Mindset: The New Psychology of Success

Collins reports that Alan Wurtzel, the CEO of the giant electronics chain Circuit City, held debates in his boardroom. Rather than simply trying to impress his board of directors, he used them to learn. With his executive team as well, he questioned, debated, prodded until he slowly gained a clearer picture of where the company was and where it needed to go. “They used to call me the prosecutor, because I would hone in on a question,” Wurtzel told Collins. “You know, like a bulldog. I wouldn’t let go until I understood. Why, why, why?”

Wurtzel considered himself a “plow horse,” a hardworking, no-nonsense normal kind of guy, but he took a company that was close to bankruptcy and over the next fifteen years turned it into one that delivered the highest total return to its stockholders of any firm on the New York Stock Exchange.

A STUDY OF MINDSET AND MANAGEMEECISIONS

Robert Wood and Albert Bandura did a fascinating study with graduate students in business, many of whom had management experience. In their study, they created Enron-type managers and Wurtzel-type managers by putting people into different mindsets.

Wood and Bandura gave these budding business leaders a complex management task in which they had to run a simulated organization, a furniture company. In this computerized task, they had to place employees in the right jobs and decide how best to guide and motivate these workers. To discover the best ways, they had to keep revising their decisions based on the feedback they got about employee productivity.

The researchers divided the business students into two groups. One group was given a fixed mindset. They were told that the task measured their basic, underlying capabilities. The higher their capacity, the better their performance. The other group was given a growth mindset. They were told that management skills were developed through practice and that the task would give them an opportunity to cultivate these skills.

The task was hard because students were given high production standards to meet, and—especially in their early attempts—they fell short. As at Enron, those with the fixed mindset did not profit from their mistakes.

But those with the growth mindset kept on learning. Not worried about measuring—or protecting—their fixed abilities, they looked directly at their mistakes, used the feedback, and altered their strategies accordingly. They became better and better at understanding how to deploy and motivate their workers, and their productivity kept pace. In fact, they ended up way more productive than those with the fixed mindset. What’s more, throughout this rather grueling task, they maintained a healthy sense of confidence. They operated like Alan Wurtzel.

LEADERSHIP AND THE FIXED MINDSET

In contrast to Alan Wurtzel, the leaders of Collins’s comparison companies had every symptom of the fixed mindset writ large.

Fixed-mindset leaders, like fixed-mindset people in general, live in a world where some people are superior and some are inferior. They must repeatedly affirm that they are superior, and the company is simply a platform for this.

Collins’s comparison leaders were typically concerned with their “reputation for personal greatness”—so much so that they often set the company up to fail when their regime ended. As Collins puts it, “After all, what better testament to your own personal greatness than that the place falls apart after you leave?”

In more than two-thirds of these leaders, the researchers saw a “gargantuan personal ego” that either hastened the demise of the company or kept it second-rate. Once such leader was Lee Iacocca, head of Chrysler, who achieved a miraculous turnaround for his company, then spent so much time grooming his fame that in the second half of his tenure, the company plunged back into mediocrity.

Many of these comparison companies operated on what Collins calls a “genius with a thousand helpers” model. Instead of building an extraordinary management team like the good-to-great companies, they operated on the fixed-mindset premise that great geniuses do not need great teams. They just need little helpers to carry out their brilliant ideas.

Don’t forget that these great geniuses don’t want teams, either. Fixed-mindset people want to be the only big fish so that when they compare themselves to those around them, they can feel a cut above the rest. In not one autobiography of a fixed-mindset CEO did I read much about mentoring or employee development programs. In every growth-mindset autobiography, there was deep concern with personnel development and extensive discussion of it.