Chip Conley spends a lot of time in inspiring places, like Burning Man and the Point Reyes Lighthouse cottage, where he wrote his first book. But the insight that saved his company and rewrote his business philosophy came to him at a Borders bookstore in San Francisco’s Union Square.

 Conley’s chain of Bay Area hotels, Joie de Vivre Hotels, had been blasted by the bursting of the dotcom bubble and the 9/11 attacks. Local hotels had seen revenue per available room collapse by 52% (on average!). Margins on what revenues remained were being squeezed by the emergence of online travel agencies like Priceline and And in the wake of the Afghanistan invasion, patriotic Americans were boycotting anything that sounded even remotely French. “It was the one time,” Conley told a crowd at Inc’s “Build” event in Half Moon Bay last week, “that I wished I’d named my company something different.”

And so Conley went to the bookstore, seeking an answer in the business books section. Instead, he found himself drawn to the self-help stack, where he came across the work of the work of mid-century psychologist Abraham Maslow. You may remember Maslow from introductory college psych courses, as the creator of Maslow's hierarchy of human needs. In Maslow’s model, there are five levels. In order of urgency they are:

  • physiological (like food and shelter)
  • safety
  • belonging
  • esteem
  • self-actualization

Until the lower-level needs are met, a person isn’t interested in moving up the chain to the next. The higher you go in the hierarchy, the more secure, happier and fulfilled you become.  

 Conley’s eureka moment was to realize that Maslow’s five levels could help rewrite Joie de Vivre’s business model. It could, in fact, rewrite how the company saw its relationship with literally everyone it dealt with: customers, employees—even investors. Among the principles born of Conley’s epiphany were the following, any (or all) of which might apply to your company:

Great companies give employees a calling, not a job.

At the base level of Maslow’s hierarch, an employee wants money and benefits. You have to provide that, but you only inspire employees if you also address the highest level need—a sense that the job helps them become the best people they can be. The benefits are obvious: An employee who views the job as a calling is internally motivated to excel. An employee who sees it as a job needs external motivation, like more money. Or threats.

Conley illustrated the point by recalling a conversation with Southwest Airlines CEO Gary Kelly. While Southwest has recently begun to publicize that it doesn’t charge for luggage, the policy had been in place for years, long after other airlines began to charge. When Conley asked Kelly why, the answer surprised him: Because it would turn Southwest flight attendants into baggage handlers, as passengers tried to stuff more and more  luggage into the overhead bins. That would make the flight attendants unhappy, said Kelly, and that in turn would make passengers unhappy. “We want our employees to feel that their job a calling,” he said. “And the people who most have to feel that way are the ones closest to the customer.”

If you only take care of your customers’ lower level needs, you are producing a commodity--and you will lose them.

In the hotel business, the lowest-level customer needs are a decent, safe place to say. But many, many hotels offer that. A clean room is a commodity. “And you have to realize that customers are promiscuous these days,” Conley said. “If they’re buying ac commodity, they’ll go anywhere they can to get a lower price.”

If you can help them self-actualize, you are giving them what they didn’t know they needed.

At Joie de Vivre, Conley designs each of his hotels that flatter and vindicate a different category of customers’ distinct self-image.  “The idea,” says Conley, “is that each one should match how certain customers would describe themselves on a good day.”

At the Vitale in San Francisco, for example, the minimalist design and fitness conscious services target the kind of bourgeois bohemian who might like Dwell Magazine. A few blocks away in Union Square, the Hotel Rex’s tweedy décor and emphasis on its Jack London heritage caters to urbane literary sorts who read The New Yorker. “Everyone in our business used to talk only about demographics.” Conley said. “We focus on psychographics.”

Your actual job is chief emotions officer.

“If an employee told you he had the flu, you’d send him home,” says Conley. “If an employee told you he was feeling anxious, you’d probably tell him to get back to work. But the emotion is just as contagious as a flu virus.” Workers who are anxious, resentful or mistrustful will communicate that same feeling to themselves and customers.

Managing for positive emotions puts the contagion factor to good use. A few years ago, Conley began to insist that every senior management meeting end with a leader describing someone anywhere in the organization who had done outstanding work in the previous week. An executive was then dispatched to thank the employees.

This had a number of contagious emotional benefits, says Conley. “First, the meeting ended on a positive note, and everyone left feeling happy, which gets passed on. Second, the employee was recognized, and that made him happy, which affected how he treated customers, his co-workers, maybe even his family. And finally, there was cross-fertilization. If the VP of technology thanks the bellman for great service, they both begin to feel good about being on the same team.”

While concept of the five Maslow levels isn't hard for businesses to grasp, Conely says, they tend to focus on the most basic Maslow levels because they are easier to measure. That’s a mistake. “You ought to think of yourself as your company’s chief emotional officer,” says Conley. “We’re all human. It’s the most important, neglected fact in business.”

 Joie de Vivre Hotels today has $250 million in revenues and over 2,500 employees. In the years since Conley discovered Maslow, he has doubled the number of hotels the company operates, and added restaurants, spas and other properties. In October this year JDV merged with Thompson Hotels. In 2011, Joie de Vivre was named one of the Bay Area’s Best Places to Work for the sixth year in a row.