The Feeling Economy is the term researchers Ming-Hui Huang, Roland Rust and Vojislav Maksimovic use for an economy in which distinctly human capacities, such as empathy, creativity and relational intelligence, matter most, because neither automation nor analysis can replicate them. For leaders, it changes the core of the job: from setting direction and managing output to creating the conditions where people bring their best.
Every leader we meet can describe their strategy. Far fewer can describe how their people actually feel on an ordinary Tuesday. In the economy we are now operating in, the second is doing more of the work, and most leadership models were built as if the opposite were true.
Key takeaways
- Each economic era has demanded different leadership: physical output in the industrial era, cognitive output in the knowledge economy, and human and relational capacity now.
- The World Economic Forum ranks resilience and adaptability, creative thinking, and empathy and active listening among the core skills organizations need most.
- Teresa Amabile’s research shows leaders are the gatekeepers of creativity: the environment they create determines whether people’s capabilities get used.
- Followers consistently ask leaders for trust, compassion, stability and hope, and most workplaces are not delivering them.
- The empathy gap is a model failure more than a character failure. Leaders were trained for an economy that no longer exists.
Why feelings drive performance
Think about the last major purchase you made: a car, a trip, a piece of technology. How much of that decision was purely rational, and how much was about how it made you feel?
Now think about your team at its best: creative, committed, willing to go beyond what’s required. What drives that? Not the salary and not the benefits package. It is relational. It has to do with meaning, connection and whether people feel genuinely seen by the people leading them.
This is not soft territory. It is the new center of gravity in organizational life.
What is the Feeling Economy?
Every major economic shift has required a matching shift in what leaders do:
- Industrial economy: physical output. Leadership meant organizing, directing and controlling.
- Knowledge economy: cognitive output. Leadership meant strategy, analysis and expertise.
- Feeling Economy: human and relational output. Leadership means creating the conditions for empathy, creativity and collaboration.
Writing in the California Management Review, Huang, Rust and Maksimovic describe the Feeling Economy as the era in which the capacities machines can’t replicate become the ones that matter most: empathy, creativity, relational intelligence and the ability to work through ambiguity with other people.
The World Economic Forum’s recent Future of Jobs research supports this. Resilience and adaptability rank second among the core skills organizations need, creative thinking ranks fourth, and empathy and active listening rank seventh.
The shift is not coming. It is here. Yet most leadership development still trains people for the economy that came before it.
What the Feeling Economy changes about leadership
The practical implication: in a Feeling Economy, the most important thing a leader does is not set strategy or manage performance. It is to create conditions, specifically the conditions in which people feel safe enough, connected enough and valued enough to bring their full creative and relational capacity to work.
Leaders are the gatekeepers of creativity
Teresa Amabile’s research at Harvard Business School identifies three ingredients of creative performance: domain expertise, creative thinking skills and intrinsic motivation. Leaders can’t hand people the first two. But the environment a leader creates either cultivates or undermines intrinsic motivation, and that environment largely determines whether people’s expertise and creativity ever get used. The gate opens or closes based on how human the leadership is.
What followers ask of leaders
Gallup’s research on what followers need from their leaders points to four things: trust, compassion, stability and hope. None of them is a request for better processes or clearer strategy. Each is a request for something deeply human.
The empathy gap
Here is what makes this urgent: those needs are not being met. Only 37% of workers report feeling genuinely respected at work, and fewer than half feel their supervisor cares about them as a person. After decades of talk about emotional intelligence, servant leadership and empathy, the numbers show the conversation hasn’t become practice.
That is primarily a model failure, not a character failure. Most leaders were trained in frameworks that rewarded decisiveness and results, not relational depth, real listening or the patient work of building trust. Those frameworks fit the economies they were designed for. They are not adequate for this one.
What leading in the Feeling Economy looks like day to day
- Asking how people are doing, and listening to the answer, as part of how work gets done rather than as small talk before it.
- Treating psychological safety as a performance condition, not a perk.
- Staying steady under pressure so stress doesn’t roll downhill onto the team.
- Connecting everyday tasks to purposes people care about.
- Noticing and naming specific contributions, so people feel seen.
A test for your own leadership
If you lead a team, a department or an organization, the question isn’t whether this shift affects your industry. It already does. The question is whether your leadership is keeping pace with what the moment requires.
Think about the last time someone on your team brought you an unexpected, creative solution to a hard challenge. What did you do, as a leader, that made room for it? And what, if anything, made it harder? Your answers to those two questions are your leadership development agenda.
Human Centered Leadership is our framework for that work. Its definition starts from the idea that leadership is a verb, not a title, and its central practice is building a Creative Alliance where people can do their best work together.
Frequently asked questions
What is the Feeling Economy?
A term from Huang, Rust and Maksimovic (California Management Review, 2019) for an economy in which empathy, creativity and interpersonal skills become the most valuable human contributions, as AI and automation take over more analytical and mechanical work.
Why does the Feeling Economy matter for leaders?
Because the capabilities organizations now depend on, such as creativity, collaboration and adaptability, flourish or wither depending on the environment leaders create. Leadership shifts from directing work to creating conditions.
What do employees need most from leaders?
Gallup’s research on followers points to trust, compassion, stability and hope.
Is empathy a leadership skill that can be developed?
Yes. The gap most organizations face comes largely from how leaders were trained, which means it can be closed with different models and deliberate practice.
— Lane & Jules
Morris & Morris | BOMBDIGGITY, LLC
Michael Lane Morris, PhD and Jules Morris, PhD are co-authors of “Human Centered Leadership: The Decisive Leadership Advantage,” published in the SAGE Handbook of Human Resource Development (2024). Jules Morris’s doctoral research on creative role identity and leadership (Morris, 2025) directly informs this work.