Empathic Diagnosis Archives

Empathy, properly employed, is a robust business tool that smart entrepreneurs use to design winning value propositions.

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Key Takeaways & Actionable Insights

Here’s why empathy matters for entrepreneurs.

Entrepreneurs’ success depends on what others do — those others being customers. The entrepreneur has the goal of customers buying, as a result of listening to their preferences and meeting them.

But there’s a little more work to do than just listening. As we discovered in Dr. Mark Packard’s previous podcast episodes, the customer is engaged in a continuous, dynamic, and ever-changing value learning process: learning what they, subjectively, really want. So they can’t tell you what they prefer when they are still engaged in the learning process. So listening, while useful in gathering factual knowledge, isn’t quite enough for the entrepreneur to embark upon designing a solution.

The entrepreneur must develop a special kind of “needs understanding” for their chosen customer group.

As Dr. Packard stresses — and as is foundational to the application of Austrian economics to business — the customer determines value, and that value takes the form of an experience: how customers feel about the experienced benefit of an economic exchange like buying a car, driving it, getting it serviced, and sensing the esteem of others for the choice they made.

There are two kinds of knowledge, factual and tacit. Your customers can communicate factual knowledge to you. They can’t communicate tacit knowledge, because it is derived from experiences that only they can feel.

So entrepreneurs must find a tool to represent the tacit knowledge that’s locked in the customer’s mind — a tool for “needs understanding”. The tool Dr. Packard proposes is a mental model the entrepreneur can use in the empathic process.

Importantly, empathy is not emotional mirroring — feeling what another person feels. It’s an active implementation of the entrepreneurial imagination, a cognitive act that the entrepreneur can plan and perform.

The process of modeling “needs understanding” starts with factual knowledge, purposely gathered and organized.

What entrepreneurs must pursue is deep learning about why customers feel the way they do about their experiences The goal is to gain insight in order to be able to improve consumers’ future experience. This requires knowledge-based inference from your empathic imagination about the causes of the current experience.

To do that, entrepreneurs need substantial background information—especially the personal and situational context surrounding the experience: the specifics of who, what, when, why and how. It’s not about imagining the experience of random people; it’s about learning a lot about a specific person in order to be able to successfully empathize with them.

Factual knowledge can be run through the entrepreneur’s mental model.

Once factual knowledge of the customer, their context and their current experience is gathered, the entrepreneur makes two runs of this information through their mental model. Think of it as running a simulation — a mental simulation.

The first run of the mental model is based on the entrepreneur’s own experience. Pick an experience that you’ve had and can self-analyze, so that you have a model of what that experience feels like. Now run the information you’ve gathered about the customer through that model — what does it suggest that they might feel? For example, think of an experience that you’ve had where you bought a product you expected to enjoy, and it disappointed. What did that feel like?
The second run of the mental model is the empathic mental model based on the entrepreneur’s understanding of the customer’s current or recent experience as told during knowledge gathering. You can understand what you felt like when a product disappointed. Now you imagine what the customer feels like or felt like as a consequence of a comparable experience.

The final step is to project the empathic mental model into the future.

The ultimate goal is to imagine what the customer’s feeling would be like in the future, following an experience with a new product or service value proposition offered by the entrepreneur. This is a projection — one that can be carefully constructed from the two previous runs of the mental model.

Create a mental model from your own experiences.
Run that mental model for an experience that a customer has reported to you that they have felt in the past.
Then run a projection of that model for the new experience you are planning to offer.

The more developed this skill becomes, the more confidence you can develop in your empathic projection, and the better you will be able to evaluate the business opportunity you are imagining you will design and create, and the value the customer will experience.

Just as the customer learns what to value, the entrepreneur can learn to project future value.

Dr. Packard emphasizes that the customer is continuously engaged in a learning process — assessing value propositions, making decisions as to what to buy and what to try, then evaluating the resulting experience — was it better or worse than expected?

The entrepreneur must keep up with this learning process, monitoring the customer’s dynamic subjectivism, their ever-changing preferences amidst an ever-changing context.

By keeping up via continuous monitoring, the entrepreneur will be able to make multiple runs of the empathic mental model, and test the model results for increasing predicted value.

Free Downloads & Extras From The Episode

Empathy As A Process (PDF): Get It Here

“The Austrian Business Model” (video): https://e4epod.com/model

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Per Bylund teaches us to explore the only two fields that matter for entrepreneurial success: understanding the laws of economics and understanding the mind of the customer. Isabel Aneyba is an expert in the techniques of empathic diagnosis that yield the understanding of the customer’s mind, and she shares these techniques — and her success in starting and growing a customer research company — on the Economics For Entrepreneurs podcast.

Key Takeaways and Actionable Insights

Listening to customers is a planned activity. Yes, we suggest regular, frequent, conversational interaction with customers. But not without a calculated purpose. You need to know in advance what you will do with the information — what decisions will you make that you can’t make now. This enables you to define the expected value of the information, and how much of your scarce resources of time and money to allocate to gathering and processing it. If you don’t know the purpose and estimated value of the research, don’t conduct it.

5 Steps To Help You Listen With Your Heart Graphic

Click the image to download the full 5-step PDF

Conduct conversations with customers at least every week. Isabel includes conversations in the customers’ homes or offices, conversations in your offices, face-to-face (including digital face-to-face using webcams). To make emotional connections, we look into each others’ eyes. Certainly, these conversations can be integrated with findings from other customer data sources, but they can’t be replaced.

Exercise your passion for listening; don’t focus on asking questions. The style of conversational research is the opposite of interrogation. Don’t work too hard on composing a list of questions, and sticking to your list. Once the conversation starts, let it flow. Focus on what the customer is thinking and feeling, not on facts. Use non-verbal cues to do so (Isabel tells us how during the podcast). Employ gentle probes (“Tell me more about that”) rather than direct questions. Let the customer do the talking and make it comfortable and easy for them. Good researchers, and all entrepreneurs, have a passion for listening.

Storytelling is the great revealer. Rather than ask a structured set of questions about, for example, the stages of a customer journey, it’s better to get the customer to tell a story, in their own words. Invite them to start at the beginning and continue to the end, without interruption. For example, the story of a visit to the doctor might begin with feeling symptoms and end with the doctor’s prescription. The customer will tell you everything that went on in between, from the drive to the office to the time in the waiting room to the doctor’s demeanor. Let them tell the story uninterrupted. You can loop back later into internal details.

Try other exercises besides asking questions. In some cases, Isabel favors the exercise of having a customer make a collage out of photos, magazine pages and other materials. The choices in the collage can revel preferences, and the customer is naturally open to explaining why they made the choices and what the collage and its elements means to them.

Listen with the heart to uncover hidden truths. Isabel explains how:

Open the conversation with an “emotional handshake”. Find a conversational path (which might not concern your business question) for the customer to express emotion. “What do you love to do?”
Listen for the customer’s emotional drivers — expressions like “I feel” or “I enjoy” — when they talk about a behavior or choice or a functional benefit. These expressions reveal emotions, and you can gently probe whether these emotions represent the subjective reason why customers behave as they do.
Interpretation is required — the customer won’t tell you that they take action X because of emotional driver Y. You have to make the connection. Then gently probe to see if you can find confirmation.

Apply the learning to design a better customer experience. Remember that customer research has a purpose. Your purpose in business is to create and keep a customer. Customers purchase your good and services for the experience they anticipate. By listening for their emotional drivers, you’ll identify gaps in the current experience — examples of customer unease. Use the information you gather to eliminate the gaps, and relieve the unease.

Compute the return on information. How much does the information gathering cost? How much value will you able to facilitate for the customer by designing an experience they feel better about?

Free Downloads & Additional Resources

“5 Steps To Help You Listen With Your Heart” (PDF): Click to Download

Isabel Aneyba’s company, COMARKA Consulting & Marketing Research

“Qual Method Aims to Unite Clients, Respondents in Co-creation”

“Let’s Work Together: The Consumer Co-Creation Camp”

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98. Mark Packard’s Empathic Mental Model for Predicting Future Customer Value