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Australian Graduate School of Management Mid-Market Growth Forum

Discover how to turn your business into a strategically agile organisation. Gain insights into addressing ongoing challenges such as government regulations, access to capital and talent management and take your organisation to the next level.

AGSM Mid-Market Growth Forum

2 August 2013

Table of Contents

Agenda ......................................................................................................................................... 1

Welcome from AGSM ................................................................................................................... 2

What needs to change and where do you start by Patrick Sharry ................................................. 3

Growth Opportunities in Dynamic Environments ....................................................................... 4

Four General Strategies for Dynamic Environments .................................................................. 5

Design Thinking ...................................................................................................................... 11

Strategic Agility ....................................................................................................................... 13

CYNEFIN Framework ............................................................................................................. 16

A leader's framework for decision making ............................................................................... 17

How to grow whilst managing costs by Suzana Ristevski ........................................................... 21

Notes .......................................................................................................................................... 25

Peabody Energy Australia Case Study ....................................................................................... 27

Knowledge at ASB Articles ......................................................................................................... 28

Innovate or Bust: Creating Business Cultures Open to Change .............................................. 28

To Realise Workforce Potential, Manage with a Growth Mindset ............................................ 31

Grow your Business.................................................................................................................... 34

Become a High-Performing Workplace ....................................................................................... 34

Notes .......................................................................................................................................... 35

The Leader ................................................................................................................................. 36

Mid-Market Growth Consortium .................................................................................................. 36


Page 1 © AGSM Executive Education 2013

Agenda

Welcome – Introduction to the topic and speakers Caroline Trotman Executive Director AGSM

Session 1 – Faculty Insights

Keynote – Growth Opportunities in Dynamic Environments

Strategy in dynamic environments

Making this work in your organisation

Reflection – Time to reflect on what has just been presented

Patrick Sharry AGSM Faculty

Energiser Lex Dwyer AGSM Faculty

Morning tea

Session 2 – Industry Insights

Leading Growth – How to grow whilst managing costs The challenges of capital resourcing, how do you overcome these challenges and the impact of the multi-speed economy?

Suzana Ristevski Growth Leader & CMO, GE

Q&A - What are your current challenges? What capabilities have you developed?

What role do you see a Business School like AGSM playing?

How do you see AGSM working with you in the future?

Patrick Sharry AGSM Faculty

Lex Dwyer AGSM Faculty

Reflection session

Around the table reflect on what has just been discussed and the challenges that you face.

What will you share with your team and colleagues? Getting the audience thinking about what they’re going to take back to their teams

Lex Dwyer AGSM Faculty

Wrap up followed by Tea & coffee - Networking Caroline Trotman Executive Director AGSM



Welcome from AGSM

Welcome to the inaugural Mid-Market Growth Forum.

In November 2012, we partnered with GE Capital to launch the Australian Mid-Market Growth

Alliance aimed at helping Mid-Market organisations overcome barriers to growth. The alliance will

see us working together on:

• Consortium Program for the Mid-Market: A program experience designed specifically

for Mid-Market companies and their strategic challenges. Up to six participant

organisations will attend plus a cohort from GE Capital;

• Mid-Market Events: AGSM will deliver two events each year aimed at addressing the

issues impacting Mid-Market organisations

• Academic Research Project: Over three years, the research project will investigate the

Australian Mid-Market sector to enhance theoretical and practical understanding

regarding drivers of innovation, performance, and growth for Mid-Market firms.

We invite you to register to become an alliance member at www.agsm.edu.au/amga and stay

abreast of the latest research, opinions and thought leadership relevant to your Mid-Market

organisation.

Best Regards,

Caroline Trotman Executive Director AGSM Executive Education Australian School of Business, UNSW

http://www.agsm.edu.au/amga

Session 1 Faculty Insights



What needs to change and where do you start by Patrick Sharry

Patrick Sharry

Adjunct Faculty Australian Graduate School of Management (AGSM)

Patrick holds a Master of Science in Decision Sciences from the London School of Economics,

Master of Education in mathematics education from QUT, a Graduate Diploma of Teaching and a

Bachelor of Arts.

He has extensive experience in financial services, Internet technology and international trade and

has worked in many other sectors including professional services, health, education, mining and

utilities. He regularly works in Australia, Asia, the USA, the UK and Europe, as well as being

involved with development programs in places such as PNG and East Timor.

His clients regard him as an expert facilitator and he is regularly called on to assist with complex

issues and difficult situations that need an expert and reliable hand. Much of his work is with

groups involving multiple stakeholders with differing views on complicated issues.

He has wide experience in handling groups from 6 to 600, from senior executives and Boards to

local community groups, in domestic markets and in culturally diverse, multi-lingual international

settings.

Organisations that Patrick has recently worked with include: HSBC, BNP, NAB/MLC, Westpac/St

George/BT, AMP, ANZ, CBA, ING, Austrade, ICANN, AGL, Bovis Lend Lease, Queensland

Health, Cardno.

Patrick holds a Master of Science in Decision Sciences from the London School of Economics,

Master of Education in mathematics education from QUT, a Graduate Diploma of Teaching and a

Bachelor of Arts.



Growth Opportunities in Dynamic Environments Quiz

80 to 100% _____

50 to 80% _____

20 to 50% _____

0 to 20% _____

Dynamic Environments

Turbulent Environment Research at the AGSM

As environmental turbulence increases:

• Mixed strategies are more effective over pure strategies (low cost or

differentiation)

• Networks are less helpful

• Resources still follow inverted U-shape

• Governance from external sources is beneficial

Traditional strategy theory is “not very effective” in turbulent environments



Four General Strategies for Dynamic Environments

1. Agility

2. Disruption

3. Stay the course

4. Push back

1. Agility

2. Disruption

3. Stay the course

4. Push back



History is just not what it used to be!

• Strategy has always been about using your strength against a competitor’s

weakness

• Where absolute superiority is not attainable, you must produce a relative one at

the decisive point by making skillful use of what you have

Karl Von Clausewitz (On War, 1832)

Strategic thinking:

Contemplating how things work and what is likely to happen so that you can position your organisation to be successful in the future

In strategic agility, think of:

• Strategy as choices of options

• Strategy as experiments

• Strategy as dynamic manoeuvring

Proposition 2: Mid-market firms are more agile than large firms

Proposition 1:

We are entering the age of the agile strategist



Growth in Dynamic Environments Four S’s for Mid-Market

Sense

• Dynamic monitoring of weak/early signals for trends and uncertainties • Engage everyone in your organisation to be opportunity aware

Seize

• Aggressive opportunism - Increase decision speed • Maintain a portfolio of “options” with very small investments (experiment) – “All”

experiments are successful

Stay flexible

• Keep resources lean and leverage your network (multi-company solutions) • Build adaptive capability - Learn to change by changing • Flexible commitments – early commitments (for competitive success) and timely exits (to

manage risks)

Seek problem niches

• Seek problems, for others (i.e. large firms), in the turbulence these may create opportunity for you

• Consider unserved, under-served, over-served, or non-traditional consumers



Summary

1. Mid-sized firms have a strategic advantage in dynamic environments

2. Pursue and explore dynamic environments to find the growth opportunities

3. 4 S’s - Sense, seize, stay flexible, & seek problem niches

Snowden, D. J. & Boone, M. E. 2007. A leader's framework for decision making. Harvard Business Review, 85(11): 68-76

Proposition 3: Mid-market firms …?



What do you think is the IKEA strategy?



Strategy

Strategising

What can we learn from serial entrepreneurs?

Serial entrepreneurs

1. Take a small smart step

2. Pause to see what they have learned

3. Build that learning into what they do next

Source: Sarasvathy

CreAction

Source: Schleisinger & Keifer



Design Thinking

Zook and Allen: The design principles of repeatable models



What are the simple rules for your business?

How-to rules:

Boundary rules:

Priority rules:

Timing rules:

Exit rules:



So, what can you do?

• Map your strategy and use it as the basis for ongoing strategising

• Apply the principles of design thinking

Observe your customers

Encourage new ideas

Fail often to succeed sooner

• Develop simple rules to drive execution at the front line

Strategic Agility What is strategic agility?

The ability to continuously adjust and adapt strategic direction in core business, as a function of strategic ambitions and changing circumstances, and create not just new product and services, but also new business models and innovative ways to create value for a company.*

What research investigates strategic agility?

1. Strategic flexibility and adaptability (INSEAD & Managerial literature) Strategic sensitivity, resource fluidity, and collective commitment

2. Dynamic capabilities (UCLA-Berkley) Sense, seize, and transform

3. Temporary competitive advantage and Hyper-competition (Dartmouth)



Agility Matrix: Focus Recommendations

• Are all organisational activities the same? • Do you need a multi-dimensional organisation and strategy?

Doz, Y. L. & Kosonen, M. 2008. Fast strategy: How strategic agility will help you stay ahead of the game. Harlow, England; New York: Pearson/Longman.

Strategic Agility / Fast Strategy: The Key Enabling Capabilities

1. Strategic Sensitivity: both the sharpness of perception and the intensity of awareness and attention

2. Resource Fluidity: the internal capability to reconfigure business systems and redeploy resources rapidly

3. Collective Commitment: the ability of the top team to make bold decisions –fast, without being bogged in “win-lose” politics at the top

Doz, Y. L. & Kosonen, M. 2010. Embedding strategic agility: A leadership agenda for accelerating business model renewal. Long Range Planning, 43(2–3): 370-382.



Dynamic Capabilities: Sense, Seize, & Transform

• Sensing is an inherently entrepreneurial set of capabilities that involves exploring

technological opportunities, probing markets, and listening to customers, along with

scanning the other elements of the business ecosystem. It requires management to build

and “test” hypothesis about market and technological evolution, including the recognition

of “latent” demand. Sensing requires managerial insight and vision – or an analytical

process that can be a proxy for it.

• Seizing capabilities include designing business models to satisfy customers and capture

value. They also include securing access to capital and the necessary human resources.

Employee motivation is vital. Good incentive design is a necessary but not sufficient

condition for superior performance in this area. Strong relationships must also be forged

externally with suppliers, complementors, and customers.

• Transforming capabilities are needed most obviously when radical new opportunities are

to be addressed. But they are also needed periodically to soften the rigidities that develop

over time from asset accumulation, standard operating procedures, and insider

misappropriation of rent streams. A firm’s assets must also be kept in alignment to

achieve the best strategic “fit”: firm with ecosystem, structure with strategy, and assets

with each other. Complementarities need to be constantly managed (reconfigured as

necessary) to achieve evolutionary fitness, avoiding loss of value should market leverage

shift to favor external complements.

Teece, D. J. 2011. Dynamic capabilities: A guide for managers. Ivey Business Journal.

Strategy Hints for environments of temporary advantage

Consider if your organisation should: • Engage in self cannibalisation

• Pre-empt the market by being first to introduce the next new advantage

• Time pace (plan changes on a set calendar)

• Use unpredictable, aggressive actions

• Have more than one strategy (perhaps a unique strategy for each competitor)

• Develop new business model approaches

• Utilise disruptive approaches – targeting unserved, under-served, or non-traditional consumers

Adapted from D'Aveni, R. A. 1994. Hypercompetition: Managing the dynamics of strategic maneuvering.

New York: The Free Press.



Best Practice

Good practice

Emergent Practice

Novel Practice

Use experts

CYNEFIN Framework For each decision you make, which system are you in?

Notes



A leader's framework for decision making



References in Agility

• Doz, Y. L. & Kosonen, M. 2010. Embedding strategic agility: A leadership agenda for

accelerating business model renewal. Long Range Planning, 43(2–3): 370-382.

• Reeves, M. & Deimler, M. 2011. Adaptability: The new competitive advantage. Harvard

Business Review, 89(7-8): 134-143.

• Teece, D. J. 2011. Dynamic capabilities: A guide for managers. Ivey Business Journal.

http://www.iveybusinessjournal.com/topics/strategy/dynamic-capabilities-a-guide-for-

managers#wpcf7-f8139-w1-o1

• D'Aveni, R. A. 1994. Hypercompetition: Managing the dynamics of strategic maneuvering.

New York: The Free Press.

• Doz, Y. L. & Kosonen, M. 2008. Fast strategy: How strategic agility will help you stay

ahead of the game. Harlow, England ; New York: Pearson/Longman.

http://www.strategicagility.com/

• Teece, D. J. 2009. Dynamic capabilities and strategic management: Organizing for

innovation and growth. Oxford ; New York: Oxford University Press.

• De Geus, A. 2002. The living company: Habits for survival in a turbulent business

environment. Harvard Business Review Press.

• Snowden, D. J. & Boone, M. E. 2007. A leader's framework for decision making. Harvard

Business Review, 85(11): 68-76.

• Design Thinking – Tim Brown HBR June 2008

• Strategy as Simple Rules – Eisenhardt and Sull HBR January 2001

• The Great Repeatable Business Model – Zook and Allen HBR November 2011 (also their

book – Repeatability and the website http://repeatability.com )

• Just Start – Schlesinger and Kiefer (have a look at the website too: http://just-start.com )

http://www.iveybusinessjournal.com/topics/strategy/dynamic-capabilities-a-guide-for-managers

http://www.iveybusinessjournal.com/topics/strategy/dynamic-capabilities-a-guide-for-managers

http://www.strategicagility.com/

http://repeatability.com/

http://just-start.com/



Notes

Session 2 Industry Insights



How to grow whilst managing costs by Suzana Ristevski

Suzana Ristevski, Growth Leader and Chief Marketing Officer, GE Australia & NZ

The Mid-Market remains a key driver of the Australian economy

Growth-engine of economy with significant influence

The Mid-Market still the most optimistic business sector



Concern about growth barriers

NSW & ACT - Key findings



If you (Mid-Market) succeed

… Australia succeeds

GE’s vision



Customer alignment, simplification & innovation

Customer aligned • Employees know which customer segments we serve & what their top 3 needs are • Our organisation rallies around these needs (customer facing & support departments) • We continuously track customer metrics at a transaction, product & business level • We respond to customer feedback fast

Simple

• We do less, better • Our customer processes are intuitive • Our internal processes are as easy as

our customer processes • We routinely identify & eliminate the

bottom 30% low value processes, reporting & meetings

Innovative • We encourage, empower & reward

employees who challenge the status quo • We launch new ideas fast (<45 days on

average) • We have a full pipeline of ideas linked to

incremental volume • We invest $1MM pa on Innovation

Innovation

Innovation process can become too rigid, expensive, complex and slow. Jugaad Innovation makeshift solution

Six key principles for cost-effective innovation: 1. Seek opportunity in adversity 2. Do more with less 3. Think and act flexibly 4. Keep it simple 5. Include the margin 6. Follow your heart



Notes

Case Studies and Further Readings



Peabody Energy Australia Case Study

James Agenbag Senior Process Engineer, Peabody Energy Australia Pty Ltd

James Agenbag is an engineer with the world’s largest private-sector coal company. In Australia, Peabody operates 11 mines throughout Queensland and New South Wales and ships coal to local electricity generators and international steel producers.

The Australian Government may have recently introduced a tax on carbon. However, James is still in a growth industry with his company’s total sales forecast to double to around 40 million tons by 2015.

James is one of the people responsible for maximising the efficiency of that mining growth.

He explains that his job has evolved and gone beyond just providing technical design input to projects. “I project manage our scoping studies into plant modifications and also mentor and coach our process engineers and graduates” he says.

“With my greater interaction with people, I felt the Foundations of Management and Leadership program would develop the people management skills I needed. I have very strong technical skills, but managing and leading others was a whole new ball game” he says.

“I’ve heard that my program has had a name change to that of Emerging Leaders. That is an appropriate name, because that is exactly how I felt at the time. It was like a transformation of my working life was taking place” he reflects.

“My program was attended by other people in exactly the same boat as me. Technically competent from a range of different disciplines, but all of us were new to the management role.”

“So it is true to say we were emerging leaders” says James. “And the fact we were all going through similar experiences – albeit in different industries – gave it a real collegiate feel” he says.

“The interactive style of the program suited me perfectly” he enthuses. “I’d say a large portion of my learning came through the interaction with fellow attendees.”

“Not that I want to take anything away from the presenters” he adds. “I found them to be very experienced and enthusiastic about their subject matter. It’s just learning with peers added more value than just soaking up the information passively.”

James says his confidence as a manager has increased markedly since attending the program in November 2011. “I’m now more self-aware, organised and conscious of the requirements of being a good manager.”

“Time management and goal-setting have become important elements of my daily life.”

James is very satisfied with his training experience and his performance in his new role.

“I feel I’ve been able to add significant value to multiple projects within Peabody. I have benefitted from the five-day program and so has my employer. From my point of view, it was definitely a valuable experience.”



Knowledge at ASB Articles

Innovate or Bust: Creating Business Cultures Open to Change Published: February 19, 2013 in Knowledge@Australian School of Business

What does it take to be innovative in a changing global economy? That was a key question posed at the 35th-anniversary conference of the Australian Graduate School of Management. A highlight of the conference was three business leaders – Gerhard Vorster, chief strategy officer at Deloitte Australia and Asia Pacific; Andrew Stevens, managing director of IBM Australia and New Zealand; and George Frazis, CEO of St George Banking Group – sharing their insights into embracing the challenges of innovation, now and into the future.

Implementing innovation in business can be hard work. It demands new ways of thinking, not only today but tomorrow and beyond. At the 35th-anniversary conference of the Australian Graduate School of Management, three business leaders gave their views on meeting the challenge of innovation within the context of their companies.

Gerhard Vorster, chief strategy officer at Deloitte Australia and Asia Pacific, believes that innovation "needs to wear overalls" and "overalls that are different to what you have been wearing". In order to be effective, these "overalls" must blanket an organisation. Innovation is all about trying new things and it has to be entrenched in business plans - in the way business people think - and should be explored using concepts such as design thinking.

To provide the necessary tools, Deloitte has teamed up with leading international academics to teach staff about design thinking, which aims to balance analytical and intuitive thinking so that the organisation can not only make the most of existing knowledge but create new knowledge.

At the heart of Deloitte’s business strategy is a belief that 30% of its revenue every year should come from substantially different activities to those of the previous two years. "This means that if you are the strategy guy, your job is to innovate," Vorster says. "You have to change a lot of the things that you do now."

To drive innovation, Deloitte favours preparedness over prediction to go with "the swings and roundabouts and to be opportunistic when you have to shift focus, [which] is at the core of being an agile organisation".

It also takes a change in mindset. "Constantly questioning what is done and how it is done is treated as an asset at Deloitte," Vorster says. "That is at the heart of innovation - challenging everything you do, not just challenging from a big perspective. It’s in everything we do and that dissatisfaction with the status quo is inherently a wonderful feeder for innovation in its own right."



Retaining Core Beliefs

Andrew Stevens, managing director of IBM Australia and New Zealand, shares a similar vision. He believes the essential ingredients of an innovative company over the long term involve deep scientific research driven by ideas that are not limited by current products, while sticking to core beliefs in the midst of widespread change. Since 2000, the global company has invested almost US$70 billion in R&D, generating more than 47,000 patents.

"The person who has to justify that kind of investment is [senior vice-president] John Kelly, our head of research," Stevens says. "John says that the reason our competitors have tended to fail to make it through major technology transitions is that they were not doing the research to know what the technology was going to do next. That’s a profound idea. It’s a good question to ask yourself in your business: do I really know what is coming? Deep research allows you to foresee new markets and to play a part in inventing them. It is also true in the long run that innovation is the only true source of differentiation."

IBM is studying biological systems because they feature a level of complexity that "we believe we will see in business and society in just a few years. By working at the frontier of science, we are gaining access to the insights and technologies that we can’t get anywhere else," Stevens says.

It also pays to avoid being limited by existing products. Instead, be defined by ideas.

"IBM’s core idea is to create and provide innovative solutions [for] our clients that they can’t get from anyone else," Stevens says. "This has meant making some hard decisions from time to time, like selling our personal computer business in 2004. That might have seemed crazy at the time but the reality was that PCs were becoming commoditised and we are not a commodity player. We are a high-margin innovator."

IBM rates itself as a future-focused company with its sights set on three key technology trends that it believes will shape business and society during the next 15 years: nanotechnology, which will pack huge computing power into tiny devices; exascale, which will make larger computer systems at least 1000 times more powerful than at present; and systems that can learn for themselves.

But the most important lesson from the IBM story is that even if you change your entire business every decade or more, something must remain the same "That something is your core beliefs. It’s what makes you you. Or, in our case, it’s what makes IBM us," Stevens says.

Core values are also at the forefront at Westpac, which has recently introduced a new one - courage - based on the need to be more innovative and open to change. "It is saying to our 40,000 people that we want them to be courageous in how they approach their job and be able to take perceived risk in terms of change," says George Frazis, CEO of St George Banking Group, a subsidiary of Westpac.

Frazis agrees with Stevens that clarity on the true purpose of the organisation is a critical element.



"What happens with organisations is that the core purpose gets muddled up and gets quite complex. Complexity is a big stifler of innovation," he says. "[At] St George, we got back to the core of what we were about. To a certain extent, we lost our way [during the past] two years because we tried to be a big bank and tried to be what we were really not about. [But] if you think about St George’s heritage, it is very simple: we help people save to get into their homes, then secure their future. As simple as that. Providing that core purpose, that noble purpose, means people can innovate and provide clarity."

Solutions and Diverse Input

Like Vorster, Frazis acknowledges the importance of a culture open to change, everywhere. For him, service improvement is critical. And time - how to speed up decisions - is a key measure.

"The critical thing when you are looking at time is that you only get innovative solutions if you have stepped changes in that time," Frazis says. "So if a home loan takes two weeks to approve, which is roughly what it used to, reducing that to one week provides absolutely no benefit. The customer hardly notices it and, effectively, processes don’t really change. To reduce it to an hour, that requires innovation. That requires real change."

Frazis believes that from an organisational perspective, there is logic behind being a quick follower. But a number of firsts are also needed. He reels off how St George was the first to introduce internet banking in Australia, and the second worldwide, in 1995; how St George was the first to introduce [the use of] SMS texts in 2010; and the first to enable customers to open an account via their mobile phones.

"Having those firsts actually does create a culture of innovation but you [also] have to be really quick at following," he says.

Diversity is another essential ingredient and the youth sector plays an important role in St George's understanding of digital and mobile trends. Frazis has formed a youth network led by the company’s top 10 under-30-year-olds who attend core leadership meetings.

"Effectively, it is a signal to the organisation that we are prepared to listen to an under-30-year-old as much as our senior leaders in terms of strategy and direction of the organisation. At the end of the day, innovation actually attracts the best talent. And it is a much more exciting organisation to work in than one that is static," Frazis says.



To Realise Workforce Potential, Manage with a Growth Mindset Published: October 03, 2012 in Knowledge@Australian School of Business

During the past three decades, research pioneered by Stanford University professor Carol Dweck has accumulated a vast literature on “implicit person theories”. These are peoples’ assumptions – known as mindsets – about the malleability of personal attributes such as intelligence and personality. It has become well-established that mindsets affect how people think, feel and act in achievement situations. About 45% of the children in Dweck’s studies, and 50% of the managers in studies by Peter Heslin, a professor of management at the Australian School of Business, were found to hold the fixed mindset that, essentially, people tend not to change much over time. Roughly the other half of the population – those with a growth mindset – focus more on how the personal attributes that guide behaviour are quite malleable by life experiences such as education, challenges and developmental relationships. A recent series of studies led by Heslin looked into the implications of fixed mindsets and how they can be changed. This research aims to address damaging employee reactions including demoralisation, disengagement, absenteeism and turnover, and a sense that they are not being given a “fair go” by their manager. “It turns out that managers with a fixed mindset tend to demoralise everyone, including themselves,” says Heslin, who leads the EMBA Managerial Skills course at the Australian Graduate School of Management (AGSM). “It’s imperative to recognise how readily a vicious cycle can be created by anchoring on a negative first impression of someone’s performance capabilities,” he says. “A person’s initial achievements in a role are often not predictive of what they are ultimately able to achieve. Employees resent feeling unsupported and underestimated. Imagine how frustrating it would be to be managed by someone who did not believe in your potential to improve your performance or advance in your career?” Managers with a fixed mindset can also be dysfunctional in how they deal with top performers. “After categorising someone as a star, a fixed mindset can lead managers to not recognise when remedial action is needed,” Heslin says. “For instance, what if someone who was once a high performer in a nuclear power plant – which is where we conducted our initial research on the role of mindsets in organisations – was no longer performing adequately. Having been categorised as a star performer by a manager with a fixed mindset can prevent an employee’s currently inadequate performance from being recognised and acted upon. The implications could be catastrophic in this context, as in other arenas such as the medical, military and security industries when competent performance is imperative for human safety and wellbeing.”

https://psychology.stanford.edu/cdweck

http://www.asb.unsw.edu.au/schools/Pages/PeterHeslin.aspx

http://www.asb.unsw.edu.au/schools/Pages/PeterHeslin.aspx



Everyone is Not Equal

"Sure you can't make a silk purse out of a sow's ear - not anyone can become anything and some people have more innate ability in certain areas than others. Our research is nonetheless revealing that it is dangerous and often costly for managers to focus primarily on that and thus lock people into a particular performance category, regardless of whether it’s winner, loser, dud, or superstar. Sustained attentiveness to employees’ scope for performance improvement through suitable coaching and developmental experiences is a much more productive approach.” Beginning in 1995, Dweck and her colleagues reported that students with a fixed mindset developed deeply encoded evaluative labels for others (such as lazy or intelligent) based on hearing an anecdote about a single behaviour. She theorised that these labels acted as an anchor that was resistant to change. In a series of studies published in 2005, a collaboration between Heslin, Gary Latham from the University of Toronto and Don VandeWalle of Southern Methodist University found that a fixed mindset blinded managers to variation above or below an employee’s initial performance level. On the other hand, those with a growth mindset were more data-driven, less anchored by past impressions, and therefore more capable of providing an accurate and unbiased appraisal of employee performance. Subsequent research by Heslin and his colleagues found that employees believed managers with a growth mindset were more willing and capable of providing helpful on-the-job coaching. Intuitively, it makes sense that if fixed-mindset managers were sceptical about employees’ ability to change, they would be unlikely to invest their precious time and resources in coaching their employees. Heslin’s latest work, again co-authored with VandeWalle and published in the Journal of Management, sheds initial light on how employees react to managers as a function of managers’ mindsets. In short, it shows that when managers hold a growth mindset, employees feel that they receive a more procedurally fair performance appraisal (probably reflecting it being more data-based, accurate and supplemented with coaching). Employees will thus be more committed and willing to go the extra mile for their organisation – outcomes that are well known to have significant business benefits.

Can a Growth Mindset Be Grown?

A growth mindset can be systematically developed within individuals and teams, according to Heslin, who has developed and refined a workshop program during the past decade that is now being deployed within leading Australian organisations. The workshops aim to embed within managers the notion that improvement in employee performance is almost always possible, given the plasticity of the human brain and that virtually everyone’s skills can be honed to some extent with suitable guidance, encouragement and deliberative practice.

http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Latham.aspx

http://www.cox.smu.edu/web/donald-m.-vandewalle



“The process is key,” Heslin says. “It’s easy to read that change is almost always possible and say, ‘Yeah, I agree with all that’. However, recalling instances of intransigent individuals readily hooks managers right back into the limiting fixed mindset. Thus, managers seem to benefit from experiencing a process of deep immersion in the potentiality of a growth mindset. This involves working through the various workshop exercises, rolling up your sleeves and doing it all chapter and verse.” Katrina King, from resources giant BHP Billiton, is using Heslin’s work on growth mindsets as a key component of the organisation’s Metallurgical Coal Leadership Program, in partnership with AGSM Executive Education. “It has been wonderful to see managers using this latest thinking back in the business to engage stakeholders more effectively,” King says. Colleen Durant, head of leadership and talent at banking group Westpac, says: "The focus on objectively assessing employees' contributions – what they have actually achieved in the past six to 12 months – as opposed to labelling employees as superstars (or not), builds a more inclusive and respectful work environment.”

Heslin offers three tips for managers seeking to foster a growth mindset:

1. Recognise that initial efforts are not necessarily indicative of what a person can ultimately achieve. Ensure adequate time and other resources are devoted to improving individual and team performance (as well as your own), which almost invariably involves some experimentation, risk and failure. What may have enabled success in the past is often inadequate to meet emerging challenges.

2. Avoid focusing primarily on stars or declaring brilliance. This creates a fixed mindset within employees, making them risk averse and concerned with not jeopardising their illustrious status.

3. Perhaps most importantly, resist routinely diagnosing people. Focus more on what people have done and are doing, as well as how their strengths can be built upon, rather than on the kind of person they are. Declared stars often fall, but people rarely outperform any negative labels assigned to them. It’s more productive to help people appreciate their actual performance and the viable opportunities to proactively fine-tune it.



Grow your Business

Become a High-Performing Workplace

Recent research has found that to be competitive, your organisation needs to develop

management and leadership capabilities across 6 key areas:

1. Profitability and Productivity

2. Innovation 3. Employee Experience 4. Fairness 5. Leadership

6. Customer Orientation

Engagement with AGSM can help you become a high performing workplace.


Notes


The Leader

The AGSM Executive Education email publication ‘The Leader’ provides you with interesting features, information, research and opinions on issues that affect your business. This publication will address a particular theme in each issue.

By attending this event you are now subscribed to this publication.

The next edition launches in September 2013.

Mid-Market Growth Consortium

The Mid-Market Consortium is a 3-day intensive (residential) program designed for senior leadership teams of Mid-Market companies to accelerate innovation through collaboration and shared knowledge.

The program is designed to be practical, experiential and directly relevant to your company’s strategic challenges.

The Mid-Market Consortium program will comprise of up to seven non-competing organisations. Teams from each organisation will develop and work on a key strategic project in collaboration with academic and industry experts.

Please contact our sales team on [email protected] for more information.

For more information please contact:

AGSM Executive Education Phone: 02 9931 9333 Web: www.agsm.edu.au/executive Email: [email protected]

AGSM Executive Education is a friend and supporter of Learning Links

www.learninglinks.org.au

mailto:[email protected]

http://www.agsm.edu.au/executive

mailto:[email protected]

http://www.learninglinks.org.au/

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