Read an Excerpt
Welcome to the Emotional Economy
One Man's Vision
One day in 1609 Galileo stood on his balcony, peered at his world in a new
way, and changed it. What he used to achieve this milestone was actually very
simple. He took implements that were readily available to him-a piece of organ
pipe fitted with a curved lens at either end-and gazed through it. Pointing his
telescope toward the rippling ocean, he saw what no one else could. Two ships
far off, their billowing sails driven by a steady wind, aimed their bows
directly at him. A magnified world, he realized, had enormous practical
possibilities. Enemies could be spotted before they readied for attack. Friendly
vessels, long away from home and feared lost, would be "there" before they
docked. This was an innovation that people could understand-and they embraced
it.
Then he shifted his focus from the world he knew. Turning his implement to
the vast seventeenth-century sky once again, he saw something that no one else
could. Peering at the magnified heavens, Galileo discovered four small moons
circling the huge mass of Jupiter. Dark spots on the sun's bright surface were
suddenly visible, as was the now illuminated surface of the moon as the sun's
rays reached it.
These celestial bodies, he realized, were moving. But why? The prevailing
theory of Galileo's time held that the earth was the center of the universe. The
spheres surrounding it were supposed to move as a group, not as independent
entities. Galileo knew that his findings were consistent with a view radically
different from the accepted wisdom. Copernicus had already put forth the radical
idea that the earth actually revolved around the sun, and not the other way
around.
Galileo also knew that expressing beliefs contrary to rocksolid dogma could
be deadly: In 1600 Giordano Bruno, a Dominican friar, had been burned at the
stake in Rome because he had insisted that the earth did not remain motionless
at the center of the universe.
Obviously, a different perspective on the accepted world they inhabited
terrified a lot of the good people of the time. Unlike the ocean view through
the telescope, which brought the objects of their world "closer," this sky
revelation created chaos. What did this information mean? How could they deal
with it? Could it hurt them? Would they have to change the way they lived? The
familiarity of their world was being questioned, and there didn't seem to be any
ready answers. So instead of trying to understand the message of the spheres,
they punished the messengers who delivered the "bad" news.
It took a long time, but eventually Galileo's keen observations changed our
understanding of how natural forces operate in the universe. Back on earth, they
altered how the planet itself was viewed and linked it into the bigger picture
of space. Without this knowledge astronauts could not have traveled to the
moon.
With a symbolic step into the unknown, Galileo helped create a path to a
world he could not have imagined.
A New World's Old Way to Look at Business
Today's visible business world is not unlike the world in which Galileo
lived. Many innovations-like technology- are embraced as long as they don't
shake up long-established foundations. Machines are controllable and fixable.
What they can and can't do is well understood, and how they affect business is
usually highly appreciated.
But the other system that fuels business-human nature -is a whole other
matter. Humans are emotion-driven entities, and emotions are messy. Little
understood and less than predictable, emotions can disrupt, cause upheavals, and
occasionally inspire fear. Certainly this ever-present human aspect is regarded
as an annoying hindrance, something to be glossed over or avoided altogether.
Think about it. Have you ever had to manage:
• Judy, "the thinker," who seems to spend hours staring into space?
• Ed, "the always excited," who can't restrain himself from leaping into
every new project with gung-ho abandon?
• Raphael, "so quiet you don't know he's there," who turns in precision
work?
• Stephanie, "the caretaker," who spends too much time remembering when
people started work and commemorating the occasion with a cake?
• Ralph, "the boss-in-training," who wants to head every committee?
These kinds of employees (and there are lots more) get under your skin. You
don't want to deal with their quirks and tics and habits because you believe
they take precious time away from work.
Unfortunately, your view is upside down. All those personal "tics" are clues
to who these people are-and, more important, to the innate talents they
possess.
Just as the prevailing "wisdom" in Galileo's time forbade changes in what was
accepted as true, businesses today tend to turn a blind eye to a force they
don't want to understand because they don't know how to deal with it. Nor do
they comprehend what it means to them.
THE ANTI-EMOTIONAL BELIEF SYSTEM
It's time to toss aside the antiquated
"rules" of management, and for a good reason: They don't work.
Consider the tenets of the accepted wisdom regarding employees:
• Everyone can excel at anything provided they try hard enough.
• People will work harder only if they get paid more and are given perks.
• The focus of employees' development should be on fixing their
weaknesses.
• An organization's outcomes are dictated by the hard financial realities of
better products and processes, not people.
• Treat every employee the same way.
• The key to growth is increasing demand.
• Superior performance is the result of improved technology.
• Competencies, skills, and knowledge are always more important than
talent.
• Superior performance is the consequence of rational thinking, so emotions
should not be allowed to affect reason.
• "People" are an organization's most valuable asset.
And where customers are concerned, the beliefs can be summarized like
this:
• Customers "know" what they want: better products at reasonable prices that
will keep them coming back for more.
•Customers are always right; just give them what they want.
• Treat every customer the same way.
This skewed view of human nature is as backward as the narrow view of the
universe was in the 1600s, for a fundamental reason: It doesn't begin to
consider how human nature can impact positively on business outcomes.
A growing number of executives intuitively know that their organizations are
running at a fraction of their human potential. (They're right. It's less than
one-third. This startling number, and many others like it, will be covered in
detail later in this book.) They are aware of constant fluctuations in the job
performance of individuals and teams. The behavior of customers, they realize,
is not something that can be relied on. But just as Galileo wondered why the sky
moved but didn't understand what drove it, these executives don't have at their
disposal a way of describing, much less linking, their observations and finding
a solution to their problem.
That's because most businesses regard the subjects of the "impact of people"
and "human potential" as interesting issues in theory that are irrelevant to
their organizations' financial outcomes in reality. The general assumptions are
that these issues don't exert an important influence, so why bother
understanding them?
The same head-in-the-sand viewpoint applies to customers. Organizations are
well aware that enormous growth potential lies in existing customers rather than
from new ones. In his popular book The Loyalty Effect, Frederick F.
Reichheld notes that the result of turning 5 percent of ordinary customers into
return ones leads to an average increase in profit per customer of between 25
and 100 percent. But while most organizations maximize their ability to attract
new customers, they minimize their understanding of what makes these essential
people come back over and over again.
What many organizations don't see-and what many don't want to understand-is
that employee performance and its subsequent impact on customer engagement
revolve around a motivating force that is determined in the brain and defines
the specific talents and the emotional mechanisms everyone brings to their
work.
But at the same time we are finally seeing a growing awareness of just how
influential human nature is in determining business outcomes. Human nature, the
"soft side" of an organization, is attracting interest, particularly in the
financial community. Investment bankers are already studying "human capital,"
because they are realizing how important an issue it is for them. Recently,
Piper Jaffray, the equity investment arm of U.S. Bancorp, issued a report
entitled Human Capital: Optimizing Talent in the Knowledge Economy, which
stressed the growing value of talented employees.
Leading accounting firms are also looking at human-related issues as being
part of an organization's assets, not its liabilities. Customer reliability and
brand equity are areas of special interest in this regard.
Across all kinds of organizations, references to "human capital" are growing.
What does this term mean? It varies. Definitions include "the knowledge worker,"
"the talent pool," "the competent workforce," "the educated employee," and the
more encompassing "enthusiastic workforce."
By whatever name, these references reflect a new alertness to the profound
impact of human nature in the workplace.
Multinational organizations, such as the European Commission, have been
studying the economic implications of human capital, and not just in terms of
percentages of GDP (gross domestic product) invested in education (as Nobel
laureate economist Gary Becker has advocated). They are examining the
harder-to-measure implications of talent and employee involvement in the
workplace. The common goal is this: to find the code of human nature's role in
shaping a company's business outcomes.
There is a way to do this. Great organizations are keenly aware of it. They
tap into the power of human nature every day. It is what makes them
great.
The Unique Pathway
"Roads with the most traffic get widened. The ones that are rarely used fall
into disrepair."
What do roads have to do with business, much less human nature?
Everything.
Dr. Harry Chugani, professor of pediatrics, neurology, and radiology at Wayne
State University School of Medicine, made the statement above in reference to
synaptic connections in the brain, the pathways that have led to your individual
talents from the day you were born.
That day every neuron in your brain sent out many thousands of signals. The
purpose of this was to establish connections with other neurons in order to
communicate with them. By the time you were three years old, each of your
brain's one hundred billion neurons formed up to fifteen thousand of these
connections.
But these created a problem. Now your young brain was being inundated with
information, and not all of it could be understood. In order to make sense of
this excess of data, over the next ten years or so your brain refined and
refocused its network of connections. Stronger synapses grew.
Weaker ones withered away. By the time you were fifteen these choices,
determined by genetics, brain physiology, and environment, shaped high-speed
communication among neurons. Rapid access to memory and information, fast
learning and knowledge acquisition, emotional response mechanisms, and a
particular framework for the interpretation of experience: All these systems
were firmly established. The solid foundation of these building blocks formed
your unique sense, the way you, as an individual, react to the world.
This, great organizations know, is the basis of the particular talents you
bring to everything you do.
For instance, if your brain highway has strong connections for communication,
you will be able to teach others around you rather complicated issues that can
be translated into understandable stories. Or, on the other hand, if you work
with someone who is forever saying the wrong thing at the wrong time to the
wrong person, he is not acting out of malice. His communication connection is
weak; he can't find the words to connect to the level of the person he is
communicating with. Customer service is obviously not the place for him.
Likewise, another person's brain will send her the right word time after time in
the heat of a debate while a colleague will suffer word deprivation at the most
critical moments. Obviously, the second person is better suited to dealing with
customers than the first.
This is borne out by the work of University of Pennsylvania psychologist
Martin Seligman, who has devoted much of his career to the study of what can be
learned and unlearned. In his book What You Can Change and What You Can't:
Learning to Accept Who You Are, he writes that an individual can change his
opinions and preferences-but the manner in which he perceives the world around
himself cannot be changed.
Furthermore, recent discoveries in neuroscience reveal that talent and
better-quality performance involve not just the frontal lobes-the
decision-making brain circuitry that houses intellect-but also the amygdala. The
circuits that color experiences with emotions reside in this almond- shaped
structure; anytime action trumps reason, your amygdala is working overtime.
Thanks to these recent discoveries, we know that emotions are indispensable for
adequate rational thinking.
In his book How the Mind Works, Massachusetts Institute of Technology
psychologist Steven Pinker notes that emotions are the mechanisms that set the
brain's highest-level goals. Once generated toward a favorable activity, an
emotion triggers a "cascade of sub-goals that we call thinking and acting with
no sharp line dividing thinking and feeling." In other words, emotions drive our
reactions, which, in turn, are ruled by the innate talent we possess and our
propensity to be emotionally engaged. Our natural predispositions explain our
distinctive experiences.
Studies of top performers show something even more remarkable. When forced by
a situation to make a split-second decision to operate at top speed, or when
faced with the pressure of doubt, top performers report something distinctive.
They say that a part of them feels several steps ahead of what is going on. This
helps them take control and anticipate possible alternatives for action. Where
to pause, stop, and go is part of the package. Talent is their guide. Scientists
use the world "supra-conscious" to describe this.
So there it is: Superior performance is not the exclusive product of the
rational mind, no matter how appealing it is to business to believe this is so.
Talent does intelligence one better, because it combines and utilizes the full
circuitry (rational and emotional) of the brain's neural connections in the
endless pursuit of a productive outcome.
Quality performance does, of course, require knowledge and skills-but talent
makes it happen. And while individuals always operate in conditions of
uncertainty (another fact that gives companies the jitters), their talent is an
unsinkable life preserver. As long as it is acknowledged and utilized, innate
talent always comes through, helping employees make better decisions and achieve
finer results. In essence, talent and engagement are emotionally driven. In
tough economic times, talent and emotional engagement are the only natural
competitive advantages.
In his book Synaptic Self, reviewing the neurobiology of emotions,
Joseph LeDoux, professor of science at New York University's Center for Neural
Sciences, notes that "In spite of the tremendous similarity of our brains, we
all act differently, have unique abilities, and have distinct preferences,
desires, hopes, dreams, and fears. The key to individuality therefore, is not to
be found in the overall organization of the brain, but rather in the fine tuning
of the underlying networks."
Is it any wonder that great organizations make use of the brain's natural
pathways? They are the reliable roads to continued success.
Reason and Emotion: It's a Chemical Reaction
Have you ever wondered why you prefer to watch the news on a certain
television channel? Or why your kids "must" eat one special cereal morning after
morning? Or why your family chooses to return to one resort year after year?
In the past, customer choices were regarded as being rational. Now we know
something new. Emotions, to a very large degree, determine what customers
respond to, what they buy-and what they keep returning to.
However, just as sight was not considered a legitimate proof of evidence in
Galileo's time, emotions have long been regarded as elusive, "a baggage of
evolution," subjective and almost impossible to measure objectively. For more
than a century reason and emotion have been considered to be independent of one
another. Reason has been viewed as the predominant characteristic of human
beings, while emotions have been seen as the weaker human trait. Because of
this, many people believed that reason could oppose and control emotion. How
could someone be both rational and emotional? It just didn't make sense.
Emotions are the mechanisms of the mind least understood by management.
Still, organizations have tried to trigger emotions by using all types of
symbols-brands, products, and technology-and spending millions on advertising
that appeals to the senses. But the least applied and the most powerful
transmitters of emotions are human beings. And of all the sources of emotional
stimuli, the human voice and face are the most effective emotional markers.
Every human interaction either elevates or downgrades the emotional state of a
human being.
Recent discoveries in neuroscience and psychology bear this out. Neuroscience
shows that emotional processes are integral to learning, reasoning, and decision
making. It is now well accepted that much of what a person learns happens
outside of conscious awareness.
And finally, it is clear that there is nothing vague, elusive, or mystical
about emotions. Thanks to research discoveries and technological advances,
emotions can now be observed and defined objectively as specific and consistent
collections of physiological responses.
The process is immediate and direct. When a person receives a signal-for
instance, she sees or hears something-a signal travels from her senses to her
brain's emotional systems, which trigger a chemical reaction that in turn
produces a feeling. It might be pleasant, such as happiness, surprise, pride, or
excitement; or unpleasant, such as fear, sadness, anger, disgust, embarrassment,
or guilt. Feelings are triggered by mechanisms that cannot be controlled. All
this happens without any conscious or rational intervention.
Moreover, psychology has begun to show that emotions are required for
superior performance in any occupation. Neuroscientist Antonio R. Damasio, in
his book The Feeling of What Happens, shows that emotions point us to the
sector of the decision-making space where our reason can operate most
efficiently. His discoveries have led him to believe that "well-tuned and
deployed emotion is necessary for the edifice of reason to operate
properly."
Discoveries in neuroscience strongly suggest that emotions triumph over
reason. Although thoughts can trigger emotions, our human mind is not very
effective at willfully turning off emotions. Neural pathways from the brain
structures that command our emotional responses (that is, the amygdala) to the
brain systems that control our thoughts are wider and stronger than the pathways
the other way around.
So three central questions emerge: What are the right emotions that great
organizations promote in every employee and every customer-the ones that
systematically lead to engagement and growth? What are the mechanisms that these
organizations employ to generate these emotional responses? And finally, how do
they systematize these practices to make them universal within the organization
as a whole?
A response to these three questions is what The Gallup Path leads to, again
and again. Emotional engagement is the fuel that drives the most productive
employees and the most profitable customers. As you travel along The Gallup Path
with us, you will be amazed at just how powerful emotional fuel is. The most
amazing thing about it is that it never runs out.
Emotions Are a Terrific Thing to Value
Here's what the world's most successful organizations don't do. They
don't suppose that either superior college grades or comprehensive training is
the only accurate or dependable indicator of the right person for the right job.
Neither do they expect that employee incentives will guarantee consistently
better job performance.
Instead they depend on the reliable source that other businesses disdain:
human nature. They know that the emotions of both employees and customers
create feelings, which drive their behavior. Great organizations are aware of
the power of emotions and therefore set up the conditions that generate and
cultivate emotional mechanisms among employees and customers. The only way to
achieve this is through human interaction, the fastest and most powerful trigger
of emotional states.
By recognizing and unleashing the innate abilities of employees and matching
their gifts to the positions that will best take advantage of them, thus making
them even stronger, great organizations look inward in order to move
forward.
They cherish the fluctuations in human behavior because they understand that
these create a pathway as electric as any inside a brain:
• Employees who use their natural talents in their jobs produce significantly
more than average workers.
• Emotionally committed employees form teams that deliver exceptional
outcomes.
• Customers recognize the passion and commitment employees feel toward them
and cannot help but respond in an emotional way.
• This emotionally driven reaction builds a bridge between employees and
customers that creates engagement.
• This engagement becomes the key factor that drives sustainable growth.
• Sustainable growth is the route to profits and, ultimately, higher stock
value.
In the end great organizations know that a reason-driven economy can travel
only so far. The missing link is the engagement of deep-seated emotions as the
driver of growth and profits. These-and only these-feelings are the fuel that
propel talented individuals to do more, and inspire customers to return. And
while reason influences both employees and customers, emotions are indispensable
because they drive the best in both of them. Finally, a chemical reaction inside
the brain can be converted into a business model that works.
EMOTIONS DRIVE BUSINESS OUTCOMES
If you want to open the gate to the pathways that lead to greater profits and
growth, you must change the way you view emotions in terms of your employees and
your customers. These people are a lot more complicated than you think. If you
want to understand what makes them tick, those forces that drive their actions
and reactions, you must understand the role that emotions play in their
behavior.
The implications of the effects of emotions both inside and outside the
workplace are incredibly powerful and far reaching. Emotions:
• Set the highest-level goals, including how hard a person works and how
attached a person will stay to a brand or to an organization.
• Take place outside the rational, willful awareness and constitute emotional
memory.
• Drive decision making, the emotional state of conscious awareness.
By acknowledging the role emotions play in driving business outcomes, you
have taken the first step on The Gallup Path.
Copyright © 2002 by The Gallup Organization
