Chapter Seven

Principle Six

Follow Your Heart

Your time is limited, so don't waste it living someone else's life. Have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

—Steve Jobs

Unlike Western CEOs, Kishore Biyani doesn't rely on expensive management consultants to advise him on his next strategic move. Biyani owns Big Bazaar, one of India's largest grocery and home goods retail chains or “hypermarkets.” When Big Bazaar opened its first store in India, Biyani was advised to follow the traditional, Western approach to retailing, using neatly organized aisles and soothing music. But that format didn't go down well with Indian shoppers who found it all a bit too sleek and unnatural. After all, Indians are used to shopping in noisy, disorganized street markets. Biyani then realized that the Big Bazaar stores should live up to their name: they must look—and even smell—like bazaars. When we visited him in his office in Mumbai, he told us, “Initially we took the advice of management consultants who made us follow the Walmart model. But we soon discovered that this didn't work in the Indian context. We realized what we had to do was to be ourselves, and follow our intuition.”¹

Guided by his intuition, Biyani swiftly reconfigured his stores to have the chaotic look and feel of Indian street markets: cluttered aisles, store clerks in casual clothing, and bins of vegetables with some bad items thrown in to make customers feel they had scored when, for instance, they found the perfect onion. And rather than standardize their offerings across all stores, he made sure that each Big Bazaar outlet stocked a product mix that fit local needs. Further, these needs weren't identified by expensive market researchers, but by regional store managers with an intuitive and empathetic understanding of local preferences.

“Common sense retailing” is what Biyani calls this customer-centric approach. And it's worked. We visited several Big Bazaar stores across India. Typically crowded, they have the feel of a buzzing Moroccan souk. Biyani continues to experiment and tweak his business model. Not surprisingly, Big Bazaar is now India's largest hypermarket.

Jugaad innovators in emerging markets rely more on their intuition than on analysis to successfully navigate a highly complex, uncertain, and unpredictable environment. They use their gut intelligence and innate empathy for customer needs to innovate breakthroughs that defy conventional wisdom. Their undying passion acts as the fuel that sustains their efforts to make a difference in the lives of the communities they serve.

In this chapter, we discuss why and how Western executives, inured to data-driven decision making, can benefit from relying more on their intuition to succeed in an increasingly complex world. Rather than second-guessing what customers want by sitting in a remote R&D lab, Western innovators need to immerse themselves in customers' native environment so as to better empathize with customer needs. Most important, we show how, rather than merely seeking to harness their employees' brainpower, Western companies can learn to tap into their employees' “heartpower,” thus unleashing the passion of individual employees and channeling it into innovative pursuits that serve a larger purpose.

Your Heart Knows What Your Mind Doesn't

The heart is the seat of passion, intuition, and empathy. Jugaad innovators in emerging markets possess these qualities in abundance. The challenge is twofold: how to develop these qualities in the first place and then how to nurture them. We have found that several key aspects of the complex environment in which jugaad innovators operate make them particularly passionate, intuitive, and empathetic.

Jugaad entrepreneurs are regularly exposed to the harsh conditions in which their fellow citizens live—whether these involve regular electricity failure, water rationing, or poor access to health care and education. Whatever they may be, these extreme conditions arouse the empathy of jugaad entrepreneurs, who feel they must do something to improve the often harsh conditions around them. Thus jugaad innovators don't just sit around after witnessing others' pain; rather, they convert their compassion into passion by seeking solutions to alleviate this pain. Yet these solutions are not charity work—they are built around sound for-profit business models. As such, empathy forms the cornerstone of jugaad innovators' practice of an altruistic form of capitalism that is shaped by enlightened self-interest. Adam Smith captured well the importance of empathy as a vital ingredient of entrepreneurial innovation. In his pioneering work The Theory of Moral Sentiments, Smith argued that although man generally tends to be selfish, “there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”²

In some cases, jugaad entrepreneurs innovate to meet their own needs—and to alleviate their personal pain. For instance, after Venkat Rangan heard his father constantly complain that his brokerage company couldn't execute stock transactions as fast as he liked, Rangan decided to do something about it. He founded INXS Technologies, a software product company based in Chennai, South India, which has developed one of the world's largest mobile trading platforms. The platform, called MarketSimplified, currently helps speed transactions through mobile phones not only for Rangan's father but also for millions of customers of the world's leading brokerage houses that use MarketSimplified.³

Another reason why jugaad innovators follow their hearts—more than their brains—is that they are forced to think on their feet all the time. It's hard—even counterproductive—to logically analyze a highly complex situation and make rational decisions when things are changing constantly. Emerging markets are fast-paced and volatile. Confronted daily with do-or-die situations, jugaad innovators have learned to make decisions on the fly, using their well-honed intuition rather than relying solely on analysis and logic. For instance, as soon as he saw signs that a Westernized retail format for Big Bazaar was faltering, Kishore Biyani quickly dropped it and embraced a new one—without waiting for an opportunity to do market research. If he had failed to respond as quickly as he did by heeding his intuition, it is quite possible that his business would have gone under.

The harsh conditions in emerging markets kindle jugaad innovators' creative empathy and passion, and the unpredictability of the local environment forces them to make rapid-fire decisions based on intuition rather than rational analysis.

The Gutsy Art of Acting on What Feels Right

Jugaad innovators like Kishore Biyani and Venkat Rangan are a self-confident and brave breed: they dare to act on what they feel is right. They don't seek validation or approval from customers or investors for their visionary ideas, and they tend to ignore naysayers. They know intuitively what the right solution for an unmet market need is. Only after they have introduced their pioneering solution do others recognize its true value. In other words, jugaad innovators valiantly forge their way into uncharted territory using the heart as a compass.

For instance, Diane Geng and Sara Lam, two Harvard-educated Chinese-Americans eager to reconnect with their ancestral roots, decided to spend time in Chinese villages where eight hundred million people or 60 percent of China's population live. In these villages, Geng and Lam noticed that up to 90 percent of the youth dropped out of middle school without any occupational skills—and with a clear disdain for their communities. Geng and Lam also learned that the reason why rural youth either never attended or did not complete high school was not financial difficulty but (1) the irrelevance of the school curriculum to their life needs and (2) ineffective teaching that encouraged rote learning rather than creative thinking. As a result, Chinese villages were deprived of skilled young workers who would otherwise find creative ways to sustain the socioeconomic growth of their communities.⁴

Geng and Lam recognized this was going to be a major issue for China, given its rapidly aging population (by 2030, 16 percent of the Chinese population will be over sixty-five—up from 10 percent in 2011). Driven by empathy, they decided to do something about the situation. Their intuition told them that the solution lay in improving the “software” of the rural education system—such as curriculum and teacher quality—rather than fixing the “hardware,” such as building more schools and offering scholarships (as most NGOs and government agencies in China do). So Geng and Lam launched the Rural China Education Foundation (RCEF), a community-led grassroots initiative that recruits and works with local teachers in villages. RCEF creates new student-centered curricula that impart life-relevant skills to students, using practice-based learning methods that foster creativity and keep students engaged. By providing rural youth with a quality education that is practical and relevant to their life needs and skills, RCEF hopes to ensure China's future economic stability.

When asked what drives jugaad entrepreneurs like her to do something bold like RCEF, Lam had this to say: “A sense of urgent need and mission. A feeling that something must be done. Compassion and an intolerance for injustice. The willingness to take the first step and to do what you can with what you've got. It's easy to think ‘All I need is this much more funding, or that many more people, then I can start.’ ”⁵

Jugaad innovators also succeed in following their hearts because they rely heavily on their social intelligence to guide their decisions. Jugaad innovators are street smart and possess very high “cognitive fluency”—which means that, rather than relying on spreadsheets to make decisions, they rapidly process large amounts of sensory information from the real world and improvise decisions in an intuitive and dynamic fashion based on emergent patterns.⁶ Jan Chipchase and Ravi Chhatpar, who work for frog, the design and innovation consultancy, and have interacted extensively with innovators in emerging markets agree. Chipchase is frog's executive creative director of global insights, and Chhatpar is strategy director at frog and founder of its Shanghai studio. Both point out that, for instance, many Chinese innovators in the consumer electronics sector who practice zizhu chuangxin, the Chinese version of jugaad, don't use focus groups to determine ahead of time what features to include in their new products.⁷ Rather, they spend a great deal of time on the street, observing what products customers actually use, and learning about which competitors' products are selling well and why. These innovators then use their deep customer insight to prioritize and quickly decide which features to include in their own products. In the process, they gain an intuitive sense of what customers want and thus can anticipate their needs.

Their deep customer insight also enables jugaad entrepreneurs to connect with customers at an emotional level—and establish higher customer intimacy in the process. Kevin Roberts, CEO of the global advertising agency Saatchi & Saatchi, discusses this very connection in his book Lovemarks.⁸ Noting that intimacy is a key ingredient of winning over consumers, and highlighting the importance of empathy, commitment and passion in achieving intimacy, Roberts says: “It's the thoughtful touch, the surprises, that connect with a consumer's heart.”⁹ Jugaad innovators tap into this empathy-based customer intimacy to gain deeper insights into the core issues that customers are grappling with and the broader socioeconomic context in which they live. These rich insights allow jugaad innovators to then devise solutions that have a meaningful impact on customers' daily lives.

For instance, Anil Jain, managing director at Jain Irrigation Systems Ltd., has come up with a series of innovative solutions that have dramatically improved the productivity of the small-scale Indian farmers who make up a large segment of the Indian population. He attributes this success to the high emotional quotient of his employees: “We intentionally hire salespeople whom we call ‘sons of the soil’ ”—that is, people with an agricultural background who can relate to and empathize with the company's customers—the farmers.¹⁰ These employees help elevate transactional customer relationships to transformative relationships. For instance, in their initial interactions with their customers—the farmers—Jain Irrigation's salesmen don't try to “pitch” solutions to them; rather, they try to instill pride in the farmers by cocreating innovative solutions with them. Such shared innovation is sustainable because it is shaped by empathy and a passion shared by all stakeholders. Thanks to this customer-centric engagement approach, Jain explains, his company has been able to successfully shift its business model from “contract farming” to “contact farming,” a model that delivers disproportionately higher value to farmers.

While jugaad innovators trust their intuitions, they also conduct rapid experimentation to validate them. Rather than making forecasts or predictions, jugaad innovators test their intuitions in the real world to get rapid feedback. As such, they use experiential learning (that is, learning by doing) to hone their intuition and innovate continuously over time. Take Bam Aquino's Hapinoy Program in the Philippines, introduced in Chapter Three. The program empowers women owners of sari-sari stores (mom-and-pop shops) in the rural islands of the Philippines by identifying new business opportunities for them and giving them the tools and skills needed to capitalize on these opportunities. Aquino told us that although he relies on his intuition to identify what additional services he can bring to the women in the Hapinoy Program's network, he also relies on rapid prototyping to validate his intuition: “We do lots of small pilots. We drop bad ideas early on and identify good ideas that have legs and focus our efforts on scaling them up.”¹¹ For instance, the Hapinoy Program recently piloted a project with a large pharmaceutical company to sell its over-the-counter medicine on a per-tablet basis through some of the sari-sari stores in far-flung villages that belong to the Hapinoy network. The pilot was successful, and is now being scaled up across the network.” On the other hand, Aquino had a strong intuition that mobile remittances—sending money to family members via cellphones—would be a great service that the Hapinoy Program could offer throughout its sari-sari store network, but the pilot project revealed some limitations. The organization found that adoption of the mobile remittance service depended on the level of access to banking services—which varied widely from area to area. So the mobile remittance service was deployed selectively in some areas only. Aquino explains: “We use rapid prototyping to validate our intuitive ideas and reach one of three decisions: kill the idea, selectively scale it up in some parts of our network, or totally scale it up all across our network.” Acting in congruence with their intuitive feelings—and staying true to their passion—gives jugaad innovators such as Kishore Biyani, Diane Geng, Sara Lam, Anil Jain, and Bam Aquino an edge over competitors. And this can lead to eventual success in the marketplace.

Keeping the Fire Alive

How do jugaad innovators manage to sustain their passion? By practicing what one might call “detached engagement.” Although deeply engaged in their innovative projects, jugaad innovators remain detached from the outcomes. They don't let either failure or success affect their passion. For instance, Kishore Biyani didn't allow the failure of his first retail business model to dampen his passion for delivering a better retailing experience to Indian customers; he just moved on and tried other business models.

Jugaad innovators are indefatigable in pursuing their interests because their passion transcends the intellectual and emotional realms: they frequently believe they are carrying out a critical mission that serves a larger purpose. In Indian philosophical terms, jugaad innovators believe they are following their dharma—the personal obligations or duties that one is called upon to perform in his or her lifetime with diligence and detachment. Dr. Prasad Kaipa, a CEO coach and senior fellow at the Indian School of Business, explains: “Mahatma Gandhi famously said that ‘Happiness is when what you think, what you say, and what you do are in harmony.’ By aligning these three elements—thoughts, words, and actions—with heart and spirit, jugaad entrepreneurs derive a sense of fulfillment by serving a larger cause. This is truly the secret of their undying passion.”¹²

Take the case of Dr. Devi Shetty, a reputed Indian heart surgeon who treated Mother Teresa. Dr. Shetty is the founder of Narayana Hrudayalaya, a heart hospital in Bangalore, India, where hundreds of low-income people receive heart surgery every week. Dr. Shetty started the hospital because he believes that, as a physician, he has a moral duty to make health care affordable and accessible to everyone, regardless of their caste, creed, religion, or income.¹³ It is a compassionate sense of duty that sustains the passion of Dr. Shetty and his fellow physicians at Narayana Hrudayalaya. In doing his duty and being true to his profession, Dr. Shetty is clearly following his heart (visit JugaadInnovation.com to learn more about Dr. Devi Shetty and his compassionate health delivery model).

Not only are jugaad innovators able to sustain their own empathy and passion, but they also actively seek to ignite the passion and empathy of others. These qualities can be contagious: jugaad entrepreneurs are very good at inspiring employees, customers, and partners to rally around the cause—thus forming “passion networks.” For instance, to secure his managers' buy-in for his visionary ideas, Big Bazaar's Kishore Biyani doesn't rely on traditional corporate communication tools such as PowerPoint presentations. Instead, he has a “chief belief officer”—Devdutt Pattanaik—who concocts stories inspired by the rich storehouse of Indian myths to fire up managers' passion and enlist their support for transformational changes in the company.¹⁴ Similarly, driven by his own passion, Bam Aquino is igniting the passion of women entrepreneurs in the Philippines through the Hapinoy Program, which encourages them to dream big and scale up their mom-and-pop stores. The women who succeed in doing so in turn become passionate advocates of Aquino's idea—and the Hapinoy Program—and evangelize it to other women business owners in nearby villages—thus forming a “passion network” whose ripple effects are felt all across the Philippines.

The World Is Too Complex for the Mind Alone to Grasp

In the coming years, Western corporate leaders—inured to data-driven analysis and rational decision making—will find it helpful, if not crucial, to follow their hearts as much as their brains. In this section, we discuss the reasons why we believe this is likely to be the case.

Pure Logic Will Not Suffice

In an unpredictable environment, Western companies can't solve problems using data when the problems themselves are ill defined and good data is likely to be unavailable. As Dan Pink argues in A Whole New Mind, the left-brain's linear, analytical, computer-like thinking—controlled by what we call our “mind”—is insufficient to help us decipher, let alone navigate, our increasingly complex and ambiguous world.¹⁵ Rather than relying purely on logic, therefore, Western executives must learn to innovate by also tapping into what Jack Welch calls their “gut intelligence”—a creative intuition honed by years of experience.¹⁶

Research in neuroscience, cognitive psychology, and behavioral economics increasingly shows that the emotions play a major role in helping humans solve complex problems in situations of ambiguity and uncertainty. Rather than being untrustworthy, emotion and intuition may actually help people make wiser decisions than if they were guided by rational considerations alone. As Malcolm Gladwell shows in Blink, in many cases spontaneous decisions can often be as good as, if not better than, carefully planned and considered ones.¹⁷

Gen Y Employees Are Looking for Meaning

Western employees—especially Gen Y or Millennial workers—are no longer motivated by money alone: they want to work for an organization that puts their creative skills to use for a larger cause. Firms that leverage Gen Y's brainpower only to please shareholders are likely to lose out to rivals who channel Gen Y's heartpower into innovative projects that actively engage them and benefit the company as well as society at large. In a recent survey conducted by EuroRSG, 92 percent of Millennials agree the world must change, and 84 percent consider it their duty to drive this change. Nearly 82 percent believe they have the power to make it happen.¹⁸ With 50 percent of the world's population under the age of twenty-seven, it is imperative that Western companies find creative ways to harness the passion and entrepreneurial dynamism of young people driven to make a difference in the world.

Customers Yearn for Authentic Relationships

According to Forrester Research, only 5 percent of consumers agree with advertising claims; the other 95 percent consider them to be dishonest and inauthentic. Forrester also found that a growing number of consumers—empowered by peer-to-peer social computing tools like blogs and Facebook—trust other consumers more than they trust brands.¹⁹ In the hyperconnected age of Twitter and Facebook, customers can swiftly punish brands that disingenuously attempt to “sell” to them rather than engage them in a respectful and empathetic relationship. The good news, according to Josh Bernoff and Charlene Li, coauthors of Groundswell, is that Western consumers do trust brands that they feel truly empathize with their needs. The authors argue that the onus lies with companies to demonstrate genuine empathy in their interactions with customers—by respectfully engaging them as value cocreators rather than passive users of their offerings.²⁰ Indeed, 96 percent of North American consumers are more likely to purchase products from a company that listens to—and acts on—their advice.²¹

Unfortunately, many Western companies don't realize that by encouraging or even allowing employees to follow their hearts and by creating emotionally engaging experiences for customers, they can help drive innovation and growth. And the companies that do recognize this may find it difficult to institutionalize such a culture and make it fundamental to the organization and its practices.

Industrial-Era Business Practices Keep Hearts Locked Out

In the postindustrial experience economy in which complexity is the norm, customers seek intimate and authentic relationships with brands, and Gen Y employees look for meaning in their work, it pays to be empathetic, intuitive, and passionate—and to take advantage of your organization's heartpower. Yet Western companies have trouble cultivating—and demonstrating—their heartpower because they remain attached to industrial-era business practices and structured innovation approaches. These practices and approaches—which overemphasize left-brain thinking and rational behavior—hinder Western leaders' ability to make intuitive decisions, and prevent their companies from building empathetic connections with customers and igniting and harnessing the passion of creative employees.

R&D: Isolated and Disconnected from Real-World Customers

R&D engineers who operate in isolated labs do not spend time immersed in the world of customers and thus cannot empathize with them. Further, at many Western companies, R&D performance is still measured by the number of patents produced (an indicator of left-brain prowess) rather than the quality of the customer experience delivered (an indicator of right-brain empathetic creativity). But as Matt Bross, an American who runs Huawei's R&D, notes: “There are no breakthrough technologies, only breakthrough market applications.”²² R&D's inventions, groundbreaking or otherwise, will fail at launch if they don't address a well-defined source of customer pain. Understanding customer pain requires empathy for, and collaboration with, customers. Unfortunately, R&D tools and techniques, used for scientific discovery in the lab, were not conceived to capture consumer insights such as latent buyer needs, let alone to dynamically engage end users in designing and testing new products. This explains why 80 percent of new consumer products fail after launch—they often lack market relevance, leading Tim Brown, CEO of IDEO, a top design and innovation consultancy, to conclude: “[R&D] design may have its greatest impact when it's taken out of the hands of designers and put into the hands of everyone.”²³

Firms Often Seek Refuge in Numbers—and Shun Intuition

The business world abhors surprises and craves predictability: forecasts, plans, and budgets are all meant to “control” the future and confer a sense of stability—leaving no room for intuitive improvisation. It is easier for a CEO to justify to investors a decision to invest in a new product or service if the CEO has lots of data to back it up. But investors are less likely to buy into an innovation project if you tell them that it's your gut telling you that the project merits investment.

Companies' overreliance on data—rather than intuition—leads them to make two strategic mistakes. First, they tend to axe many projects too early because they can't find enough data to support their commercial viability. (Conversely, they don't realize that by the time they have collected all the data needed to justify an innovation project, the window of opportunity for commercializing it may already have closed.) Second, companies prefer to invest in incremental innovation rather than breakthrough innovation because the former is easier to justify to investors. This attitude explains why nearly 90 percent of R&D projects in consumer product companies are aimed at sustaining existing products—by developing, for instance, line extensions—rather than investing in new-to-the-market products.²⁴ This leaves the door open for a competitor to disrupt the market with a groundbreaking offering.

Marketing Executives Don't Emotionally Connect with Customers

Marketers often want customers to understand their value proposition, when it should be the other way around. For instance, consumers are sending this message to suppliers of premium consumer goods: “My values have shifted. I now value simplicity and affordability: can you deliver on that?” But consumer good companies lack the empathy to positively respond to this plea; instead they continue to make and sell high-priced goods to middle-class Americans. As a result, frugal consumers find their suppliers insensitive to their economic woes and take their business elsewhere. Kevin Roberts warns marketers: “In the [old] Era of New marketing, it was all about your product. In the Age of Now it is all about the mastery of emotional communication; not manipulation, but of having relationships. In the Age of Now it's all about the single question consumers have of you: ‘How will you improve my life?’ Answering this is to deliver priceless value.”²⁵

Outdated Human Resource Management Doesn't Engage Next-Generation Employees

Companies continue to rely primarily on financial incentives (such as bonuses) to motivate their employees rather than giving them the space and time to pursue their passion in a constructive manner. Not surprisingly, according to a Gallup survey, only 29 percent of Americans work with passion, and a full 52 percent say they do not feel engaged by their jobs. John Hagel, cochairman of the Deloitte Center for the Edge and coauthor of The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion, offers the following piece of advice to heads of human resource management: “One thing I would do is to start systematically measuring the passion levels of my employees. I've developed a strong view that one of the keys to motivating individuals is to help them connect to their passion for their profession. Monitoring passion level gives you the ability to provide rapid performance improvement. Passionate people are deeply motivated to improve themselves and drive themselves to the next level of performance.”²⁶

How Western Firms Can Follow Their Hearts

In an environment that favors more structured and data-driven approaches to innovation, following one's heart in business today poses several challenges for Western managers and companies. By drawing on the experience of jugaad entrepreneurs, however, there are several ways in which Western leaders can develop a culture of empathy and passion within their companies.

Send Senior Management to “Empathy Development Boot-camps”

Empathy is like a muscle; it can be developed in senior executives by exposing them to diverse perspectives. For instance, Allianz Global Investors runs a dedicated training center in its headquarters in Munich, Germany, where senior executives from Allianz as well as client companies attend training programs in communication, team building, and leadership—all of which are conducted by visually impaired trainers in the dark or by hearing impaired trainers in a soundproof space.²⁷ The goal of these programs is to increase self-awareness among senior executives, the idea being that one cannot empathize with others unless one has direct knowledge of them and one has realized and acknowledged one's own limits.

Ignore Market Researchers and Investors to Innovate Radically

C-level executives need moral courage to follow their hearts—and this often entails ignoring market researchers and investors when it comes to disruptive innovation. Specifically, to avoid getting caught in an inflexible web of structure and demands for data, senior executives shouldn't rely solely on the approval of external stakeholders when launching truly disruptive products and services. Relying on external approval in this way could either delay or altogether prevent corporate leaders from pursuing truly breakthrough ideas. For instance, when developing new products or formulating new strategies, Apple's Steve Jobs rarely bothered to get validation from financial analysts, media pundits, or even consumers. He was more interested in following his heart than in merely seeking to please analysts and market watchers.

Embrace Customer-Centric Design Principles

R&D engineers and scientists need to get out of their labs and immerse themselves in the environment that surrounds their customers, to truly understand their needs: this is the basis of customer-centric design. As we've noted, companies like Nokia and Intel employ ethnographers who spend months living with underserved customers in emerging markets to identify their latent needs and design meaningful solutions that can make a significant impact on customers' daily lives. These solutions (such as Nokia's 1100, which has sold over 250 million units worldwide) carry the potential of turning into breakthrough products with huge commercial potential. Firms eager to build their internal skills in human-centered design can do so by hiring specialized consultancies such as IDEO, frog, LUNAR, or Continuum. Companies that can't afford these design consultants can use social media tools like Facebook and crowdsourcing techniques to engage “lead users”—that is, the early adopters among consumers. These lead users can help companies identify mainstream customers' unarticulated needs and help cocreate new products, services, and experiences that fulfill those needs.²⁸

Engage Your Customers in a Heart-to-Heart Conversation

Researchers in fields from neuroscience to psychology, behavioral economics to marketing, all agree that emotions are as powerful a driver of consumer behavior as rationality and calculation. In many cases, emotions may even be the only driver of consumer behavior. In others, they may be more dominant. In still others, the emotions may play a complementary and reinforcing role to that of reason.²⁹ All this has profound implications for CMOs and marketers more generally. In a world where brands have achieved parity on features, price, distribution, and even design, engaging customers' emotions becomes a crucial way for marketers to differentiate their offerings from those of others.

Kevin Roberts of Saatchi & Saatchi has long been passionate about engaging customers' emotions. Roberts says that a major breakthrough in his thinking came from the insight that reason leads to conclusions, whereas emotion leads to action. Following this insight, Roberts felt certain that emotional, not rational factors were the key to the next round of competition and that the future would be won on relationships, not just transactions. This conviction led Roberts to create the notion of “lovemarks” to replace “brands.” He felt certain that “if people loved something rather than merely liked it, they would be loyal beyond reason, beyond price, beyond recession.” Hence the notion of lovemarks: a “future beyond brands, infused with mystery, sensuality and intimacy. Delivering premium margins because people don't merely like them, they love them.”³⁰

Starbucks provides another example of this kind of emotional connection with consumers. The company revolutionized how coffee was bought and sold by engaging customers emotionally rather than through price or convenience. Prior to Starbucks, the mass market was mostly about “instant coffee,” bought off the shelf, and with price discounts. But following a trip to Milan, Starbucks' Howard Schultz, who joined as director of retail operations and marketing in 1982, realized that coffee was much more about passion, emotion, and lifestyle than about price, convenience, and a warm drink. By creating a “third space” between home and work, and using coffee as the means to fill that space, Starbucks was able to engage consumers emotionally and create a global business in the process.

Lululemon Athletica also engages customers at an emotional level. The company has used this ethos to develop a cult-like following for its high-end yoga gear and generate remarkable sales—over 52 percent compound annual growth in the roller-coaster economy between 2005 and 2009. It has achieved this largely through the creation of a unique customer-centric culture—built both within stores and through a community-based marketing approach—that is quickly being copied by Nike, Gap, and Nordstorm, among others. The company identifies local yoga ambassadors who embody the “lulu lifestyle” and outfits them with their gear. Every week, the store pushes aside racks and shelves, and mats are unrolled so these ambassadors can provide free yoga classes in stores. Their easily identifiable red shopping bags are decorated with phrases and aphorisms such as “breathe deeply” or “friends are more important than money.” Although yoga has been around for millennia, Lululemon has driven a trend that makes yoga practitioners feel they are a part of a community and a larger vision—and keeps consumers coming back for more.

Create “Centers of Passion” Across Your Organization

Firms must empower employees to publicly share and discuss ideas they are passionate about—however controversial and disruptive these ideas may be. And to bring these ideas to life, they must help build communities of customers and partners around them. For instance, frog has launched “centers of passion” across its global network of design studios where employees can freely discuss their left-field ideas and engage with colleagues, customers, or external partners who share similar passions. Robert Fabricant, vice president of creative at frog and the driving force behind this enterprise-wide initiative, explains: “We want to turn an individual employee's passion into a ‘community of passion’ where people with different perspectives can identify ways to convert their personal passion into a practical reality. These passions are the seeds of transformational solutions that can be used to enhance existing initiatives or launch entire new practice areas. The aim is to create a groundswell movement within frog by cross-pollinating and cross-fertilizing personal passions across our organization.”³¹

Frog has set up a website where its employees can share their passions with the world. In one of these videos, Denise Burton, a frog fellow, describes her passion:

Encourage Employees to Trust Their Gut—and Validate with Rapid Experimentation

CEOs need to follow the lead of Kip Tindell, CEO of The Container Store, a leading U.S. housewares chain, who not only relies on his own intuition to guide his business decisions but has also enshrined intuition as one of his company's “Foundation Principles.”As Tindell explains: “We just beg and plead and try to get employees to believe that intuition does have a place in the work force. After all, intuition is only the sum total of your life experience. So why would you want to leave it at home when you come to work in the morning?”³³

Both Google and Facebook encourage employees to trust their gut by beta-testing their intuitive ideas—and then adopting those that achieve significant customer uptake into their mainstream product line. Despite the power of intuition, it is important to note that however much you trust your intuition, it is unlikely to always be right. Therefore the best way to minimize the risks of investing in the wrong products and services is to test your intuitive ideas early on in the marketplace—and use customer feedback to continually iterate design or drop the offering altogether if customer interest is tepid.

Apple: A Heartpowered Corporation

Steve Jobs, cofounder and former CEO of Apple, was perhaps the world's most effective practitioner of the “follow your heart” principle. Jobs helped Apple disrupt the consumer technology industry several times over, first with the iPod and iTunes, then with the iPhone and most recently with the iPad. But Apple didn't do extensive market surveys to come up with the iPad. This may have been just as well, given that many consumers, analysts, and media experts were convinced that there was no market for it. But Jobs had a knack for reading the market and was well known for anticipating customer needs without relying on analysts' predictions or focus groups.

More important, Jobs depended on his company's heartpower, as measured by the quality of customer experience delivered, rather than its brainpower, as measured by the number of patents filed. Indeed, it is telling that Apple ranked eighty-first in the 2010 Booz & Company's ranking of companies by their R&D expenditures. As a percentage of its revenue, Apple spends a fifth of what Microsoft spends. Yet it is the world's most valued brand today; and, in the same Booz & Company study mentioned earlier, Apple was ranked as the most innovative company in the world.³⁴ Credit for this goes to three qualities that Jobs consistently demonstrated throughout this his career at Apple.

Jobs Was Intuitive

Steve Jobs was always a dreamer who envisioned the future of technology well before competitors—or even customers—did. He let his intuition identify big opportunities and reveal the pathways to seize them (interestingly, according to Jobs's biographer Walter Isaacson, Jobs learned to trust his intuition during an introspective trip to India in 1974).³⁵ As such, he was able to shape—and lead—entire new markets again and again. For instance, when he returned to Apple in 1997 after a twelve-year absence, he happened to meet a designer named Jonathan Ive. Ive was dejected because his latest invention—a monolithic monitor that had all the computer functions integrated into it—had been rejected by Apple's managers who viewed it as too avant-garde. But Jobs was immediately smitten by Ive's invention—in it, he saw the future. He promised Ive that they were about to start a long-term partnership that would change the world of computing forever. Ive later became Apple's head of design; the invention that Jobs helped bring to market was the iMac.³⁶

Because he always followed his intuition, Jobs never sought out or relied on external validation for his decisions—from either investors or customers. In fact, in an interview with Inc. magazine in 1989, Jobs said: “You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new.”³⁷ Jobs practiced customer-minded innovation, honed by intuition, rather than customer-driven innovation, shaped by rationality.

Jobs Was Empathetic

Steve Jobs never had to purposefully listen to end users to understand their needs. His identification with users was so great that he used himself as Apple's first and foremost customer. And he was often the customer of the future rather than of the present. This helped him design superlative customer experiences not so much to please external users as to please himself. Indeed, it seems as if he spent his entire career trying to address his own needs as a technology user, rather than thinking and acting like a technology provider as most of Apple's rivals do. You could call this self-empathy or self-directed compassion.

Jobs Was Obsessively Passionate

Steve Jobs wasn't just a passionate leader—he was an obsessively passionate one. He was obsessed with delighting customers with amazing products that marry ease of use and superior technical performance—and with over-the-top customer service to boot. His unabashed passion for excellence in everything pushed Apple's employees to outdo themselves and meet his stringent quality expectations. Jobs's perfectionism is enshrined in Apple's product development principles, such as “Pixel Perfect Mockup” (any prototype needs to be designed hyperrealistically to look and feel as close as possible to the end product) and “10 to 3 to 1” (for every new feature, Apple engineers design without restriction ten entirely different mockups, then narrow them down to three, and eventually settle on a final one).³⁸ Of course, Jobs's detractors thought that his passion for excellence bordered on insanity (the marble for the floor at the New York Apple store was allegedly shipped to his California office first so he could examine the veins). But as the saying goes, the difference between genius and madness is success.

In his 2005 commencement address at Stanford, Jobs had this to say to the graduating students: “You can't connect the dots looking forward. You can only connect them looking backwards, so you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever—because believing that the dots will connect down the road will give you the confidence to follow your heart, even when it leads you off the well-worn path, and that will make all the difference.”³⁹

Tim Cook, Steve Jobs's successor, is more operations focused, given his supply chain background—and he seems more driven to managing the present rather than predicting the future. However, Cook may be just what Apple needs now that the role of chief empathy officer and chief intuition officer has shifted from a single individual—Steve Jobs—to thousands of passionate jugaad innovators at Apple. To help these employees channel their ingenuity into shaping the future of computing while maintaining Apple's successful legacy, you need a leader who is solidly anchored in the present. Tim Cook might well be just that person.

Conclusion

Jugaad innovators like Kishore Biyani and Steve Jobs are truly gutsy in many respects: they have courage and the willingness to take risks, they trust their intuition, and they are passionate about what they do, believing that they are pursuing a higher cause in the process.

Following one's heart—the seat of empathy, intuition, and passion—is the last of the six principles that jugaad innovators follow. But following these principles alone is insufficient for an enterprise to be able to implement the jugaad approach to innovation. As we explore in the next chapter, to sustain the adoption of jugaad and its six principles, corporate leaders must understand what changes are needed at the organizational as well as the individual level.