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            [post_title] => A Fixed or Growth Mindset? What it Means for Your Organisation
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There are now about two million people who are in work in Ireland. Of these, about half a million work in the public sector in areas such as administration, teaching and health. The rest are employed in the private sector.

Considering its centrality to our everyday prosperity, the private sector is oddly depicted in our culture. The big businessman is always the baddie. Just think: Mr Burns in The Simpsons, Michael Douglas’s Gordon Gekko in Wall Street, or Leonardo DiCaprio in The Wolf of Wall Street.

Picture3

Source: www.axiomcommunications.com

On that basis, it’s good to see that a movie has just come out that portrays financiers in a more realistic light: as intelligent people who take risks to make money in a complex financial world in which there are winners, but, by extension, plenty of losers. The Big Short, released on January 22 2016, is based on an adaptation of the adage of “buy low, sell high” among stock market traders. Going “short” simply reverses the sequence by aiming to “sell high, buy low”. To put it simply, you sell a stock that you don’t own and think is overvalued and undertake to close the transaction by buying it back later. The protagonists of The Big Short, based on the book of the same name by Michael Lewis, realise in the mid-2000s that the US housing market is an accident waiting to happen and that it is a big candidate to be “shorted”. It examines several different individuals who independently reached such a conclusion and who had the guts to back that insight with their own cash. As one Bloomberg View writer put it: “It isn’t a spoiler alert to say that the financial world collapses, the protagonists get rich and no one lives happily ever after.” The most compelling story was that of Michael Burry. He was the founder of the Scion Capital hedge fund which he operated from 2000 to 2008. Mr Burry initially qualified as a medical doctor and left work as a neurologist to pursue his hobby and become a full-time investor. In 2001, Mr Burry’s first full year at the hedge fund, the S&P 500 index fell 11.88 per cent but Scion was up 55 per cent, according to Lewis. The next year, the index fell again, by 22.1 per cent, and yet Scion was up again: 16 per cent. In 2003, the stock market finally turned around and rose 28.69 per cent, but Mr Burry beat it again — his investments rose by 50 per cent. By the end of 2004, he was managing $600 million and, as Mr Lewis put it, was “turning money away”. It was at this point that Mr Burry focused on the US housing market. As the market collapsed spectacularly and others lost lots of money, he was still in profit because he had correctly predicted what would happen. He later said he shorted mortgages because he had to. “Every bit of logic had led me to this trade and I had to do it,” is how he put it. He has also pointed out that he did not benefit from taxpayer-funded bailouts as he liquidated his shorted positions by April 2008. Picture1 One thing is clear from all of this. Mr Burry is worth listening to, especially when it comes to issues relating to the financial markets. In a recent interview with New York magazine, he gave some hints about where the next big-short trading opportunities may come from. He said that he had hoped after the crash that the world would enter a new era of personal responsibility, but instead we “doubled down on blaming others and this is longterm tragic”. On this basis, the Irish response might not impress Mr Burry. Our reaction to our own banking crisis has been to blame bankers for lending to us rather than to reflect on whether we were wise to borrow and to invest in overvalued property. Instead of learning lessons, it would appear that we have simply sought out scapegoats to evade personal responsibility. Mr Burry’s comment that “if a lender offers me free money, I do not have to take it” is not one that sits easily in Irish public debate even if it is little more than a statement of the obvious. The hedge fund manager is not happy either with the current state of global financial markets, which he believes are once again trying to stimulate growth through easy money. “It hasn’t worked, but it’s the only tool the Fed’s got,” he said. Mr Burry is worried that the markets are using interest rates to “price-risk”, but that mechanism is broken as the interest rates of central banks have been kept for many years at close to zero. Worse still, he thinks that by using low interest rates to fight the aftermath of one bubble going bust, central banks may just support the development of more bubbles. That’s the big risk today, but it’s also how the US housing market developed into a bubble a decade ago. In combating the economic decline after the internet bubble went bust in 2000, Mr Burry argues that the Fed kept US interest rates too low for too long. He argues that we are building up “terrific stresses in the system” and any fault lines will harm the outlook. The problem with this conclusion is that, despite our progress, Ireland remains one of the most heavily indebted countries in the world. We would face a heavy cost if they were to rise again.

Let us be grateful then that Mario Draghi, the head of the European Central Bank, doesn’t agree with Mr Burry and that eurozone interest rates are likely to remain low for several years to come.

 
IMI . Picture Conor McCabe Photography.
Cormac Lucey is the Programme Director of the IMI Diploma in Business Finance. Cormac is also a Financial Services Consultant and Contractor who has previously worked with PricewaterhouseCoopers, Rabobank Frankfurt and the Department of Justice. 
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Touching back on my last blog I mentioned that culture needs to become a strategic business priority (like sales, profit, etc.) and not just a HR priority.

boat with leader Source: www.clubsolutionsmagazine.com

Leadership teams can start the creation of high performance cultures by implementing the following 6 steps:

1. Establish a sense of urgency

They need to make it clear that the current culture needs to change, articulate the vision and business case, and describe the opportunity (as John P. Kotter states in his book The 8-Step Process for Leading Change) in a way that appeals to the hearts and minds of people.

2. Develop a set of strategic beliefs

These are the beliefs senior executives have about their organisation’s environment that enables shaping business strategy e.g. Dell believed that customers would, if the price was right, buy computers from a catalogue rather than go to computer stores as the conventional wisdom dictated they would. They created a $7 billion business.

3. Develop a set of values

Values enable the organisation to act on its strategic beliefs and implement their strategy the right way. Values shape the culture of an organisation, define its character and serve as a foundation in how people act and make decisions. Dell’s values supporting its strategy and strategic beliefs include: Delivering results that make a positive difference; leading with openness and optimism and winning with integrity.

4. Capitalise on quick wins

Capitalize on and honour your cultural strengths and act quickly on any critical behaviour changes required.

5. Challenge those norms that get on the way of high performance

Norms are informal guidelines about what is considered normal (what is correct or incorrect) behaviour in a particular situation. Peer pressure to conform to team norms is a powerful influencer on people’s behaviour, and it is often a major barrier affecting change. It is always easier to go along with the norm than trying to change it…. Common samples of negative norms in some organisations: Perception that it is ok to yell at people, ignore people’s opinions, etc.

6. Role model and recognise the desired behaviours

As Gandhi wonderfully put it “Be the change you want to see in the world”. This empowers action and helps embed the desired culture you are trying to create. Behaviour is a function of its consequences. Behaviour that results in pleasant consequences is more likely to be repeated, and behaviour that results in unpleasant consequences is less likely to be repeated. According to B. F. Skinner and reinforcement theory “future behavioural choices are affected by the consequences of earlier behaviours”. The argument is clear; if you want people to be brave and challenge the status quo, you shouldn’t make them feel awkward or like difficult employees when they do. Furthermore, if want people to contribute at meetings make sure you actively listen to them and act on their suggestions and ideas.

Caution:

On his famous article “On the folly of rewarding A while hoping for B” Steven Kerr argues that the way in which we reward and recognise people doesn’t always deliver the desired results. We all have being in situations where we are told to plan for long-term growth yet we are rewarded purely on quarterly earnings; we are asked to be a team player and are rewarded solely on our individual efforts; we are told that the way in which results are achieved is important and yet we promote people who achieve results the wrong / in a Machiavellian way. A friend of mine was recently at a hospital and he complained to the ward manager about the doctor’s bad manners and rudeness. The answer he got was “do you want to be treated by the best heart doctor in the country or a not so good doctor but with a really nice bed manner?”.

My argument is why can’t we have both?

 
Pedro3-SHRM.jpg
Pedro Angulo is the Programme Director of the IMI Diploma in Strategic HR Management starting on 16th November 2016. Pedro is an Organisational Effectiveness Business Partner in AIB and Chairperson of the Irish EMCC (European Mentoring and Coaching Council). He is a motivational speaker and regular presenter at HR, coaching, change and business conferences / events. _____________________________________ [post_title] => 6 Steps to start the creation of high performance cultures [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => 6-strategies-start-creation-high-performance-cultures [to_ping] => [pinged] => [post_modified] => 2020-05-11 19:48:25 [post_modified_gmt] => 2020-05-11 19:48:25 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.imi.ie/?p=12562 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )
IMI Insights

IMI Insights

7th Feb 2018

Related Articles

A Fixed or Growth Mindset? What it Means for Your Organisation
....“If a lender offers me free money, I do not have to take it”
6 Steps to start the creation of high performance cultures

Connecting Technology Leadership with a Growth Mindset

What is happening today, and what will happen tomorrow?

These are the questions David Cornick grapples with in his everyday life. Having worked for IBM for over 30 years, David sees technologies emerging from all corners of business, and watches as they evolve, merge, compete, and, ultimately, change our lives.

How to think about the Future

The future is impossible to predict, but it is possible to think about it in a way that will give you a glimpse into it. This way of thinking can be illustrated by the Fixed vs Growth Mindset theory.

With a growth mindset, an individual is much more likely to embrace change, treat failure as an opportunity and be excited by the future, not afraid of it. With a fixed mindset, the individual will be much more inflexible, see change as a threat and be afraid of failure.

Growth mindset (Photo source)

A leader and manager must have the agility and flexibility to see opportunities in a world of rapid change, and a leader that leans towards growth mindset is more likely to spot those threats and opportunities quicker than their rivals.

With the proliferation of new technologies on an almost daily rate, the other thing a leader needs to lean on in the future is other people. It is critical to build your network because the way technology is evolving today means that you will need subject-matter experts in a variety of fields and, maybe even more critically, be able to create new opportunities by combining different technologies into a single solution.

For example, a major construction company created an incredibly efficient and sustainable HQ building using smart technologies – simple things like lifts being on the floors at the times they are most used, smart lighting for when rooms aren’t being used etc.

When they calculated how much their work had saved in terms of the cost of running the building, they saw they had saved 7% over the year. In a hugely competitive industry like construction, a 7% gain can be sector changing. Now, that major construction company has gone into the facilities management business, knowing they can undercut their competitors on the design and build of a project, and then recoup the money back over a longer period.

So, by combining their traditional skills with new technologies, this construction company has essentially carved out their own niche while damaging their competitors at the same time, who now have to race to catch up.

A Look Ahead

For companies and organisations, technology is fundamentally changing how they deliver their products and solutions, and for some, even what their core value proposition is.

The sportswear company, Under Armour, did what every other traditional sportswear company do; they sold sportswear. Their CEO, Kevin Plank, had a different vision – he wanted Under Armour to help athletes to reach peak performance.

This vision would, in the past, have been an aspiration – a mission statement to be guided by. Under Armour would be able to produce improvements in their clothing line to help athletes get better, but in reality there’d be no data to back it up and probably only elite athletes would get the benefits. With digital technology however, Under Armour saw an opportunity to become partners with every athlete in the world – both professional and amateur – on an individual basis for all aspects of their life, not just the hour they spent at the gym.

They started by buying three different apps – MyFitnessPal, MapMyFitness and Endomondo. One tracks diet and exercise, one an athlete’s movement and one an athlete’s diet and nutritional intake. In other words, Under Armour bought apps that covered the entirety of an athlete’s life.

Today, 170 million people are using those applications.

‘All this is about gathering as much data as possible they can about their customers, and then feeding it back to them in a way that is easily consumable’ said David. ‘Examples? A forty-year old athlete could compare their performance with other forty-year olds in the database for a realistic standard, your nutrition app will feed into your fitness app, suggesting improvements, and will track your overall progress with motivational ‘pushes’ based on your past behaviour. Always skip the gym on a Monday? Your device will tell you to get off the couch’.

According to Under Armour, 2/3 of their growth over the next decade will be from their digital offerings, while the company is now predicted to be the 3rd biggest sportswear company in the world by 2020.

We’re still in flux

There is always the human temptation to say ‘well, this is as good as it gets’ or, at least, ‘someone must be doing that’. However, this is generally not the case. This is still the beginning of the technological revolution, and there are plenty of opportunities out there.

And it is the flexible, growth minded leaders that will be able to see these opportunities. ‘It’s all about people’ said David. ‘You have to attract, develop and retain the best people to succeed when everything is constantly changing.’

The robots may be coming, but it will be people that point them in the direction that they go.

 

This article is based on a talk given at the IMI Campus by David Cornick at the Advant-edge series for IMI members. To become an IMI member, click here. To find more details on upcoming IMI Membership events, click here

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