'Growth mindset' cultures like Microsoft's drive organizational transformation, researchers say. Here's how this has measurable results for companies.

Satya NadellaMicrosoft CEO Satya Nadella.REUTERS/Charles Platiau

Growth mindset grew out of primary school classrooms, has entered into corporate offices, and is now heading back into the research lab.

For example, as we've noted, Microsoft credits lots of its turnaround to growth mindset, a concept drawn out of the research of Stanford psychologist Carol Dweck about how young children (and later adults) react to challenges.

Now, new research from Dr. Elizabeth Canning and Dr. Mary Murphy at Washington State University lends empirical weight to growth mindset, especially as it relates to the way organizations operate.

Growth mindset draws a distinction between growth mindset ("I keep failing. I need to learn more about the optimal approach to solve this.") and fixed mindset ("I keep failing. I'm not smart enough to get this right").

It turns out that the cultural context that an organization offers its employees can be fixed or growth-based - and this, in turn, affects the way employees see themselves and how they work at the company.

Canning and Murphy extended growth mindset to the context of an overall organization's mindset. They asked how an entire organization's perceived mindset changes the way employees interact, trust, and commit to their company.

Organizational mindset becomes a part of individual employee mindset

Canning and Murphy told Business Insider that one surprising result of their research was how "strongly and consistently" organizational mindset set the tone for cultural norms, which provide context for an organization's growth and success.

Specifically, employees who indicated that they worked for a company with a fixed mindset culture perceived that their company had less effective collaboration and teamwork, less intellectual exploration (through innovation and risk-taking), and less ethical behavior.

"As a consequence, these employees were less trusting of their company and less committed to it - important factors for organizational productivity, job satisfaction, and employee turnover," the researchers explained.

Within the paper, published in the prestigious Personality and Social Psychology Bulletin, the researchers point out that not only do employees change the way they present themselves based on how they perceive organizational mindset, they also reward other employees for behaving according to the same mindset.

One way to picture this would be a feedback loop between organizational and individual mindset, where the attitude of the firm reflects back on the employee. a sort of mindset echo chamber that leads to the growth or detriment of the company.

Tracking the movement of organizational mindset, and recommendations for founders and leaders

The point of origin for organizational mindset is communication from leaders, supervisors, and teams. This translates not only to explicitly defining a mindset, like Microsoft's CEO Satya Nadella does time and time again, but also in the policies and practices within an organization.

If an organization says it operates on a growth mindset, but employees don't feel that in standards for hiring, evaluation, and promotion, the actual context remains fixed- and employees and the public are quite perceptive in ascertaining a company's true organizational mindset.

"One interesting thing that we found is that even people with virtually no experience with an organization can perceive an organization's mindset just by reading publicly available company materials, like mission statements and job ads," the researchers said.

Still, they qualify that employees' perceptions matter most. Their research results show that employee perceptions associate most closely with the company's cultural and behavioral standards.

For future research, Canning and Murphy want to answer how organizational mindset diffuses through an organization.

Recently Microsoft outlined a set of global standards for its managers based on growth mindset. As corporate vice president of talent, learning, and insights Joe Whittinghill told us, growth mindset is where everything starts for the tech giant.

"Our fundamental belief is that our culture transformation and our company transformation and where we are today and where we are headed is absolutely grounded in a deep understanding of a growth mindset," he said.

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