The Hidden Factor Fueling Business Growth

A digital mindset is a hidden asset, but it shows up in the practices and artifacts that manifest your organization’s culture. Indeed, for a digital mindset to take hold among individual employees or departments, it must be woven into the fabric of company culture.

Two executives, the CFO and the HR Director, are sitting in the boardroom viewing the latest set of data, which shows revenues and profitability tracking steadily upward. As they bask in this good news, a familiar debate breaks out.

“See,” says the CFO. “We were right to invest in software to monitor profit margins and financial ratios. Business growth  is all about the numbers.”

The HR Director shakes his head. “Well, look at how much more efficiently Production is working compared with last quarter. As I keep telling you, business growth is all about the people.”

Enter the CEO, who, overhearing the conversation, pokes her head in the door to say, “Actually, you’re both right. The most important thing we’ve done this year was encouraging our people to develop a digital mindset so they’re eager to embrace new tools, like accounting software.”

What is a digital mindset?

A digital mindset is, first and foremost, an attitude of inquisitiveness. It’s an openness to change and doing things differently.

When someone with a digital mindset encounters a problem, they don’t get frustrated. They get curious.

Instead of lamenting the good old days when the problem didn’t exist, or the existing solutions used to work, they ask, “How might we look at this issue through a digital lens? What part of the problem could technology help solve?”

Yes, this requires a degree of optimism, but embracing a digital mindset doesn’t mean seeing the world through rosy, tech-tinted glasses. It means adopting a pragmatic attitude toward learning—being willing to try new approaches in order to figure out, through trial and error, what the ultimate solution will be.

What does digital mindset have to do with business growth?

Steve Jobs embodied a digital mindset when he famously encouraged business leaders, “Stay hungry. Stay foolish.” He recognized that breaking through a wall often requires a number of failed crashes into the wall. Those failures aren’t stupid; they’re essential steps along the path to success.

Of course, that was fine for Jobs to say, wasn’t it? We’re not all running Apple, and we’re not all once-in-a-generation visionaries looking to make a bigger “ding in the universe” than most.

Here’s the good news: you don’t have to be a tech hero to embrace and model a digital mindset. You just need to develop a growth mindset that extends to the digital domain.

As psychologist Carol Dweck has shown, the number one factor influencing our ability to learn and improve is our belief that we can grow. If you think that failure means you’re a loser, you’ll lose, time after time. But if you believe that failure means you simply haven’t succeeded yet, you’ll bounce back, learn from your mistakes, and carry on toward your goal with renewed purpose. (If you’re looking for today’s dose of inspiration, check out Dweck’s TED Talk on “the power of yet.”)

Facing challenges with curiosity and resilience doesn’t make you foolish. It makes you smart.

In one 2007 study, Dweck and two of her colleagues demonstrated this by comparing two groups of struggling middle school students whose grades in math had been dropping over the past year. The first group intentionally developed a growth mindset by participating in a series of workshops that showed how we can actively increase our intelligence. The second group also participated in workshops, but they simply learned study skills. Following the workshops, the students who’d worked on their growth mindset maintained or improved their grades, while their counterparts in the study skills group continued to experience falling grades.

Learning how to integrate digital solutions into your business model and workflow is no different from learning math or any other subject. What makes the differences between the winners and the also-rans is a growth mindset. Those who willingly engage in digital experiments with an attitude of “let’s see what we learn from this” will achieve their growth goals while actively increasing their capacity for future growth.

How can you cultivate a digital mindset among your team?

A digital mindset is a hidden asset, but it shows up in the practices and artifacts that manifest your organization’s culture. Indeed, for a digital mindset to take hold among individual employees or departments, it must be woven into the fabric of company culture.

Here are some practical things you can do to create the kind of culture that fosters a digital mindset:

  • Model digital curiosity. When you come across a new app or other digital tool, share it with your team—not to encourage managers to blow their budget on new toys but to stimulate discussion about possibilities for improving business processes.
  • Make it safe to fail. Invite ideas for small digital experiments that carry little risk and require only a small budget. Measure success not in terms of outcomes but in terms of learning.
  • Identify your cultural heroes. Share success stories from businesses that have modernized their operations by using digital solutions. This doesn’t mean you have to paper your boardroom with posters of Jobs. Find business leaders in your own industry who inspire you to modernize your business on your terms.
  • Embed a growth mindset in your company values. As Dweck’s research has proven, growth mindset doesn’t happen by accident. It requires intent. So consider incorporating language about resilience and learning in your company value statement.
  • Encourage ongoing learning. Make it easy and inexpensive for employees to access learning opportunities that will develop their digital skills and nurture curiosity about digital solutions.
  • Make openness to change a hiring criterion. When you’re recruiting new team members, ask targeted interview questions that expose their attitude toward trying new things and failing.
  • Reward innovation and resilience. Praise those who try new things and learn from them. Make innovation a company-wide competency, something celebrated through employee awards and evaluated in performance reviews.

Rewards of a digital mindset

A recent study published by the MIT Sloan Management Review showed that companies with “digitally savvy” executive teams who perform the best (in terms of revenue and valuation) practice four key leadership practices: coaching, creating a “digital culture,” creating accountability, and “encouraging innovation.”

These “digitally savvy” practices all help to nurture the hidden factor that drives business growth in the digital era: digital mindset. Coaching encourages resilience, the ability to learn from mistakes. Digital culture normalizes the question “How can technology help?” Creating accountability encourages debriefing that treats failures as lessons to grow from. Cheering on innovators makes digital optimization part of everyone’s role.

Digital mindset may not be tangible, but it produces outstanding tangible results. In the MIT study, companies with a “digitally savvy” C-suite produced revenues and valuations 48% higher than the results of similar organizations without “digitally savvy” leadership.

Start cultivating digital mindset in your team and you may be surprised to see the difference it makes to your numbers, your people, and your vision for your company’s future.

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