Growth is a deep-rooted desire for us all.
The word growth evokes images of change, personal development, and improvement. It’s something everyone wants to experience at some point in their lives, yet it can be difficult to maintain a growth mindset when we’re faced with challenging times says Paul Haarman.
People with a fixed mindset lack the motivation to improve because they believe everything about them should already be perfect. People with a growth mindset know that there is always room for improvement and are motivated by challenges that bring opportunities for development and success.
In the context of “how businesses grow”, people might assume that focusing on profits should be a top priority for any business owner or executive team – but this isn’t necessarily true. Of course, making money is important, but new research suggests that companies with a growth mindset are likely to generate significantly more revenue than those with a fixed mindset.
The reason for this? Simply put, people want to work with businesses that place emphasis on growth and improvement over profit maximization. Customers respond well to companies that prioritize growth – after all, who doesn’t want their business or brand to grow?
In this article, we take an in-depth look at the latest research into growth mindsets and how they impact businesses. We explore some of the key benefits of focusing on company growth as opposed to profits alone and explain why having a strong company culture is one of the best ways to build a sustainable company explains Paul Haarman.
Growth Mindset vs Fixed Mindset: the Research
A study carried out by Paul O’Brien, at the University of Sheffield, investigated the differences between growth and fixed mindset companies.
The research used data sourced from publicly listed businesses in New Zealand to measure company growth over a 5-year period. The study applied psychometric tests to uncover the mindset type of each sampled company.
Companies were ranked on three measures: revenue growth, revenue size, and market capitalization (how much their stock is worth). The results showed that businesses with a growth mindset significantly outperformed those with a fixed mindset when it came to revenue size and growth rates.
On average, companies in the top 20% for revenue growth had one common theme – they all possessed a growth mindset. This finding was even more pronounced when it came to market capitalization – businesses in the top 20% were twice as likely to have a growth mindset as those in the bottom 20%.
The study’s author, Paul O’Brien, commented on the findings: “Our research shows that if you want your company to grow, you need to adopt a growth mindset. This is in line with previous research which has shown that people with a growth mindset are more successful in life.”
So, what exactly is a growth mindset?
A growth mindset is a way of thinking that focuses on learning and development. Rather than viewing challenges and setbacks as negative experiences. People with a growth mindset believe that intelligence and ability can be improved through dedication and hard work says Paul Haarman. In other words, people with a growth mindset believe that nothing is static. And personal development is possible no matter your starting point.
On the other hand, people with a fixed mindset believe that all of our abilities are predetermined at birth. They feel that intelligence and talent are qualities you’re either born with or not. Making success purely based on luck or what’s conveniently available to you.
Leaders with strong company cultures know how important it is. To cultivate an environment where employees can learn and improve through new experiences. This will enable them to develop their skillset which in turn helps their company grow further down the line. However, many companies place too much emphasis on so-called “performance”. By hiring managers who only hire those they think possess certain traits, skill sets, and abilities.
This is where companies can run into problems. Because it means that employees are hired on skill alone – rather than the desire to improve and learn new things.
If you want to build a sustainable company culture that will last for years after you’re gone. Then make sure your company is hiring people who have a growth mindset! You’ll instantly know if someone has a fixed or growth mindset. By asking them how they feel about failure says Paul Haarman. If they believe failures are learning opportunities, then they possess a growth mindset. By contrast, those with fixed mindsets view failure as an embarrassing event. That will cause people to judge their ability or look down upon them in some way.
Companies with a growth mindset outperform those with fixed mindsets.
Leaders should make sure their team has a growth mindset. Hire based on this trait rather than misconceptions of what makes a good employee.