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Rita McGrath

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June 19, 2014

How do we get our middle managers back into a growth mindset?

It’s been five or more years since the Great recession walloped economies all over the world, with the result that for many companies it has been a time of doing not very much but cost-cutting, downsizing, divesting and otherwise holding on to what business they can by their fingernails.  Now, as things are slowly starting to pick up and companies are beginning to once again see opportunities, they are facing an entirely different kind of problem. Their middle management ranks are full of people who have exactly the opposite of a growth mindset.  They’re risk-averse, afraid to fail, numbers-driven and generally insecure.  Often, they’re not engaged with jobs which haven’t stretched or challenged them in a positive way for years. So how can you begin to make a change to this situation?  Some suggestions:

Start with a portfolio view.  Every business has some activities that keep its core operations healthy.  Those should be job #1, as if the core isn’t working well nothing else will either.  You can’t launch a new business on a shaky foundation.  But, just working on the core, in a transient advantage context can really get you into trouble when an old advantage fades away.  So you need a few projects that have the potential to be a big part of your next core business.  My buddy Geoffrey Moore calls these H2 projects, but whatever you call them there need to be some in your portfolio.  Finally, you have what I call options, which are small investments you’re making today to buy  you the right to make more substantial investments in the future.   People need to understand what part of the portfolio they are responsible for driving.  Further, you need to make a critical distinction between low-uncertainty and high-uncertainty contexts.  The options are high-uncertainty situations and need to be managed with a different set of disciplines, emphasizing discovery and experimentation.

Make your growth goals clear. People are much better at seeing how they can make a transition to a new way of working if this is connected to a clear and measurable set of outcomes.  “Gain market share in Europe” is a lot less clear than “Add at least 2 new customers, increase the number of services our existing customers buy by 25% and increase the total number of inquiries we receive by 20%”.  People can see far more clearly what to do if they understand the levers you are trying to push.

Align incentives. I can’t tell you the number of times I’ve been in strategy meetings when a big new strategy is announced, but everybody is “too busy” to get around to thinking about how this will translate into the incentive program.  You’re never going to drive a growth mindset with incentives oriented toward cost-cutting and hunkering down.

Get smarter.  It’s a funny thing – for almost every other practice in a company, there is recognition that you need to learn the right practices and develop the right capabilities to reliably accomplish a goal. Yet when it comes to growth –  particularly innovation-led organic growth – companies very often start from scratch as though it had never been done before.  That doesn’t make much sense.  There are a number of excellent resources out there that can help people understand what works and what doesn’t when it comes to growth.  To give a personal plug, my own Columbia Business School course Leading Strategic Growth and Change provides a one-week, extremely practical introduction to the basics of managing a growth program, from how you think about financing growth ideas, to managing portfolios, making smarter decisions under uncertainty, managing the predictable hiccups of cultural change, and dealing with politics.  You’ll make mistakes, for sure, but why not make your own, rather than repeating the mistakes of people who came before you?

Start small, experiment, and learn from intelligent failures.  All too often, growth programs are announced with great fanfare and much enthusiasm but wither under the weight of later disappointments.  To get started, find a few opportunities that would allow your people to practice the new behaviors you are trying to encourage.  Perhaps a customer has a need which you normally wouldn’t attend to, but which someone might do as an experiment.  When they work, spread the word.  When they don’t, spread the learning!  The concept of intelligent failure is also important – if people understand clearly when it’s OK to fail, they are less apt to be resistant. The time to start is now.  You don’t want to be missing opportunities simply because your people are stuck in a mindset that stopped making sense.

Filed Under: Discovery Driven Planning, Innovation, Profitable Organic Growth, Transient Advantage, Uncategorized

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