Optimizing Human Capital

I wrote previously about the work of Carol Dweck at Stanford University, and her research on “fixed mindset” vs “growth mindset”. Essentially, what she has found is that students who believe that their intellectual capacity is “fixed” by their genes tend to underperform students who believe that intellectual capacity is up to the individual to optimize and grow. 

Last week I had a chance to attend a lecture by Carol in which she suggested that the same framework can be applied to organizations. Organizations tend to either believe that their employees’ potential is fixed, or that their employees’ potential can be grown. 

To test this idea researchers asked employees at Fortune 1000 companies the extent to which they would agree with the statement “When it comes to being successful, my company seems to believe that people have a certain amount of talent, and they really can’t do much to change it.” High levels of agreement suggested that the organization had a predominantly fixed mindset; low levels suggested a growth mindset (see article about this research in Harvard Business Review). 

Employees at “fixed mindset” companies tended to believe that there were only a handful of “star workers” within the organization, and that it really wasn’t worth the effort to try to become one. Employees at “growth mindset” companies tended to be more innovative, more interested in improving themselves, and higher-achieving. 

Different businesses operate in different ways, of course, depending on their particular sector, talent pool, business model, etc. But it’s worth noting that for most companies, employees are the single biggest expense line. So some try to maximize the value of their human capital by tightly controlling it (show up on time, conform to procedure, minimize disruption), while others maximize the value of their human capital by establishing a growth mindset culture where each employee is encouraged to push themselves, invest in themselves, advance themselves. 

It’s fixed mindset vs growth mindset. I choose the latter.