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Missed “Marketplace” with Kai Ryssdal on air? Catch up here! Listen now
The Big Book

The “other AI” that matters

Pauline Brown Dec 10, 2019
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A view of the Steve Jobs Theater at Apple Park. Photo by Justin Sullivan/Getty Images
The Big Book

The “other AI” that matters

Pauline Brown Dec 10, 2019
A view of the Steve Jobs Theater at Apple Park. Photo by Justin Sullivan/Getty Images

The following is an excerpt from Pauline Brown’s new book, “Aesthetic Intelligence.” Brown was the chairman of LVMH Moët Hennessy-Louis Vuitton North America and spent her career working with luxury brands. She’s currently part of the faculty at Harvard Business School.

The term aesthetics is typically used to describe how things look.  In business, that may be seen in product design, brand image or corporate identity.  However, when I use the term, I mean far more than visual elegance.  Aesthetics is the pleasure we derive from perceiving an object or experience through our senses. Aesthetic businesses don’t just sell products and services that meet customer needs; they offer experiences that are pleasure to buy and consume. In turn, their customers pay a premium —not for the utility of their purchase, but for the sensorial delight they enjoy. 

The value of aesthetics in business starts at the top. Specifically, it starts with a founder’s or CEO’s own Aesthetic Intelligence or, what I call, “the other AI”  It is the ability to understand, interpret and articulate feelings that are elicited by a particular object or experiences. 

People are born with more aesthetic capacity than they use. Of course, some are naturally gifted, such as the musician Bob Dylan with his extraordinary ear for sound and rhythm or the chef Wolfgang Puck with his legendary ability to balance flavors, textures and tastes. But even individuals like Dylan and Puck must continue to hone their skills and evolve their styles, lest their aesthetic advantage atrophy.

Business leaders with high AI are not only attuned to their own aesthetic tastes and preferences, but to those of their customers as well. After all, studies show that some 85% of purchase decisions are based on how a product or service makes a customer feel; only 15% is based on a rational assessment of features and functions. Yet most leaders disproportionately (if not exclusively) focus on the latter.

The power of AI may be most obvious with consumer products and services, but it also can serve as a meaningful differentiator for professional services firms.  Earlier in my career, I was a Managing Director at the private equity firm The Carlyle Group. Private equity investing was and continues to be a highly competitive field, with dozens of investors chasing fewer and fewer high-quality deals. Sellers of attractive companies are bombarded with multiple offers at increasingly rich valuations. Rarely does an investor such as Carlyle win a deal on price alone. In truth, Carlyle is not all that different from its chief competitors, such as Blackstone, KKR and Bain. They all recruit investment professionals from the same few business schools; these professionals rely on the same formulas for analyzing and valuing companies; they work with the same “bulge bracket” banks to structure their deals and secure the best lending rates; and they get access to many of the same buyout opportunities. So, what’s the difference? Why does Carlyle win some deals, while its competitors win others?

In rational terms, these investment firms all look pretty much the same.  But each of them has a critical differentiator: the core values, personalities and styles of its people — in other words, the aesthetics of the firm. Typically, these distinct attributes are set by their founders and manifest themselves in many of the ways the firms represent themselves to key constituents. In a seller’s market, sellers choose investors who tell a story that fit with their own values and style; after all, they want to feel comfortable, understood, and reassured during the deal process, especially if they have longer-term aspirations for their business. Do not underestimate the power of aesthetics to help deliver that comfort and reassurance.

Studies show that some 85% of purchase decisions are based on how a product or service makes a customer feel.

Back in 2006, when I first visited Carlyle’s headquarters in Washington, DC, where co-founder and co–executive chairman David Rubenstein still presides, I experienced a very specific set of values, as dictated by David and his co-founders. David came from a humble background (his father was a postal worker). Even though he is now one of the wealthiest people in the United States, his fortune was self-made. Carlyle’s headquarters reflected David’s origins in many ways: simple, unadorned, even self-denying. The offices were small and had a makeshift look, as if a wall had been put up at random every time the company needed to add a desk for a new employee. Carlyle was not investing its considerable resources in fancy space design or office furniture.

The headquarters of generic drugmaker Mylan. (Photo by Jeff Swensen/Getty Images)

Its focus on function and simplicity conveyed a critical value of Carlyle’s founders: that they did not care to invest in anything other than that which would make money for the firm’s investors, its management teams and its employees. This is an aesthetic — and it is not a right or wrong one. It does tell a potential partner or investor an important story: that this company is focused on the work and only on the work. The firm doesn’t signal elitism or luxury, even though it is staffed by some of the smartest and richest people in the world. To some, this bare-bones aesthetic is an important asset, one reason Carlyle is one of the most successful and trusted private equity firms in the world.

Contrast this to another legendary private equity firm, Henry Kravis’s KKR offices at 9 West 57th Street in Manhattan. Visitors must pass through layers of security even before they reach the reception area. The dark, wood-paneled walls are austere, fortress- like, and ostentatiously covered with precious art; the offices are decorated with heavy furniture. Walking into those offices makes one feel small and intimidated. This is not an accident. The offices are designed to feel formal and imposing. Some customers will be drawn to this aesthetic; indeed, they seek it out and are reassured by the power, prestige, and confidence that the office conveys.

Carlyle and KKR may end up achieving similar financial returns for their investors, but their aesthetics are genuine differentiators, and, consciously or unconsciously, the choice each has made about its office design and other aesthetic codes factor into why an investor or seller may choose one over the other.

The Steve Jobs Theatre at Apple Park, Apple headquarters in Cupertino, California (Photo by Justin Sullivan/Getty Images)

When I meet with senior executives in their offices, I often see a common thread. Their spaces are decorated in a conventional “corporate” style, lacking in personal touches or unique items apart from a few standardly framed photos of family and travel. In contrast, when I visit the same executives’ homes, I experience something quite different: their homes are carefully decorated, with art on the walls, pillows on the couch, and furnishings acquired through different life stages and experiences. If the executive is a married man, it is often his wife who took the lead in their home design. But why does the expression of their home life have to be so different from that of their office life? More broadly, why don’t these executives feel the same commitment to and ownership of the design and creative processes as they do of the more analytical and technical processes of their work?

My hunch is that many business executives view their homes as feminine spaces and their offices as masculine spaces. The idea that an office — even a law or financial office — ought to be austere and impersonal in order to be taken seriously is not just wrong and old-fashioned, it’s a missed opportunity to create aesthetic value.

Bringing your own particular personality and tastes into your environment and ultimately into the products and services you offer is the way you differentiate your business. In the end, you probably are not selling anything that can’t be replicated by somebody else in terms of features and functions. Competitors can easily copy what you do and how you do it, but they can’t copy who you are.

From “Aesthetic Intelligence” by Pauline Brown. Copyright © 2019 by Pauline Brown. Excerpted with permission by Harper Business, a Division of HarperCollins Publishers.

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