“My greatest challenge has been to change the mindset of people. Mindsets play strange tricks on us. We see things the way our minds have instructed our eyes to see.”

 – Muhammad Yunus (Nobel Peace Prize for economic and social development)

The mindset of a leader is often the greatest indicator of future success. Talent matters. Skill matters. Experience matters.

Mindset matters more.

By mindset I mean the “mental map” that our thoughts, emotions, and choices most naturally follow.

Examples of mindsets:

• Optimistic vs Pessimistic: Seeing life as glass-half-full or glass-half-empty.
• Scarcity vs Abundance: “There is one pie and the pieces are being taken,” or “I can always bake another pie.”
• Feedback vs Feedforward: “I’m defined by my past,” or “I’ll be defined by the choices I’ll make today and tomorrow.”
• Fatalism or Self-Efficacy: “Someone or something else creates my reality,” or “Others may impact my environment but I own my choices and my future.”

It isn’t that skill, plans and strategies don’t matter in leadership. It’s just that they can’t overcome how a leader sees his or her own self, how the leader sees and trusts others and how that leader views the world they live in.

Download the Free Mindset Change Cheat Sheet here.

Mindset and The Five Stages of Organizational Growth

There are five basic stages of organizational growth. Along the way, there are definitely skill and strategy needs. However, the challenge in each of these stages is to avoid slipping back into a lower stage. This challenge is nearly always a result of mindset.

Stage I: Conception

Just getting an idea past being a wish or a dream and into action and reality is a major event. The conception stage is marked by creating a vision and some level of planning, developing initial partners.  It is also where the first or initial customers are developed.

Mindset Challenges:

• Fear & Self-Doubt: Allowing real-feeling but unsubstantiated fears to guide decision making.
• Over-Optimism: Insufficient acceptance or exploration of inevitable challenges, investment, and effort.
• Being Closed to the Input of Others: Inability to recognize and obtain wise mentors and input.

Practical Challenges:

• Demonstrating profitability: Creating a “paper model” demonstrating how & when profitability (for-profit) or sustainability (non-profit) will be achieved.
• Estimating investment and risk: Estimating what will be required to achieve profitability or sustainability.
• Market Acceptance: Demonstrating that there is demand for what you offer.
• Organizational structure: Clarifying roles and responsibilities, including how decisions will be made, delegated and implemented.
• Financial management & accounting: The tools, the people, the procedures.

Stage II: Birth / Startup

The birth/startup stage is when you launch the business or non-profit. The “Open” sign is on. You’ve created a legal entity. You’ve begun to offering your products or services to the community. You are making a lot of changes and adjustments due to initial feedback. You are likely still learning about your product, your customer and your business model: What is wanted. What isn’t. What works. What doesn’t.

Mindset Challenges:

• Fear and Self Doubt: There will be new fears and challenges that emerge. Interpreting them accurately.
• Ego: When success or survival is on the line it is very easy for ego issues to emerge.
• Trust & Communication: Issues regarding communication, decision making, follow-through, accountability will all emerge here.
• Crisis-only mode: Forgetting to think, plan and act ahead – only responding to urgent issues in the moment.
• Sales-only mode: Business development must happen at this stage – but systems need to be clarified and developed to support the new business.

Practical Challenges:

• Managing Cash: Running out of money may be a constant threat.
• Adjusting Expectations: The realities of market demand may be slower or faster, lesser or greater than expected or planned on.
• Financial Management & Accounting: Ensuring that the tools are being used, the procedures work and are followed, that you have the right people managing your finances and books.
• Building Relationships & Credibility: Making sure you are known and attracting attention from current and future stakeholders.
• Clarifying The Value You Offer: The value of what we offer is rarely self-evident. Learning to communicate how the customer benefits in ways the customer cares about.

Stage III: Growth & Stability

You’ve made it! The start-up is over. You can walk now. Mostly. You are generating revenue, you’ve developed brand awareness and you are adding new customers. There is growing predictability in your models and approaches. You are learning what works and what doesn’t. However, competition may be a real concern. Customer loyalty may not be strongly developed. You may or may not be financially stable.

Mindset Challenges:

• Trust: Learning to delegate and let go effectively becomes very important.
• Ego: Continuing to learn to give credit and accept responsibility for problems.
• Scarcity vs abundance: Removing any elements of “survival” and “crisis” mode in favor of investment, stability, and growth.

Practical Challenges:

• Cash Flow: Sustaining financial growth and cash flow.
• Making Large Investments: Timing critical staff, facility or equipment decisions with cash flows.
• Competition: Becoming unique by distinguishing yourself from competitors in terms of service, relationship or product.
• Managing workload: Engaging the fruits of success in terms of increases in management, customers, and revenue.
• Financial management: Growth and management depend on good information.

Stage IV: Maturity and Choices

At this stage, the business or non-profit is established. Survival is not the key question. The business has customer awareness and loyalty. It has built marketing gravity – so revenue is easier to obtain. It requires less effort and energy to sustain the organization. This is the point where leaders tend to either disengage, bureaucratize or expand.

Disengagement can look like an owner or executive who takes advantage of the decreased leadership need to step away. This may be less attention to detail or less time at work. This can be a good place for owners to bring in a new executive or consider a sale.

Bureaucratizing often happens as a reaction to the unpredictable and crisis mode nature of the startup and survival phases. There is a real need and opportunity for systems & structures to be developed. However, when this happens to primarily serve internal needs as opposed to external (to serve management and staff as opposed to the customer) it’ll begin to undermine the possibility of success or growth.

Expansion means utilizing existing strength, brand, and knowledge to either expand into new markets or offer new lines of services or products.

Mindset Challenges:

• Ego & Reputation: Perceptions of how “I” or “We” are seen can inhibit good decisions.
• Ossification & Complacency: Lack of creativity and rigid thinking, systems or structures that no longer best serve the customer.
• Founder Syndrome: The founder is unable to stop tinkering, changing or rebuilding when structure is needed.
• Personal Identity & self-worth: Outgoing owners or executives may stay too long.

Practical Challenges:

• Financial management: Owners or executives often extend more trust to financial managers or CFO’s at this point. Ensure that good systems & procedures are in place. That oversight remains.
• Moving into New Markets: The organization may need to move into new markets to continue to grow. This may increase management complexity.
• Adding New Products & Services: The organization may need new products or services to grow. Ensuring that competency and culture are protected is important.
• Engaging New Competition: New markets, products or services all mean engaging new competition. Time to revisit those skills.
• Developing Systems & Structure Without Becoming Rigid: Effective growth only occurs with the development of predictable systems and structure. Learn to build ones that promote growth instead of stifling it.

Stage V: Arriving & Thriving

Not every organization reaches Stage V. It is similar to Stage IV with the difference of organizational influence, recognition, and potential impact. It is often an “institution” that others depend or rely on.  After successful expansions, your organization may now be at the top of its industry. It has maturity in the market, systems, and processes. It has a dominant presence. It could still be growing but it may not be. You are again in the place of determining whether or not you will stabilize or expand.

Mindset Challenges

• Legacy: What does the leader or organization want to be known for?
• Energy: Does the leader still have the drive to expand or maintain?
• Mythical Thinking: “We can’t fail.” Organizations who’ve made it often believe that they can’t make mistakes or lose their position. They stop pursuing excellence and believe they define excellence.
• Ossification: Lack of creativity and rigid thinking, systems or structures that no longer best serve the customer.
• Personal Identity & self-worth: Outgoing owners or executives may stay too long.
• Founder syndrome: The founder is unable to stop tinkering, changing or rebuilding when structure is needed.

Practical Challenges:

• Same as Stage IV.

Each stage brings about new challenges, opportunities, and temptation for a leader. Old, unhelpful, mindsets may re-emerge. New, limiting mindsets may be discovered.

One thing is certain: Leaders need to continue to grow, adapt and change. The way of thinking that produced your current success (or stagnation) isn’t the kind of thinking that is likely to help you at the next level.

Would like a specific tool to help you identify the mindset you want to change and how to do it?

Download the Free Mindset Change Cheat Sheet here.