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Peter Klein on Entrepreneurial Empathy

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03/20/2019Hunter HastingsPeter G. Klein

Today we talk with Peter Klein about empathy—a critical tool in the entrepreneur’s toolbox. It’s through empathy that entrepreneurs can get into the customer’s mind, understand and identify their needs and wants from their perspective and in their perception. This is the skill that enables the design of new products, new services, new systems and new solutions. If the entrepreneur has exercised empathy well, the chances of success in the design process are high for the customer to say, “Yes! That’s what I need!” Is empathy a difficult skill to master? Not really. We all have it to some degree. It needs to be applied with a combination of subtlety and discipline.

Show Notes

Empathy is a skill we learn from childhood. We’re taught as kids, when we say or do something that might be unkind or upsetting to another person, to “think about how they must feel”. The vernacular is to “walk in their shoes”. It’s the same essential skill we apply as entrepreneurs.

Entrepreneurs need to master the skill for an audience that might not be in their social circle and with whom they may not be familiar. You may be selling to car buyers, or cooking enthusiasts, or sports fans, or the procurement officer at a client. This kind of empathy is a little bit less natural and a little bit more learned.

It is entirely possible to learn entrepreneurial empathy and to get better at it. You can develop a process of reading and gathering data about the category or market you’re operating in, talking to actual and potential customers, conducting quantitative or qualitative surveys (like focus groups), analyzing the sentiments in social media conversations, or just talking to folks with a viewpoint. You can hire a consultant or an employee with highly developed customer empathy skills. But always, it’s your interpretation of the data that’s the key. What is motivating the customer, what is driving them, what is the feeling that’s at work?

There are plenty of tools. There are market research tools, analytical tools, and all kinds of methods you can use. Learn them on YouTube or an online course. Or use our Entrepreneurial Diagnosis Tool: the Contextual In-Depth Interview.

Think of yourself as a Doctor, performing a diagnosis. Often the patient can describe symptoms, but does not know the underlying cause, and certainly doesn’t know the cure. The doctor asks questions, performs some pattern recognition based on existing knowledge, and perhaps performs some tests to narrow down the possibilities. In the end, the doctor arrives at the diagnosis and the prescription based on skill.

The Doctor analogy extends even further to the cure you are trying to deliver to the customer. Your target customer is not so much looking for something new as they are seeking to solve some dissatisfaction. There is some feeling on their part — a little vague, perhaps, not too well articulated, but nevertheless genuinely felt — that something in their life could be better. Ludwig von Mises called it “felt uneasiness”, which is a wonderfully descriptive expression. As an entrepreneur, you are taking away an uneasiness. The result is a better feeling on the customer’s part — an end to that uneasiness.

This is what entrepreneurs do in a free market economy of mutual voluntary exchange. We persuade customers that they will feel better, be better off, experience more enjoyment, if they buy the product or service we are offering to them. They can be confident of that future feeling because of the empathy the entrepreneur has exercised in developing an understanding of them, their dissatisfactions and their unique individual preferences. The entrepreneurial system is best for everyone, because it’s based on empathy.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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