4.06 – Why Your Mindset Rules
Mindset is everything. Are you operating from a growth mindset or a fixed mindset? Understanding the impact of each on business growth is crucial.
Carol Dweck, a psychologist at Stanford University, developed the mindset theory in her book “Mindset: The New Psychology of Success.” Dweck defines growth and fixed mindsets as follows:
- Fixed mindset: The belief that intelligence is static, and no amount of effort will change outcomes accordingly.
- Growth mindset: The belief that intelligence and talents can be improved through effort and learning, elevating innovation and outcomes accordingly.
Resilience, a key characteristic of a growth mindset, is a skill you can develop, not an inherent trait.
A 2010 Harvard Business Review article analysed the winners and losers from the 1980, 1990, and 2000 global recessions (see the sidebar “The Difference Mindset Makes in Business”). The findings showed that companies with a “we can overcome and grow” attitude substantially outperformed competitors with a “hold tight and hunker down” mindset. Of the companies reviewed, only 9 percent grew after a downturn, 80 percent failed to achieve their pre-recession growth levels within three years, and 17 percent eventually failed altogether.
The 9 percent that thrived operated with a growth mindset, balancing offensive actions such as improving efficiencies and seizing new opportunities with defensive tactics like cutting back to prepare for the worst. Here are some examples of what they did:
- Invested in talent instead of cutting staff to offset operating costs
- Remained committed to marketing to maintain a strong market presence
- Invested in assets and resources to set themselves up for long-term growth
Your growth strategy and actions will only be as good as your product and your mindset. Keeping up with changing technology, consumer demands, and market influences is essential. No growth plan will succeed if your product is outdated or if you hold a fixed mindset. Your strategic imagination is the only limitation on your growth.
The Difference Mindset Makes in Business
An example from the Harvard Business Review article “Roaring Out of Recession,” published in 2010, illustrates how different mindsets changed everything for Office Depot and Staples.
During the 2000 recession, Office Depot hunkered down and cut staff by six percent. In contrast, Staples focused on rising above and coming out of the economic downturn strong by hiring more staff and looking for opportunities to improve efficiencies and set the company up for long-term stability. As the recession ended, Staples’ sales doubled their previous figures and were substantially higher than those of Office Depot, which had billions more in revenue at the recession’s onset. In 2021, Staples offered Office Depot $1 billion for their consumer business.
Applying Growth Mindset Principles
Adopting a growth mindset in business involves:
- Embracing challenges: View challenges as opportunities to grow rather than obstacles.
- Learning from feedback: Use feedback constructively to improve and innovate.
- Persisting through setbacks: See failures as learning experiences, not roadblocks.
- Celebrating others’ success: View others’ success as inspiration rather than a threat.
By cultivating a growth mindset, you can foster a culture of continuous improvement and innovation, driving long-term success and resilience in your business.
