What is Mindset?
There’s no shortage of factors to consider when thinking about business outcomes. Let me add a personal favorite: Mindset. Mindset is an intangible that resides beneath the surface and, in my experience, drives business performance for good or bad.
So what exactly is it? Caution: Exactly may be a stretch. Like most abstractions, mindset is open to interpretation and difficult to pin down. Usually you’ll hear definitions like mental model or assumption. Mine further specifies assumption: Beliefs and ideas leaders have about their companies.
Why it Matters
Mindset reflects long-held and seemingly reliable beliefs that occasionally defy logic. Recently, I encountered familiar examples of this in a variety of client companies. Ideas and beliefs like, “I can trust my family.” Or, “My team is fantastic.” Or even, “All we need to do is add sales people.”
The assumptions sound reasonable but only if divorced from their context. In all cases, stated assumptions directly contradicted situational realities. And this seems to be the issue. Leaders, like most of us, sometimes find it difficult to “revert to logic” at key moments that require new perspective.
Prevailing mindset is strongly conditioned by past experience. Leaders rely on what’s worked in the past and often try to force fit lessons learned to the present. Cognitive scientists call this a “prediction by matching error.” It happens a lot and not just in smaller middle market companies.
Research from the Corporate Executive Board on Fortune 100 Companies spanning the last 50 years indicates that even those with stellar revenue growth rates encounter stall periods that diminish value.
The good news is this: 87% of stall events are due to either strategic or organization factors like innovation breakdowns, neglect of core markets, and thin talent.
Two things about the findings are notable. Strategic and organization factors are undeniably controllable…provided leaders remain open to new ideas about markets and organization capability then take decisive actions well before performance levels off or softens.
The second is what the factors suggest: An untenable comfort with the status quo or said differently, complacency. Declining performance begins when leaders and their company cultures stop thinking creatively about the business.
Force For Good
On the other side of the ledger, leader mindset is adaptable and compelling. It’s very recognizable during the earlier stages of company building. Expressed early on and hopefully thereafter, this form of leader mindset is neither fixed nor rigidly bound by prior ideas or beliefs.
Unlike the above examples, mindset can be more open and expansive. Research by noted author, Carol Dweck calls it the growth mindset. The essential feature being an openness to possibility and novelty. This mindset is the antithesis of rigidity. Think of Steve Jobs transforming Apple into a consumer product company or Ed Catmull using technology to revolutionize film animation. Remember Toy Story?
This kind of mindset is critical for business leaders because it allows them to remain current and up-to-date on changes taking place in their ecosystem. Well-crafted visions and strategies are predicated on growth mindsets that are open and agile.
“Mindset is a force for good when leaders strike the reasoned balance of prior experience, current understanding, and creativity.”
What to Do
Capturing mindset should be part of all leaders’ ongoing reflective process. It’s a matter of paying particular attention to ones own (as well as others) thoughts, ideas, and perspective about the entire business and testing them out, regularly.
The goal is to discover which drive current circumstances and whether or not they are relevant. Maybe “adding sales people” worked in the past but is it the best solution now given market or customer shifts? Or, maybe the team was fantastic, 10 or even 5 years ago. But what about now when strategic or operational changes become necessary? Finally, is the belief that every sale is a good one still viable?
Putting long-held beliefs and ideas about what works for the company under the microscope counters “matching errors” and ensures better alignment of current perspective and circumstances. Truth is, more recent beliefs and ideas should also be scrutinized for value.
To start, identify the handful of key ones you want to test and ask yourself these simple questions:
- When did the belief or idea become part of our operating manifesto?
- How has the belief or idea helped previously?
- Is the belief or idea still relevant?
Rigorous belief and idea testing is learned behavior that benefits from discipline and practice. It may seem risky but there’s no other way to peel the onion and move things forward.