At market close on January 13, 2024, Microsoft was the world’s most valuable publicly traded company. That position at the head of the business pack was not because of advanced algorithms or cutting-edge hardware, according to Inc.Africa, which traces the company’s success to ten years earlier, when Satya Nadella took over as CEO.

The secret of Microsoft’s success over the last decade is widely regarded as being down to Nadella’s move to embed the concept of a growth mindset into the company’s culture. In a 2018 interview with Wharton management professor Adam Grant, Nadella had this to say about moving Microsoft from a “know-it-all” to a “learn-it-all” company. “If, for example, there are two students and one has less innate capability, the less skilled individual nevertheless may be able to achieve more by having a ‘learn-it-all’ mentality. ‘That applies to CEOs and companies [too]. I think it has been a helpful cultural metaphor for us.’”

If adopting a growth mindset has worked for a company like Microsoft, what can other companies do to make it work for them?

What is a growth (or learning) mindset?

The phrase “growth mindset” was coined by Carol Dweck, a psychology professor at Stanford, whose work in the 1980s on learning among school children eventually resulted in the 2006 book Mindset: The new psychology of success.

Dweck demonstrated that some people tend to see their abilities as “fixed” (they think of people as having inbuilt talents – or as not possessing a particular talent), while other people have a “growth mindset”: they believe that abilities can change over time.

Having one or the other mental framework affects how people regulate themselves, and how they relate to other people – and that extends into the workplace. Professors Peter Heslin and Lauren Keating outlined the implications of mindset in a 2015 paper:

• The fixed mindset assumption that abilities cannot be altered leads people to avoid challenges that might expose them as not having that ability.

• A fixed mindset means people are likely to view effort as fruitless and to ignore negative and potentially helpful feedback.

• On the other hand, people with a growth mindset embrace challenges and construe effort as crucial for mastering tasks.

• The belief that abilities are malleable prompts people to seek and pay attention to corrective feedback and to perceive setbacks as reflecting a need for more effort and better strategies.

Heslin and Keating note that mindsets occur on a continuum. Most people typically hold a fixed or a growth mindset about their abilities in particular areas. For instance, a person could hold a growth mindset about her quantitative ability (“I can learn how to do this sales report”) and a fixed mindset about her ability to work with difficult customers (“I’m just not good at working with people”). These mindsets are also by no means guaranteed. A growth mindset can become a fixed mindset if a person fails to adapt to changes in circumstances and context. For example, actions that arose from a growth mindset (a good thing), may become entrenched as go-to responses regardless of the context and become a fixed mindset (not so good).

Why leaders should encourage growth mindset (or adopt it as organisational culture)

In today’s rapidly changing world, it’s crucial for leaders to embrace adaptability and resilience, to understand the complexities of the business environment, and to recognise when change is needed. This kind of agile leadership encourages iterative work processes and flexibility, hallmarks of the growth mindset.

In the early 2010s, Dweck and colleagues investigated whether an organisation can have a fixed or a growth mindset, looking at seven Fortune 1000 companies. Harvard Business Review reports that their research found that there was a real consensus about mindset in each company. Employees at companies with a fixed mindset often said that just a small handful of “star” workers were highly valued. Employees didn’t think the company had their backs, worried about failing and pursued fewer innovative projects. On the other hand, supervisors in growth-mindset companies rated their employees as innovative, collaborative, and committed to learning and growing. They were also more likely to say that their employees had management potential.

On an individual level, having a growth mindset:

• Helps people deal with pressure: having a growth mindset means people are more likely to focus on what they can control when faced with challenges, and to think about personal strengths they can use to meet the challenges.

• Encourages people to focus on feedback rather than failure: this can help motivate employees to tackle challenging projects and create an in-built culture of learning.

• Facilitates learning: employees tend to see the immediate and long-term benefits of continuing to learn and develop new skills.

How to encourage a growth mindset in the workplace

Leaders who want to encourage a growth mindset in the workplace should start with themselves. Being willing to learn, to make mistakes and to recover from those mistakes publicly sets an example for all employees. Fundamental to the “learn-it-all” paradigm is the ability to shift one’s own assumptions about employees. If a core belief is that mindsets can’t be changed, then leaders are proceeding from a fixed rather than a growth mindset. Leaders should work on the principle that people can change – a position supported by research that shows that individuals mindsets’ are highly responsive to triggers in their environments and the messages they receive. Messages that leaders can send include:

1. Think about hiring policies: Growth-mindset organisations are likely to hire from within their own ranks, while fixed-mindset organisations look for outsiders, and typically emphasise applicants’ credentials and past accomplishments. Growth-mindset firms value potential, capacity, and a passion for learning. “Focusing on pedigree…is not as effective as looking for people who love challenges, who want to grow, and who want to collaborate,” Dweck told HBR.

2. Tie performance evaluation to learning rather than output: Instead of evaluating using output measures like units sold or projects completed on time, leaders could evaluate how employees are growing and developing, and set goals that look at improved skills.

3. Classify failures as learning opportunities: Leaders can encourage a growth mindset in the workplace by framing (and celebrating) failures as part of the learning process and treating them as a source of data on what worked (and what didn’t).

4. Encourage employees to speak up: Leaders with growth mindsets are open to hearing multiple perspectives, even when those perspectives challenge their own. They demonstrate an understanding that questions are essential to growth.

5. Invest in employees’ upskilling and reskilling: Leaders and companies with growth mindsets view employees as having the capacity and intelligence needed to face challenges, and support employees through in-house training or external programmes.

6. Support coaching and cross-domain learning: Growth-minded organisations and leaders invest time and energy in employees with the willingness to learn by providing one-on-one coaching and opportunities for cross-domain learning (short-term transfers to other departments or collaboration between teams).