A framework to deliver a corporate growth mindset

If your organization is struggling to grow, is unable to deliver a repeatable growth process, or doesn't have the entire business aligned with growth objectives, they might be missing a key ingredient: a growth mindset.

Can a "growth mindset" help, and what is it?

A growth mindset is a concept created by Stanford psychologist Prof. Carol Dweck, popularized in her book Mindset: The New Psychology of Success (2006).

Although the concept applies to individuals, not companies, and is criticized for not being replicable in field studies, I'll leave that particulate debate with the academics.

Nonetheless, I believe the following characteristics of Dweck's growth mindset are useful to executives and managers:

• Performance or task failure is seen a growth and learning opportunity (i.e., continuous improvement).
• Abilities can be developed through effort, good teaching, and persistence (i.e., training and education).

Is a growth mindset applicable to corporations?

The purpose of a company is to have a meaningful vision and then to obtain long-term sustainable returns (profit) achieving it. In other words, to create profitable customers. (Milton Friedman)

In my experience, growth mindset companies have two characteristics:

1. They are "Market Oriented"

The company has a clear vision aligned with market needs and is relentlessly focused on the experience existing and future customers have with the entire company. For example, Jeff Bezos and Amazon.

2. They understand how they grow

The company understands its growth drivers, aligning and investing in process, people, and a market orientation to deliver profitable customer growth. This can be difficult to achieve without clear Where To Play/How To Win and WWHTBT choices driving the organization's resource allocation.

To reiterate, growth mindset companies are focused on the customer and know how they grow. We'll explore these two ideas further in the next section.

Understanding the types of go-to-market orientation

There are four common go-to-market orientations: Product, Sales, Advertising, and a pure Market Orientation.

The first three are “inside-out” orientations (i.e., looking at the market from the company's perspective), while the latter is “outside-in.”

1. Product orientation

Product orientation is common to R&D and engineering organizations. It is characterized by a belief that the company makes amazing products or delivers exceptional services, that they lead the market, and consumers follow that lead.

In product oriented firms the role of marketing is to educate the market, to make the customer see how great the product/service is, rather than to understand what the customer thinks or needs.

2. Sales orientation

A sales orientation is common in revenue and utilization-focused organizations, rather than those that are profit-focused (see Milton Friedman's quote above).

Characteristics include a belief that more products are better, that any customer is a good customer, and that they don’t need to understand customers or adjust process to meet market needs.

In sales oriented firms, marketing’s role is to support sales, and every activity is expected to have a transactional outcome.

3. Advertising orientation

An advertising orientation (or pure communications focus) is common in large B2C brands and is characterized by creative advertising rather than effective advertising.

It is also arguably the most expensive and least effective go-to-market perspective, especially if you believe that advertising is a "weak force." Which it is.

Related, almost all under-performing B2B firms have a version of this orientation, where the purpose of market is restricted to the "promotion P" in the traditional 4P marketing mix. In these B2B organizations the consumer/market is excluded from product decisions, price decisions, and distribution considerations.

If you're the executive of a struggling B2B business, it is likely that the above paragraph describes your firm. The good news is this is fixable; not easily, but most certainly is fixable.

Although inside-out approaches are generally less desirable, each has its place. For example, a product orientation makes perfect sense for an organization invested in original, groundbreaking R&D. Not so much for the owner of a taco truck.

4. Market orientation

“Market driven,” “customer focused,” “customer obsessed” companies design their processes, people capabilities, and growth investments to align with market needs.

They think in terms of value-based solutions rather than products, alternatives rather than competition, perception rather than positioning, and understand every customer interaction with the company is “marketing.”

Companies with a market orientation typically grow faster and are more profitable.

An orientation case study

Most of my career involved entrepreneurial, marketing, and talent management pursuits. Only in the past decade did I settle in to a more traditional corporate marketing career.

In that time I have observed and worked with many organizations, and have seen businesses without a clearly stated strategic vision through those that run like a perfectly optimized machine.

I'd like to share an observational case study involving a fictional Company that's an amalgam of several organizations with common traits that exhibit similarly weak growth trajectories.

In this case study, the Company exhibits many characteristics of a product orientation. This is evident in the following traits:

• There is a belief that the company delivers unmatched products to market, although it is not an R&D organization with any basis to make such a claim.
• There is a utilization and revenue focus rather than profit focus, with internal performance metrics driving behavior not aligned with effective customer outcomes.
• There is a belief that more products equate to more revenue, and that sales’ role is to sell those products—rather than solutions to customer problems.
• There is a belief that marketing’s role is to educate the market, accompanied by limited understanding of what motivates prospective customers.

Now that we've identified the Company's product and sales orientation, we need to measure this to provide evidence. (Yes, more than one concurrent orientation is common.)

How to measure market orientation

The simplest way to learn whether a company is customer oriented is to ask its leadership how many customers they have. Most don't know.

Even if they can provide a roughly accurate answer, the correct response should be, "How do you define a customer?" According to Wharton Professor Peter Fader in his book, The Customer-Base Audit, most companies have no consistent answer to this question

To measure market orientation we use a framework like the MORTN scale (Farley, Deshpande), a simple 10 question survey methodology gauging employee and customer perspective of the business’ market orientation.

Using the MORTN framework, European technology consulting firm Capgemini found that 75% of companies perceive themselves as customer-centric while only 30% of customers agree. The simple fact is that most companies are not market oriented but are deluded enough to believe they are.

If you're uncertain about your market orientation, just ask your company and customers. Survey these two groups (existing and former) using a methodology such as MORTN to confirm you are actually customer oriented.

Transitioning to a market orientation

The transition to a Market Orientation is a complex and potentially lengthy process involving significant cultural change in addition to understanding the company's grow drivers.

In their study, “Creating a Market Orientation: A Longitudinal, Multifirm, Grounded Analysis of Cultural Transformation,” Cherry et al, delivered a four-stage framework to help companies transition to a Market Orientation.

An aside, their study found that engaging consulting firms without senior leadership buy-in and a commitment to success typically results in failure.

Their most important finding is that a core group of aligned and motivated employees needs to drive the change. Starting with the CEO.

As noted previously, the consequence of not changing to a market orientation:

• Product development that does need meet market needs
• Slow growth
• Below category margins
• Degraded profitability.

Market orientation and a growth mindset

The answer to most company's growth problems is as simple as orienting every behavior within the firm to focus on the market and their customers.

However, has we discussed, many firms think they've achieved this when in 70% of cases their customers disagree.

In short, your firm can achieve a “growth mindset” by transitioning from product, sales, or advertising orientation to a market orientation.

The transition will involve a strategic choice about where you will play and how you will win and an unrelenting customer focus—including removing people who are not focused on the customer.

By understanding how your company grows, how marketing actually works, where sales fits in how you grow, and by consistently delivering exceptional products or services, you will be better placed to create more profitable customers than almost all your competitors.

For executives: Go-to-market orientation is the first of ten pillars in a well-designed marketing function. Promotion is also one of the ten pillars and is arguably only about 8-10% of the value marketing can deliver your firm. It's certainly the least impactful on your margins and profit. If you're not growing as you should, ping me a DM on LinkedIn and together we'll get your firm market oriented.