Before you read the rest of the article, answer the following “Yes” or “No” questions
Do you prefer to go on a planned overseas trip as opposed to a “free-and-easy” one?
Do you need certainty in your life?
Do you try to avoid failure by calculating probabilities and taking the safest route?
Do you rely on your experience to move every project more than experimenting your way through?
Do you stay quiet at a meeting when you don’t know the answer?
Do you find yourself reaching for answers when your project travels down an unknown path?
Do you prefer to spend more for a chance of a better result?
If you have answered more “Yes” than “No”, you have what is known as a fixed mindset.
According to Prof Carol Dweck of Stanford University, author of Mindset, there are two types of mindset, the fixed mindset, which prefers a stable environment; and a growth mindset, which thrives in uncertainty.
It is worthwhile to note that both mindsets have their application in organizations. We certainly don’t want the CFO to go on exploratory jaunts in his financial management; as we also don’t want the CEO to bet the future of the company on a hunch. Not that this has not happened before; examples include HP’s acquisition of Compaq, Autonomy and Palm (3 strikes!), Lehman Brothers’ gimmicks in dabbling with sub-prime housing loans, Daimler’s unsuccessful acquisition of Chrysler, the failed merger of AOL and TimeWarner which saw the combined value of the merged company fall from US$226B to US$20B within 18 months! So there is good evidence to show that the fixed mindset is important in maintaining firm value.
However, there is a need to embrace the growth mindset when in an environment of uncertainty. Uncertainty abounds when we embark on innovation or growth projects and to make them work, there is a need to retool our mindset. That means that we need to accept that there will be failure and rather than shy away from it, to readily embrace it.
How do we do that?
First, we need to limit the downside. This is called an affordable loss. If you can afford losing (the money, time, partner, business etc) as an outcome of the risk, then it would not hurt too much when you fail.
Second, fail fast. While the fixed mindset people avoid failure, the growth mindset ones do just the opposite – they look for it. Their thinking is, “Since we are going to fail, we might as well fail fast!” After all, if the road to success is paved with failure, we must as well get it out of the way quickly – so that we can get to success faster!
Third, fail cheap. Very much in line with affordable loss, we want to make each failure as cheap as possible. As far as we can, we want to make the loss so miniscule that we can afford to take several hits at a time and yet be unscathed. This means that we will be shooting for many small successes, rather than one gigantic (read expensive) coup.
Lastly, don’t over-analyse. When we are in fixed mindset mode, we need to be sure that our investment decisions are good. Every dollar invested must return huge multiples. We strive for ROI numbers that are sky-high and we end up tweaking decision inputs to make the decision return better numbers. Yet in an uncertain environment, we don’t have any precedence towards returns; so how can we determine an ROI level? So if we need to strive towards some arbitrary return, and we work the numbers to death, two things might probably happen: the opportunity will slip through our fingers, and we might lose much more than we thought we’d gain!
The person with the growth mindset is one who goes along and gets along. This is a person who can bend with the force of nature, not resist it. And that, we know, is the success strategy in a storm. The ram-rod, rigid tree is the one that is felled by the storm. And a growth environment is a hurricane! So don’t be that rigid tree that gets destroyed, be the flexible bamboo that sways with the wind and thrives in this environment.