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Introduction
Management consulting firm Bain & Company extensively researched how organizations who once were insurgent find themselves heading the path of a struggling bureaucracy. They found that globally, "just 1 in 9 companies achieve sustained, profitable growth for over ten years" (Bain & Company [Bain], 2021). The regression reasons are internal and are best explained by three sets of organizational behaviors, known as the Founder's Mentality. These behaviors allow an organization to gain market share- while veering away from them will set the organization onto a regressive path (Zook). The three elements of the founder's mentality are:
Insurgency - Bold mission, "Spikiness," and "Limitless horizon."
Frontline Obsession - Relentless experimentation, Frontline empowerment, and Customer advocacy
Owners Mindset - Strong cash focus, Bias for action, and Aversion to bureaucracy (Bain, 2021)
If your organization finds itself in a lull-state after once being an insurgent player in the market, here are the actions you should focus your attention on right now to realign with your founder's mentality.
Increase Employee Engagement
A 142-country Gallup poll, published in 2013, found that only "13% of employees are engaged at work." Leaving 63% of employees not engaged and 24% actively disengaged (Crabtree). If your organization finds itself growing fat and apathetic, one could conclude that your employees are among the 87% that are not actively engaged. Look back to your organization's inception. Ask yourself, what drove engagement and employee performance when the company was insurgent? While recognizing your answer to this organizational introspection, keep in mind that each employee has their own unique motivating performance drivers. Some employees may derive value from autonomy while others are purpose-driven. Perhaps advancement opportunity, recognition, or income are the motivating factors that provide the most utility to your frontline employees.
We can, with caution, accept that specific patterns exist among different age demographics within our organizations. Workplace tensions could lend to a reason for inefficiencies and decreased employee engagement. "More than one in three people waste five or more hours each week (12 percent of their workweek), due to chronic, unaddressed conflict between colleagues from different generations" (Maxfield). Has your company recently grown in size and began onboarding a new group of employees? Do these new hires share the same values as those who've been with the company from the insurgent days? Recapture your organization's insurgency by being incredibly focused on understanding what made your employees engaged in the first place.
Recommit the Organization to the Vision
Before recommitting your organization to the vision, ensure that it still serves your pursuit of reestablishing yourself as a founder's mentality company. Ask yourself, why you do what you do? How does success look?
Your vision is not only what you say but how you say it. In the June 2012 Harvard Business Review article, "Learning Charisma," we found that "charisma is not at all innate; it's a learnable skill or, rather, a set of skills that have been practiced since antiquity." There is one dozen "charismatic leadership tactics," nine of which are verbal and three are non-verbal. Each of these skills can be developed. "After executives were trained in these tactics, the leadership ratings observers gave them rose by about 60%" (Antonakis, Fenley, and Liechti). Leaders, harness in on your storytelling, practice repeating keywords in your communications and use inclusive language, which focuses on the whole rather than self. By clarifying and recommitting to the vision, you provide your organization a blueprint to achieve your bold mission.
Giving Your Work Meaning
In the June 2011 issue of Harvard Business Review, Adam Grant shared his work entitled, "How Customers Can Rally Your Troops." He found that across different job functions, within various organization types that unilaterally, employees found meaning in their work when the focus was on the customer. Employees were seeking:
Impact - "see for themselves how their work benefits others"
Appreciation - "come to feel valued by the end-users."
Empathy - "develop a deeper understanding of end-users' problems and needs and thereby become more committed to helping them"
It's this work that allows for a "partnership that can enhance the meaning employees derive from their jobs and move them to do their best work" (Grant). Was your work more meaningful before losing your organizational rhythm? Has your customer focus changed in any way? Reassess your frontline obsession and empower your frontline employees to make a difference by being a customer advocate.
Balancing Efficiency and Innovation
Utilizing your owner’s mindset, identify what efficiency and innovations are ahead of your organization’s future. Hewlett-Packard CEO, Meg Whitman, recognized the need to invest back into research and development to rediscover HP’s founder’s mentality. To accomplish this, she redirected capital and became lean, resulting in the layoff of 85,000 people (Zook). While mass layoffs frequently hinder morale, for HP, this efficiency was so aligned with their R&D roots that they recaptured their insurgency position within the market.
To continue to inspire innovation, organizations must adopt a learning mindset and be comfortable with failing. Not fearing failure leads to relentless experimentation and innovation that defines companies’ relevancy in the marketplace. The aim of perfection negatively impacts the innovative organization.
Microsoft
Consider another tech company that lost its way and had to rediscover its founder's mentality, Microsoft. According to the NASDAQ, Microsoft's stock price remained stagnant from January 2000 until October 2015. Since then, we've watched the stock price soar nearly 500%. What happened?
Microsoft rediscovered what drove their scale insurgency, which of course, was the high-profit margins of computer software. Then CEO, Bill Gates managed market penetration of their Windows Operating System into 80% of the Intel-based PCs. This near-exclusivity within the PC market was born from Gate's software pre-installation strategy that made Microsoft the subject of an antitrust lawsuit in 1998 (United States Department of Justice [DOJ], 1998). These quasi-monopolistic actions ingrained Microsoft's place in the market as the operating system for PC.
It was around this time that we saw Microsoft live through 15 years of stagnation. Microsoft began experimenting, entering into different markets such as gaming, with the Xbox consoles, and modernized their computer hardware with the Microsoft Surface (Bellis). While these hardware-based innovations allowed the company to grow, they weakened the founder's mentality. Microsoft had to make a different play, one aligned with their roots to recapture their scale insurgent position.
Microsoft's Intelligent Cloud segment "is the largest source of profit as well as the fastest-growing" across the company (Reiff). Cloud services, much like software, have high-profit margins. Microsoft appears committed to expanding its Intelligent Cloud systems and services. They've recently partnered with General Motors and Cruise to offer cloud services for driverless-vehicles (Reiff).
Microsoft perfectly balanced efficiency and innovation while rediscovering their founder's mentality in the process. Recognizing the evolving opportunities that cloud services will offer to business, Microsoft sees a limitless horizon for the future.
Final Thoughts
Around 11% of companies globally achieve sustained profitable growth over ten years. I cannot help but consider the businesses that make up the other 89%. Are these companies Apple, Dell, and HP? Occasionally. Then we learn of their stories of triumph, rediscovering their founder's mentality to regain their scale insurgency in the market. I imagine that disproportionately, the other 89% are comprised of small and midsize businesses. Businesses, while they have access to ideas like the founder's mentality, do not have the resources to hire a consulting team. Like all companies, they must maintain their day-to-day operations and will probably never prioritize the critical thinking necessary to take action with this or other growth concepts.
When these smaller companies find themselves in a struggling bureaucracy state, they will have a more challenging time getting themselves back to insurgency. I imagine that we will continue to see more consolidation within the market, leading to fewer total players within each industry. And of course, many more celebrated stories of companies finding their founder's mentality.
Works Cited
Antonakis, John, Marika Fenley, and Sue Liechti. “Learning Charisma.” Harvard Business Review, Harvard Business School Publishing, June 2012, www.hbr.org/2012/06/learning-charisma-2.
Bain & Company. “About Page.” Bain, Bain & Company, Inc., 1996–2021, www.bain.com/founders-mentality/about.
Bellis, Mary. “Who Founded Microsoft and What Made It So Successful?” ThoughtCo, Dotdash, 10 Jan. 2020, www.thoughtco.com/microsoft-history-of-a-computing-giant-1991140.
Crabtree, Steve. “Worldwide, 13% of Employees Are Engaged at Work.” Gallup, Gallup, Inc, 8 Oct. 2013, www.news.gallup.com/poll/165269/worldwide-employees-engaged-work.aspx.
Grant, Adam. “How Customers Can Rally Your Troops.” Harvard Business Review, Harvard Business School Publishing, June 2011, www.hbr.org/2011/06/how-customers-can-rally-your-troops.
Maxfield, D. (2015), “The great generational divide”, Strategic HR Review, Vol. 14 No. 4. https://doi.org/10.1108/SHR-05-2015-0039
Reiff, Nathan. “How Microsoft Makes Money: Cloud Services Are Growing Fast.” Investopedia, Dotdash, 29 Jan. 2021, www.investopedia.com/how-microsoft-makes-money-4798809.
The United States Department of Justice. “Complaint : U.S. V. Microsoft Corp.” Justice.Gov, 18 May 1998, www.justice.gov/atr/complaint-us-v-microsoft-corp.
Zook, Chris. “How Dell, HP, and Apple Rediscovered Their Founders’ Vision.” Harvard Business Review, Harvard Business School Publishing, 15 July 2016, www.hbr.org/2016/07/how-dell-hp-and-apple-rediscovered-their-founders-vision.
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