What your mum didn’t tell you about empathy and the financial impact on business

I was having dinner in a restaurant in Phuket (island in the south of Thailand) a few days ago, when a little girl between 8 and 10 years old approached my table to sell flowers. My answer was a resounding NO.

How was it possible to say no despite of me having high level of empathy?

I usually support different institutions of vulnerable groups, but nevertheless, my answer was no. Apart from the fact that I am against child exploitation, the experience forced me to reflect on the impact of empathy.

How does empathy work?

Have you heard about the circle of empathy?

The circle of empathy represents all the people you feel empathy for. You will see here how it works and how it impacts your company’s products and financial results.

Imagine that you are part of a tribe 600 years ago. You relate to your friends and family and live in a village that is the center of the empire. They are all part of your circle of empathy, and you will take care of them as much as you can.

Of course, in your town there are some you don’t relate to but even if you don’t know or don’t like them, you wouldn’t place an army in front of them. This is because they are close to your empathy circle or the one of people close to you.

Rivals need to be outside your circle of empathy. If they were in it, you could not think of invading or attacking them easily, as this would put you in an emotional and moral conflict. The way you manage your circle of empathy conditions the decisions you make and your future situations.

Unless you have psychopathic characteristics (psychopaths do not have an empathy circle and you can read more here about psychopaths in business), you will have this circle quite defined even if you have never stopped to think about it.

In companies, this has an important connotation. How employees manage their empathy towards others impacts on the complexity of the product, on innovation, or even on the health of the whole organization.

In general, you need at least members of a value stream (all the people needed to produce a product or service successfully) to be part of the same circle of empathy. This allows individuals to interact honestly, try to self-organize (there is no sustainable self-organization without empathy!), and try to solve their problems. This also includes removing dependencies or managing their lack of knowledge.

As I said before, whoever is put in and whoever is left out impacts on the product, on the innovation, and even on the health of the organisation. Of course it also has an economic impact! If you leave part of the people belonging to the same value stream outside the empathy circle, then you will need more time to acquire the same knowledge or produce the same thing.

In my years as a change consultant, I have seen many companies where IT teams are left out of this circle and treated as factory workers. Besides being unfair—as it is one of the areas where most knowledge is created—it is one of the most frequent patterns that denotes very old management structures.

All people working on a product (regardless of their specialty or whether or not they are IT) need to be part of the same circle of empathy. And those organizations where this does not happen will get different types of dysfunctions that will directly impact the way value for customers is created.

I have helped some companies where software and business teams were located on different floors of the same building, which generally ended up being excluded from the circle of empathy. Another organization that I helped years ago had two owners who did not get along well. Half of the company did not have empathy for the other half, and the business was virtually divided in two. The result was that vast structures and roles were required to coordinate them.

As you can see, people usually copy the empathy models of their leaders.

When teams need to work together but do not feel empathy between them, then complexity increases. They often require external support or managers to help them solve their problems or coordinate work among themselves.

This is a case where you can clearly see how emotions condition the complexity of a software product. This could also be applied to any other physical product.

From my point of view, empathy is a type of superior cognitive ability. If you never thought of it, you rarely stop to reflect on this point. That is why it is associated with “conscience” and “self-awareness”, and it requires personal effort to be identified.

Making it visible and having the right conditions for the adecuated levels of empathy is something that a good change consultant must take into account when helping a company to improve.

In organizations it is necessary to make it visible, and that any change plan takes into account how empathy is managed between related teams or people with similar objectives. And of course the company needs to know how to measure it.

My first recommendation is that you inspect and understand how your empathy circle works before trying to influence others.

If you enjoyed this article, why don’t you check the #1 book on enterprise agility and advanced change management techniques in Europe and US, Leading Exponential Change 2nd edition?

Thanks for listening,

Leave a Reply