Embracing the Founder’s Mentality for Business Success

Harnessing the Founder's Mentality for Growth Leadership and Management

Imagine walking into a large business that feels like a start-up. Employees are bustling in the halls, knocking on doors and engaging in animated conversations.

Great teams nurture their relationships, creating transparency and trust to generate powerful ideas. The result is a company that is highly adaptable, innovative and fast-moving.

Understanding the Essence of the Founder’s Mentality

Companies that maintain a Founder’s Mentality have an edge over their competitors. However, many companies lose this edge as they grow. This happens because they neglect to preserve the core strengths and values that drove their growth in the first place. They instead revert to the practices of their industry peers or fall victim to one of three crises: Overload, Stall-out or Free Fall.

Overload occurs when a company has so much momentum that the leaders do not properly prepare for the upcoming strains on resources and people. The result is that managers start to rely on metrics that measure short-term pay-offs rather than long-term value creation. They also invest in projects that will have a quick impact on earnings and market share, often without regard to the overall business strategy.

In a company where Overload has set in, the energy levels of employees and managers start to decline. The company may become more bureaucratic, with decisions being made by committees rather than individuals who have direct customer and market knowledge. In addition, the culture can become more focused on the company’s finances and less focused on customers.

During Stall-out, companies suffer from the same problems as Overload but with even greater intensity. The result is a loss of the core strength and values that drive the company, as well as the loss of leadership talent and speed. This can be caused by the departure of the founder or by a lack of attention to key leadership skills.

Fortunately, there are ways to avoid these crises. The most important step is shifting the mindsets and behaviors of leaders at every level of the company. This involves reshaping leaders’ behaviors to make them more in line with the Founder’s Mentality. It is also necessary to align the entire organization around an insurgent mission and focus on what matters.

How Founder’s Mentality Drives Company Growth

As companies grow, they encounter a series of predictable crises that burden them with complexity and erode their Founder’s Mentality. When leaders don’t anticipate or prepare for these forces, they can lose sight of what made their company great in the first place and become prone to a downward spiral.

In our research, we found that the most successful companies overcome these three moments of crisis (overload, stall-out and free fall) by maintaining—or reclaiming— their Founder’s Mentality. These companies possess an extraordinary sense of insurgency, a frontline obsession and an owner mindset that acts as antibodies against bureaucracy.

A business can lose its founder’s mentality for a variety of reasons, including the departure of key people or the hiring of senior executives who lack an insurgent mindset. Companies that retain their founder’s mentality experience better performance in the marketplace, on the stock market and against their peers, even if they’ve grown into large, mature businesses.

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The key to reclaiming your Founder’s Mentality is shifting the mindset and behaviors of leaders at all levels. We’ve used this approach in a wide range of industries and locations, from aligning top teams at high-tech companies on the West Coast to supporting digital transformations for government agencies and improving operations at an Asian bank.

To assess how well your company is maintaining its Founder’s Mentality, consider the following questions.

Challenges and Benefits of Maintaining the Founder’s Mentality

Companies that keep their Founder’s Mentality achieve high levels of growth. They are also faster to adapt to changing market conditions and more resilient against insurgent challenges from other companies in their industry or space.

Unfortunately, most successful businesses lose their Founder’s Mentality as they grow large. In the quest for scale, they become overloaded with organizational complexity and processes that slow their decision-making. They no longer operate as nimble, agile insurgents that can quickly respond to forces blowing them off course. They become larger versions of existing incumbents instead of thriving, innovative newcomers to their industries and spaces.

As a result, only one in eleven businesses can sustain profitable growth over ten years. The majority of these companies blame internal factors, especially poor culture and insufficient leadership capability. But research by Bain reveals that only the very best performers retain or regain their Founder’s Mentality as they mature and grow.

The key to retaining your Founder’s Mentality is instilling it in all parts of your business. The good news is that most of the company practices associated with a Founder’s Mentality are measurable and repeatable. For example, AB InBev has a well-defined process for infusing the aggressive culture of its own Founder’s Mentality into acquired companies. Often, this process is accompanied by explicit statements that emphasize “zero complacency” and a “we are never satisfied” mindset.

The three core attributes of a Founder’s Mentality are frontline obsession, ownership mindset and an insurgent mission. Companies that nurture these traits in their cultures are able to drive growth and resist the pitfalls of the growth paradox. They are able to maintain three things that most of their competitors cannot: a passionate belief in their product or service, deep relationships with customers and an owner’s mindset that hates complexity and watches every dollar.

Strategies to Cultivate a Founder’s Mentality in Leadership

In a founder’s mentality, everyone acts like they own the company and cares about what happens. They are biased toward action, obsessed with speed and hate complexity. They also keep their eye on the front line and focus their efforts on serving customers better than competitors do. These characteristics help explain why companies with a strong founder’s mentality outperform incumbents in their industries year after year and are far more likely to survive internal crises (Overload, Stall-out or Free Fall).

Unfortunately, many successful companies lose their founder’s mentality as they grow larger. The pursuit of growth and scale adds organizational complexity, dilutes the sense of insurgency, and stifles innovation. The good news is that it is possible to reclaim the power of a founder’s mentality in companies that have lost it.

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One strategy is to refocus the culture on a noble mission. The first step is to define (or redefine) the mission with which all employees align. For DaVita, this involved focusing on service excellence and an unyielding commitment to customer outcomes. This helped rewire the organization and gave leaders an internal compass to guide behaviors.

Another strategy is to set stretch goals. These stretch targets force the company to push its boundaries and challenge the status quo, rekindling the passion that originally drove success. For example, a goal might be to increase the number of new patients served each day by 20%. This stretch goal requires the entire company to work together in new ways, including creating partnerships with health systems and using telemedicine to improve patient outcomes.

Finally, a company can nurture its founder’s mentality by creating a set of nonnegotiable principles that are a guide for decision making. The key is to make these principles visible throughout the organization so that all employees can see and feel them.

Case Studies: Success Stories of Founder’s Mentality in Action

Many fast-growing companies aspire to global leadership in their industries, but they are increasingly finding that growth is often at a cost. In the rush to scale and reach their full potential, they can lose the founding principles that made them successful. Embracing the Founder’s Mentality is an effective way to resist these winds and ensure a company stays on course.

Founders of successful companies create deep feelings of responsibility and ownership in their employees, and they focus everyone on a mission that is clear and focuses their efforts. They also have a deep appreciation of their spikey capabilities and a disdain for complexity and bureaucracy that can steal attention from the clean execution of strategy. Founders’ mentalities can help companies regain their growth momentum when they start to stall out, and they can even accelerate a turnaround when they are in danger of crashing into the rocks.

In a recent interview at the ONE: The Alltech Ideas Conference, Bain & Company partner Chris Zook described how to maintain a founder’s mindset, and he offered examples of companies that have achieved significant success by keeping their core values alive. Zook spoke about Steve Jobs at Apple, Ingvar Kamprad at Ikea and M.S. Oberoi of the Oberoi luxury hotel chain.

In addition to highlighting the importance of having a strong sense of purpose, Zook emphasized that businesses need to invest in their people. He cited studies that show companies with a high percentage of motivated employees generate two to three times more revenue than those with a low level of motivation. To increase the likelihood that your team will feel motivated, he suggested, invest in their development by offering them opportunities to gain skills and experiences outside of their current position at the company.

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