The KitKat effect – Building emotional capability into your organization
Empathy is not just a leadership necessity. It’s vital for organizations too. In Issue 25 of I by IMD, discover why empathy is not just for leaders, how to build a star...
Leadership
Learn to ‘read the air’: How to build emotional capability into your organization
Eugene Cha-Navarro explores how organizations can turn human understanding into an operating system for repeatable competitive advantage
Rapid read:
- Emotional capability turns individual empathy into organizational advantage through shared routines that help teams notice, interpret, and act on what matters to people.
- Build it by teaching how emotions work, embedding reflection into everyday processes, rewarding sound judgment, and making leaders’ emotional learning visible.
- As AI accelerates business decisions, organizations need human understanding to challenge assumptions and ensure technology strengthens their connection with customers.
Why is KitKat, the quintessentially British confectionery, so popular in Japan? What does this unlikely “glocalization” success story teach organizations struggling to connect with unfamiliar markets? And how do the organizations that get this right work differently on the inside?
Early in my career, I moved from a global strategy development role in Switzerland to work more closely with the Japanese market, where I encountered KitKat’s popularity firsthand. At headquarters, I was accustomed to thinking about global brands through strategy, brand guidelines, and toolkits. These disciplines matter. They create consistency and scale. Yet this lens alone could not explain KitKat’s runaway success in Japan.
A chocolate bar with crisp wafer layers, created in 1935 by Rowntree’s of York, England, a confectioner with Victorian roots, had somehow become affectionately embedded in modern Japanese culture. Japanese consumers buy about five million KitKats a day, according to Nestlé Japan, and by 2017 Japan had become the brand’s biggest market by sales, ahead of the UK. It topped Japan’s confectionery charts and sold in hundreds of flavors connected to regions and seasons, including sake, wasabi, soy sauce, and matcha. This creative diversity differed radically from how KitKat was marketed elsewhere.
Its cultural relevance in Japan extended beyond flavor. The name KitKat sounds like kitto katsu in Japanese, which translates as “to surely win”. This serendipitous play on words meant the chocolate bar became a way for parents, friends, and teachers to encourage students facing high-pressure examinations.
Nestlé, which acquired KitKat in 1988, did not simply grow or translate a global proposition. As food industry commentator Pearly Neo has noted, the Swiss multinational noticed a cultural meaning forming around the brand and learned how to serve it.
Working in Japan made me realize the importance of kuuki wo yomu, often translated as “reading the air”. For me, it meant paying attention to the expectations and concerns surrounding what people said, including what remained unspoken. It offered a useful lens on the KitKat story by highlighting that understanding a market involves noticing not only preferences, but also what a product allows people to express to one another.
The experience left a question that has followed me across countries, companies, and categories. How can an organization cultivate this attentiveness so it becomes locally meaningful without losing the advantage of global scale? And how can it develop that sensitivity to local context as a shared capability rather than depend on individual instinct?
Looking across industries and geographies, I kept noticing a similar pattern. Some organizations navigate the distance between global ambition and local relevance with remarkable consistency. They earn a place in people’s daily lives, their culture, and identity. Others, with equally strong products and equally rigorous strategies, never quite cross that threshold.
The difference is often described as consumer insight, local knowledge, or good leadership. Each description captures part of the answer but leaves a fundamental question unresolved: how does human understanding become reliable across markets, functions, and generations of leaders? An insightful individual may notice what others overlook. The larger challenge is whether the organization can repeatedly notice, interpret, and act on what matters to people in different environments.
The organizational management concept of “emotional capability” offers a different way to look at the challenge. It shifts attention from whether a few leaders are naturally good with people to whether the organization itself has learned how to work with emotion. It asks how human understanding is carried through routines, decisions, and relationships, and how it becomes an advantage that does not disappear when talented or emotionally attuned individuals move on.
Beyond emotionally intelligent leaders
Emotional intelligence is usually understood as an individual ability. American psychologists John Mayer, Peter Salovey, and David Caruso describe it as accurately perceiving emotion, understanding emotional information, using it to support thought, and regulating emotion effectively. This helps explain why some people read a room well, remain constructive under pressure, or recognize what another person may be experiencing.
Emotional capability sits at the organizational level. As INSEAD Professor of Strategy Quy Nguyen Huy has explored, it is an organization’s collective capacity to acknowledge, recognize, and respond to the emotions of its people through shared norms and routines.
The two do not automatically coalesce. An aggregation of emotionally intelligent leaders does not make an emotionally capable organization. This distinction is similar to the difference between employing financially skilled individuals and having robust financial controls. Individual expertise matters, yet organizational reliability requires systems that make the desired practice consistent.
Emotional capability is built inside the organization, but its applications extend beyond internal matters. An influential study of 163 firms in Turkey by Ali Akgün, Halit Keskin and John Byrne illustrates how emotional capability can help a company steer through radical change when people must let go of familiar ways of working. It shapes how an organization learns and innovates. It also allows a business to read consumers’ needs more deeply and work more effectively with customers and partners. What a company practices on the inside shapes what it creates for people outside.
Emotions are integral to how businesses and organizations work. They influence what people notice, how they interpret risk, whether they share unwelcome information, and how they respond to change. A strategy can be analytically sound but still fail in execution because people experience it as a threat to what they value, or as a demand they cannot meet. A customer proposition can be technically superior yet still feel irrelevant. A partnership can stall because each party answers its own question rather than understanding the other side’s concerns.
Organizations already shape these responses, whether deliberately or not. Marketing campaign reviews show whether an organization counts consumers’ emotions as data or as noise. Promotion decisions signal which leadership behaviors are valued. Meeting routines determine whose concerns are heard. Stories about successful leaders teach people what is admired. Performance measures reveal whether empathy, candor, or care remain desirable when they carry a short-term cost.
The question is not, “How do we develop more emotionally intelligent leaders?” but “How do we make our organizations emotionally capable?” That shift moves emotional capability out of the training room and into organizational design.
Similarity gives people a place to stand together. Difference then becomes interesting rather than threatening.
From insight to capability
What does emotional capability look like in practice? The food industry, where I have spent most of my career, is a useful starting point. For many people, food is a deeply emotional and personal experience, touching on memory, identity, comfort, and belonging. A product can perform perfectly in one setting and struggle in another because it feels alien or distant from everyday life. For example, Starbucks’s formula, which had conquered the world, struggled to find a place in Australia where cafe culture already had its own daily rituals. The company announced the closure of most of its stores in 2008. The emotional quality that the food industry runs on, above all, is empathy: the work of understanding what matters to consumers and partners and allowing that insight to shape business decisions.
Consider consumers first and watch how kimchi has crossed into Western markets over the past decade. The instinct of a heritage-proud category would be to lead with fermentation tradition, deep flavor, and centuries of Korean culinary history. The breakthrough came, however, from watching how Western consumers actually ate kimchi, and what they ate looked like salad: fresh, crunchy, and served with other things. The category learned to lead with “fresh” and told the probiotic story in the language of gut health that shoppers already trusted. Successful teams looked at where kimchi could add something consumers already valued, and found it belonged as a topping on a burger or a taco. That depth of understanding has practical implications beyond communications. Empathy did not dilute the product’s authenticity. It found where the product belonged in people’s lives. And there is a quiet historical irony that keeps the point honest. The kimchi we know today took shape only after chili reached Korea in the 17th century. What we now call traditional is also the result of adaptation. Authenticity is not a museum exhibit. It is a living tradition that earns its place in new kitchens by listening to the people cooking in them.
I have come to call this “seeing similarities before differences”. Similarity gives people a place to stand together. Difference then becomes interesting rather than threatening. This is empathy in practice. It means entering the consumer’s existing frame of reference before asking them to embrace something unfamiliar.
The same orientation applies in commercial partnerships. Take the development of a new snack for an airline’s cabin service, a world I came to know during my years in the food service business. Taste is only the starting point. For passengers, a snack should be easy to pick up and eat in a confined seat, without falling apart or scattering crumbs onto their clothing. For the airline, those same details have operational implications. Fewer crumbs mean less cleaning between flights. The snack must be easy to serve and maintain consistent quality within the constraints of an aircraft galley. Any proposal must balance these requirements with cost and passenger experience. Empathy brings these perspectives into the development process. It means understanding the pressures and concerns behind a purchasing decision, rather than treating each requirement as another technical specification or objection to overcome. The question shifts from how to sell a product to how to make it work for the people who prepare, service, approve, and enjoy it.
Both experiences began with empathy: understanding the situation from the other party’s point of view. But an insightful reframing or a successful negotiation does not, by itself, make an organization emotionally capable. The organizational test is whether people across the business routinely observe before judging, uncover unstated concerns, reconsider their initial interpretations, and translate what they learn into coordinated action. Human understanding becomes organizational capability when such practices become repeatable across people and situations, rather than dependent on a few emotionally intelligent leaders.
Emotional capability should improve judgment, not replace it.
Four archetypes of routine practices
My research shows that successful organizations cultivate emotional capability deliberately through four archetypes of routine practice. These recurring practices show people what good judgment looks like, enable them to learn from respected leaders, and make clear which emotional qualities the organization values and rewards.
1 – Teach the mechanism, not just the behaviors
Most leadership training programs in emotional skills teach leaders what desirable behaviors look like: listen actively, ask open questions, and stay calm. These are useful, but they don’t explain what drives the behavioral response.
As American psychologist Richard Lazarus has explored, emotion is influenced by appraisal, the meaning a person assigns to an event in relation to goals, concerns, and perceived ability to respond. Consider a sudden surge in the cost of critical raw materials, something every food business is experiencing as edible oils and fats, packaging materials, and freight prices rise. One leader immediately sees a threat, and that threat spreads fast through procurement and operations teams. Another leader reads the same challenge as useful information and becomes curious, treating it as the forcing event for an overdue portfolio review or strategic pricing shift. The event is the same, but the interpretation changes the emotional response.
That gap between event and emotion is where the real work happens. Instead of teaching managers merely to hide their feelings of threat or frustration, help them examine the interpretation producing it: “What am I assuming? What might the other person be protecting? What evidence would change my reading?” Reinterpreting the situation earlier in the process produces different outcomes than holding an emotion down after it has already taken hold, as psychologist James Gross found.
“See similarities before differences” works the same way. It interrupts the first appraisal: “The customers or partners in this market don’t understand us,” and replaces it with a more useful question: “What do we already share, and what can we build from there?”
2 – Embed emotional learning in existing routines
The design question is not what new program to add but which existing routines could carry emotional learning, and how. The opportunities are already on the calendar: talent reviews, post-mortems, and onboarding conversations.
Consider a post-launch review. Most teams review revenue, margin, distribution, service levels, and timelines. An emotionally capable version also examines the emotional friction. Where did a hand-off stall because one function was protecting itself? What did the customer appear reluctant to say directly? Which consumer assumption went untested? When operations challenged the timeline, did the commercial team take their perspective before reacting? Which concerns surfaced only after the decision was made, and what kept them silent in the room?
These are not soft questions added after the business discussion. They help explain why the business performed as it did. If asked consistently, they establish emotional and relational information as legitimate operating data that conventional reviews systematically miss.
The same approach applies to onboarding, market visits, innovation gates, and talent reviews. A market immersion should examine not only what the team observed but which assumptions changed. A talent review should consider not only what a leader delivered but whether that leader strengthened the team’s ability to hear difficult information.
Maurizio Zollo and Sidney Winter have shown that organizational capabilities develop through accumulated experience, the articulation of lessons, and their codification into repeatable practice. The meeting or training workshop itself is not the capability. The disciplined repetition and the improvement that follows build the capability.
This is empathy in practice. It means entering the consumer’s existing frame of reference before asking them to embrace something unfamiliar.
3 – Make the desired response consequential
Employees quickly distinguish between a declared corporate value and a real priority. The priority appears in resource allocation, promotion, recognition, and the decisions leaders defend under pressure.
Imagine a factory manager who pauses production because a product integrity concern on a new health-focused line could affect consumers. The immediate consequence is a missed production target. If the performance evaluation punishes only the volume loss without context while corporate values preach that consumers come first, the organization has made its actual values clear: empathic judgment is welcome only when it is costless.
Building emotional capability requires leaders to identify where metrics and incentives contradict the responses they claim to value. This does not mean abandoning accountability. It means evaluating how results were achieved and whether a decision protected the trust that future performance depends on.
4 – Let leaders see it and hear it
People learn what is acceptable by observing credible others, especially in times of ambiguity. Wharton’s Sigal Barsade showed that emotions also travel through groups, influencing cooperation, conflict, and performance.
When geopolitical events send shocks through global freight or energy markets, senior executives should not just navigate the ambiguity but openly communicate the process. This might mean acknowledging the tension between local supply shortages and global commitments and explaining how they managed their own anxiety to arrive at a balanced decision. After a difficult price renegotiation with suppliers, a leader might say, “My first response was defensive. I then realized the supplier was protecting a different risk. This is the question that changed my interpretation, and this is the boundary I maintained.”
Told this way, the story offers more than a polished version of success. It shows that emotional skill can be developed, rather than treated as an innate quality that only some leaders possess. It also permits sharing emotion and equips other leaders with language they can use. Over time, such narratives become part of organizational memory, not folklore celebrating heroic individuals, but practical guidance about how decisions are made.
Together, these four archetypes of routine practices create an organizational system: teaching how emotion works, carrying learning through existing routines, aligning consequences with stated expectations, and making senior leaders’ emotional work observable. The system reads emotion inside and outside the business, cultivating empathy and other emotional qualities a strategy requires, such as candor in risk discussions, constructive dissatisfaction when performance drifts, hope during transformation, or confidence in uncertainty.
Returning to the example of Japan with these archetypes in mind shifts attention from seeing “reading the air” as a cultural trait to examining how organizational practices can cultivate and sustain that attentiveness. I came to understand “reading the air” not simply as individual sensitivity, but as something an organizational climate could encourage and reinforce. My international assignment, a useful tool for organizations to develop cultural empathy, helped me see how this attentiveness could be cultivated. Moving from a headquarters closer to the market made differences in context harder to overlook in my own work. Such varied career experiences can help leaders question assumptions about how a brand fits into people’s lives. Their organizational value grows when these experiences and lessons are discussed, shared across functions, and used in decision-making. To make local attentiveness become a shared capability, organizations need ways to develop that understanding, circulate it, and give local teams room to respond.
The capability also comes with boundaries. Understanding a stakeholder’s fears, pressures, or priorities does not mean agreeing with every demand. It means incorporating that reality into a decision instead of pretending it does not exist.
Beyond food to an AI future
The system and archetypes I propose here are not specific to food. A bank is part of people’s questions of security and aspiration. A healthcare company enters patients’ moments of fear and hope. A technology platform becomes part of how people work, relate, and express identity. In every case, the organization must understand what its products and decisions mean in people’s lives, not only what they do.
The transferable lesson across industries is that human understanding remains an isolated insight when it stays inside one individual, yet becomes an organizational advantage when routines help people notice emotional realities, share what they learn, and act on it consistently.
The AI era raises the importance and urgency of getting this work right. AI is transforming consumer research, product development, and operations, and boards are giving it the attention and investment it deserves. But AI amplifies what you already know. If your organization is built on genuine human understanding, AI makes you sharper, with better questions asked of the data and better products built from the insight. If the inputs are shaped by distance from customers, untested cultural interpretations, or a reluctance to hear inconvenient information, AI can scale those weaknesses faster.
Using AI well to understand the consumer is itself an act of empathy. The machine can detect patterns, but someone must care enough and be skilled enough to understand the human behind them. The organization designing and deploying the machine must remain capable of understanding the people it ultimately serves.
This is why I describe emotional capability as an operating system in its own right. Empathy with consumers, composure in a crisis, and candor in decision-making are applications that an organization may run. What makes them run reliably is the system beneath: the everyday routines that shape how emotions are interpreted, shared among leaders, and made legitimate.
The lesson from KitKat in Japan was not that every global brand should imitate local flavors or rituals. It was that growth accelerates when a business understands the other side’s definition of trust as carefully as its own ambition.
We must go beyond asking how to train or hire leaders with human skills, and ask a harder question: “How do our routines, norms, and evaluation metrics currently function as an ecosystem that trains our organization’s emotional responses?”
That is where personal insight becomes collective practice. It is where human understanding becomes an organizational capability and a repeatable advantage.
The pattern in other industries
Qualities associated with individuals can be cultivated as organizational capabilities through shared practices and expectations. Pixar’s Braintrust brings colleagues together to discuss films in progress, a routine Ed Catmull describes as a way of institutionalizing candor. Through the emotional capability lens, the point is the deliberate design of difficult conversations. Microsoft’s organizational renewal under Satya Nadellabegan began with an explicitly emotional reset, making empathy and a learning culture legitimate in meetings, promotions, and product decisions.
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