spaces through
strategic frameworks?

Smart CEOs are turning to this kind of design
thinking to guide them to the new land. ZIBA, IDEO, and other design firms are
in great demand. Increasingly, design thinking is making its way up to “C” suite
levels inside corporations, with chief creative officer, chief innovation
officer, or even chief customer officer joining the organization table.
Sometimes, design thinking goes all the way to the top.

SHAPING CONSUMER EXPERIENCE.  Think about what GE Healthcare
Technologies (GE ) CEO Joseph M. Hogan has to say about the future of his
business. Hogan wrote in @issue: The Journal of Business & Design:
“Today, when we think about designing, say, a new MRI system, we don’t just
think about designing the product, we think about designing the whole radiology
suite. Design in the next 10 years will move beyond the product. It will move
beyond workflow. Hospitals in the future…will have different ways of
interacting with the patient. We have to think about setting the course for how
design can affect the whole health-care experience.”

Patient experience.
Consumer experience. Take Hogan’s template and apply it to the U.S. economy,and
you can see where we’re going. Now, how many of you have looked up the word
“heuristic” yet?

[Author]

March 12, 2005 at 10:46 AM