What Is Empathy, and Why Is It So Important for Great Leaders? Practicing empathy can help make you a great leader both in and out of the office.

Empathy is the foundation for connecting with others, and connecting with others is an essential part of entrepreneurship. As John Lennon once said, "A dream you dream alone is only a dream. A dream you dream together is reality."

Entrepreneurs know that reality better than anyone. So much of entrepreneurship depends on people: your team, your customers and audience, your competition. You can't build the next Apple or Amazon without thousands of people — or even millions — helping along the way. If those people are only strangers to you, simply dollars and cents, you'll likely never reach your goals or be as successful as you could be.

Empathy can help business leaders in all sorts of situations, whether they're looking for the next big idea, struggling to find a target market or simply looking for more ways to grow.

Related: Why Empathy Is One of the Most Overlooked Skills in Business

1. What is empathy, and how is it different from sympathy?

If you sometimes mix up the meanings of empathy and sympathy, you're not the only one. In fact, Dictionary.com even took the time to create an entire blog post about the words and how they relate to one another. The piece notes, "Both of the words deal with the relationship a person has to the feelings and experiences of another person …. Both sympathy and empathy have roots in the Greek term páthos meaning "suffering, feeling.'"

The greatest difference between the two terms is your relationship with the object of your empathy or sympathy. Sympathy is a more external force — a conveyance of pity or compassion for someone you feel sorry for, but whose circumstances you might not fully understand. By contrast, Dictionary.com states that empathy "is now most often used to refer to the capacity or ability to imagine oneself in the situation of another, experiencing the emotions, ideas, or opinions of that person." That is to say, empathy refers to the act of putting yourself in someone else's shoes. In this way, empathy can apply to a wider range of people — not just those who have experienced misfortune lately, but anyone whom you want to approach or understand.

If you're still confused, consider this: You can find sympathy cards at Hallmark for sad occasions. You can see empathy in a movie, where an actor adopts the feelings and emotions of a character or real-life person.

Related: The Dangers of Being an Empathetic Leader

2. Why is empathy an essential trait of great leaders?

In competitive fields like business and entrepreneurship, leaders typically have two primary, basic functions. The first goal for every good leader is to optimize their own teams' respective performance. The second goal is to understand and beat the competition. Empathy is required for both of these goals.

Optimizing your team

What is entrepreneurship at its most fundamental? It's solving a problem, isn't it? And identifying a problem requires understanding the challenges others face in their daily lives.

As Bill Gates pointed out in a Stanford commencement speech, "If we're going to make our optimism matter to everyone and empower people everywhere, we have to see the lives of those most in need. If we have optimism, but we don't have empathy — then it doesn't matter how much we master the secrets of science, we're not really solving problems; we're just working on puzzles."

As Mike Kappel points out in an Entrepreneur piece, it's not enough to just have a business idea. You need to consider the demand for your product or service — not just some faint desire, but the willingness to spend hard-earned money for it. You can't do that if you don't understand your target consumer and how your offering will help make their lives easier.

One of the most common pieces of advice our contributors and business experts give is to find your niche. Some companies even go so far as to create a target market profile — examples of people who match the age, gender, income and other factors ideal for a given product or service. The more you understand your target market or audience, the better you can tailor your offerings toward them.

Beating the competition

Bryan Janeczko makes a great point in his recent Entrepreneur piece, "How Can I Tell Whether My Business Ideas Are Good or Bad?" He writes, "Just because you have a solution doesn't mean you have a head start against your competitors. You need to be able to pioneer your idea and, importantly, avoid others duplicating your model. It can mean becoming a market leader while everyone else is still figuring out a strategy."

By using empathy and adopting the mindset of your competition, you should be able to determine their pain points and weaknesses. What do you do that someone in your competitor's shoes simply can't replicate? And by the same token, what can you take from other great leaders or businesses to improve your own company? A common quote within my field — the writing and journalism industry — that "good writers borrow, but great writers steal."

That is to say, the best writers can not only take on new styles but also incorporate them so seamlessly into their own works that an outsider could only assume it was theirs all along. What can you learn from others in your industry and master to that degree?

Related: 4 Reasons Why Empathy Is Good for Business

3. How can I show more empathy as a leader?

In a contributed piece for Entrepreneur, John Rampton offered nine tactics that leaders can use to help their teams in difficult times. Tip No. 1? Prioritize the health and well-being of the members of your team. To do that, you need to invest your time in actually understanding that team.

Here's a recent example from my life: I offered to have a 15-minute Zoom call with a new colleague at 11 a.m. ET, thinking that would allow him plenty of time in the morning without having to skip lunch.

However, that time didn't work for him for two reasons:

1. He worked on the west coast, not the east coast, meaning I'd set up an 8 a.m. meeting instead of an 11 a.m. meeting.

2. He had children and needed to see them off to school or daycare before starting his work.

Neither of these factors occurred to me initially and required an adjustment. We rescheduled, and all was well. But, the next time we do a Zoom meeting, I'll know better than to try on an east-coast schedule.

There are tons of ways you can practice empathy as a leader in your day-to-day life. You can be sure to avoid words that make people uncomfortable or inferior, adopt facial expressions that convey you really care about your team or work on improving your compassion and emotional intelligence. But, at the end of the day, if there really were one true tip or trick to leading with empathy, it would be easy and everyone would do it.

Instead, empathy requires unique solutions for each problem. The whole point is to put yourself in someone else's shoes, and of course, not everyone's shoes should fit the same.

Related: You Must Lead With Empathy to Achieve These 5 Crucial Leadership Goals

4. How can I create a more empathetic culture?

Depending on your business or situation, it isn't always possible to meet and know every single person whom you lead. Leaders of corporate giants like Apple or Amazon simply don't have the time to know all of their employees on a personal level. So, what can you do in those cases?

Creating an empathetic office culture

If you're looking for a place to start, try to avoid flashy gimmicks like installing a ping-pong table and focus on the things that will make a noticeable difference in people's lives. One of my Entrepreneur favorite stories to work on over the past few years was a piece contributed by Dennis Eusebio titled "Why Office Perks Are Traps, Not Benefits."

In the story, Eusebio wrote, "These days, you'll hear more about perks than you will about benefits. Things like ping-pong tables, fridges stacked full of Red Bull and Perrier, video games, and other vanity items. What the employer is signaling to you with these items is clear: We're cool! We're hip! Join us, and you too can play ping-pong all the time! It's an attractive signal, especially to young employees."

But, you know what mattered more to him than getting free energy drinks or video games? The substantial paternal leave his employer gave, which allowed him to spend time with his child. "If I were like most employees in the United States workforce," he wrote, "seven days is all I would have."

Creating an empathetic brand

Mark Cuban makes an important distinction on how best to use empathy when relating to your customers. "Your customers can tell you the things that are broken and how they want to be made happy. Listen to them. Make them happy. But don't rely on them to create the future road map for your product or service. That's your job."

He points out that your customers and clients lead busy lives and don't need to reinvent the wheel for you. However, if you can identify what's important to these customers and prove they're important to you, too, then you might just be onto something. As always, this sort of empathy can take on different forms.

For example, Zappos distinguished itself with its excellent customer service, helping users of the site with any problems they might encounter. Ben & Jerry's made recent headlines by joining a group of businesses in boycotting Facebook and Instagram ads. Shoe company Toms is famous for its philanthropy, while companies like Tesla or Beyond Meat offer potential for positive environmental change.

Each brand found its own path, and no strategy is necessarily more successful than others. The key is to find one that fits with your brand and mission in a genuine way.

Related: 3 Simple Ways to Increase Empathy at Work

5. How will using empathy on a regular basis improve my business?

At the end of the day, a company with a great culture can still go under if it can't make payroll or generate income. So, how can empathy actually have an impact on your bottom line? Consider this post by Entrepreneur editor in chief Jason Feifer, who details the process he went through when he was locked out of his office and needed to hire a locksmith:

"Picture it: There's me, standing around like a doofus, locked out of my own office. At a loss for what to do, I went to Yelp, found a bunch of locksmiths, and emailed them to explain the problem and ask for quotes. Four replied quickly.

"The first one simply wrote: "Price estimate: $29.' Then, 18 minutes later, they followed up with this promise: "I will give best price.'

"The second wrote: "$125 to open the door. Just need phone number and address.'

"The third didn't offer a price. "Yes, we can help you,' they wrote instead. "Call us to verify your address.'

"The fourth came from a guy named Jay Sofer, owner of Lockbusters, who wrote me this: "Hi, Jason, thank you for the detail. Would it be possible to send me a quick image of that handle to make certain I give you an accurate quote? Here is my direct email address.'"

Can you guess which locksmith Feifer chose? It was Jay Sofer, the man who asked for details in order to provide an accurate quote and offered a direct email address. Feifer chose him even though Sofer gave him an estimate of somewhere between $99 and $198 — and possibly even up to $300!

Related: 9 Reasons Teams Love Empathetic Managers

Feifer was willing to pay $271 more to someone he trusted — someone who had shown him empathy — than someone who simply offered him the same generic response they would offer anyone else.

And if empathy can help you get customers to try your product or service, it can also help you earn their trust and keep them coming back for more — and brand loyalty is an essential part of sustainable income. As Amy Gallo notes for the Harvard Business Review, "Depending on which study you believe, and what industry you're in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one."

Practicing empathy in the office can lead to happier employees, which can lead to more productive employees, which can lead to greater profits. Investing in these connections can help you build your business and grow it into something stronger.

"When you think that way," Feifer concluded after finally regaining entry to his office, "your customer isn't a transaction. It's another person — someone to build a relationship with, even if it's a brief one, and even if it's about something as simple as a lock."