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How to Develop a Growth Mindset in Your Business

growth mindset

What is a growth mindset and how does it impact SMEs? This concept has become popular in recent years among owners and managers wanting to grow and develop their businesses. Here we’ll provide a growth mindset definition and explain how you can develop the basic qualities to develop a growth-minded organisation.

Fixed vs growth mindset

The differences between fixed and growth mindsets has been carefully studied by psychologists and business experts. The work of Stanford University professor Carol Dweck is often cited as a definitive work on this topic. In her book, Mindset: The New Psychology of Success, she explains the difference between fixed and growth mindsets. 

The overall difference between the two mindsets is that growth-minded people believe that intelligence can be developed while those with fixed mindsets believe that intelligence is static. As a result, growth-minded people have a desire to learn while people with fixed mindsets want to look smart in front of their managers and peers. 

Fixed Mindset Growth Mindset
Challenges Avoid challenges Embrace challenges
Obstacles Give up easily  Persist in the face of setbacks
Effort See effort as fruitless See effort as a path to mastery
Criticism Ignore useful feedback Learn from feedback
Success of others Feel threatened by the success of others Find lessons and inspiration from the success of others
Result Plateau early and achieve less than their full potential Reach even higher levels of achievement

In studying the two mindsets, Carol Dweck noticed significant differences in businesses with fixed vs growth mindsets, including:

  • Fixed mindset managers believe that the amount of people’s talent is fixed and cannot be increased.
  • Employees at fixed mindset companies often feel that there are a handful of highly valued “star” workers.
  • Fixed mindset staff are afraid to fail, so they pursue fewer innovative projects. 

The growth mindset can be applied to businesses of all sizes. Here we consider how you can apply the approach to your business. 

Challenges

Consider how your business and employees view challenges. Are challenges seen as something to be avoided or are they embraced by management and staff? Organisations tend to attract people of similar mindsets, so think about how challenges are viewed. If people are punished for making mistakes, they will tend to avoid challenges. To get employees to embrace challenges, create an environment where it’s okay to get out of comfort zones and take risks without the fear of failure.

Obstacles

Growth-mindset people continue to persist in the face of setbacks. Does your business continue with projects in the face of obstacles or give up and go on to the next project? One way to overcome setbacks is to create plans that outline the potential obstacles along the way and ways they can be overcome. Knowing about potential setbacks in advance and preparing for them will help you and your team by removing the unexpected from the situation. One way you can do this is by conducting a SWOT analysis of your business. As part of this process, you look at the potential weaknesses and threats to your business. 

One business that has persisted in the face of setbacks is White Clover Music, a wedding concierge business. The business faced major challenges as a result of COVID-19 but rose to the occasion and bounced back. As co-owner Kate Tomlinson notes, “You can’t limit yourself by fear and anxiety. You will always come up against challenges, whether it’s the global economy, an industry slowdown, a pandemic – there will always be something. Even if we were set back, we’ve built this business once before; we can do it again, and possibly even better this time.” 

Read the full story in White Clover Music: Business with your better half.

Effort

The connection between effort and results plays an important role in developing a growth mindset. When employees don’t see how their work contributes to the ‘big picture’ they can see their efforts as being fruitless. Business owners can overcome this aspect of the fixed mindset by implementing practices that connect employee efforts with their results. Although the connection between effort is obvious in some roles, such as sales, it can sometimes be more difficult to get people in other parts of the business to feel the sense of satisfaction involved in delivering results. 

People who work in the finance, administration or tech parts of your business, may never meet a customer, or touch the product or service that you sell. One way to communicate the results of their work is to close that gap and share positive customer reviews across the business to show employees how their work contributes to business results. 

Another example of connecting actions to results is Return on Experience. It’s a way to measure how customer experience impacts the bottom line of a business. For example, how the experience of business travellers checking into a hotel affects how often they use that hotel chain again. When employees help to make that experience easy and quick, guests will rebook more often. To learn more, read Why Return on Experience is the Next ROI.

Criticism

Management consultant and bestselling author Ken Blanchard said, “Feedback is the breakfast of champions.” Ignoring feedback will ensure a fixed mindset and hinder business growth. Yet people who have been harshly criticised in the past often ignore feedback even when it’s constructive. The challenge for business owners and managers is to deliver feedback in a way that doesn’t offend but promotes better performance in the future. Ineffective feedback is vague and doesn’t offer ideas for improvement, so offer feedback that’s specific and provides advice for doing better next time. 

In addition, having the right mix of positive and negative feedback is crucial. Although there is no perfect ratio, it’s important to offer more positive than negative feedback. Positive reinforcement of effective behaviours will help to reinforce these, while ideas for improvement will be taken more seriously when they are balanced with positive feedback. 

Business owners and managers need feedback on their performance as well, but SME owners often lack this. One solution is to find a coach or business mentor who can provide constructive feedback.

Success of others

People with a fixed mindset feel threatened by the success of others. This applies to organisations as well. In an adversarial environment, employees are threatened by the success of others. Instead of seeing achievement as a threat, create an environment where success serves as an inspiration for others in the organisation. When recognising and rewarding effective behaviour, reinforce that this can be adopted by other team members to improve results. When done correctly, it will inspire others to adopt these behaviours. Also, when speaking about the success of competitors, see what lessons can be learnt from them and applied to your business.

Action steps to promote a growth mindset

Developing a growth mindset in your business is not a short-term project. An article in Forbes Magazine outlines three steps to nurture a growth mindset over time:

1. Foster continuous learning – in a fast-changing world, knowledge needs to be constantly updated. Foster an environment where staff are curious and interested in ongoing learning.

2. Leverage your learning management system (LMS) – if you have an LMS, get full advantage from it for developing employee education and skills. You can publish articles, host videos and offer training courses that can promote growth. If you don’t have an LMS, learn about some of the inexpensive options available.

3. Encourage rich conversations – regular conversations between managers and employees can be used to boost a growth mindset. Leaders can use these as opportunities to look out for phrases that reveal a fixed mindset, such as “This is impossible…”, “I’m terrible at…” and “I can’t…” Once you uncover these, you can take steps to promote growth through mentoring, coaching and learning and development. 

There are many reasons to develop a growth mindset in business. In addition to becoming a better place to work, the steps you take will have a positive impact on your bottom line.

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Business content for Australian SMEs. Sharing guides, growth hacks, and expert tips on finance, sales and marketing, and tech.

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