Wednesday 8 July 2020
Founder Motion5

Economy of Beliefs – The case for focusing on Mindset

Today, the idea that mindset and productivity are closely related is more and more accepted in business. Incorporating mindset in an integrated approach to run strategic projects, like Sales Excellence, can improve the success rate with a significant factor. Scientific research1 and many best practices have shown the effect of mindset on work success. Knowing this, you would expect mindset to play a dominant role in initiatives aimed at improving productivity, and indeed, more and more top managers put real effort in changing people’s mindset. However, there is still room for improvement.

Some context

Times are tough right now, with declining industries, COVID-19 and changing power of decision-makers. All around us we see companies deciding to do more with less people. Most initiatives to address productivity come down to two economic principles: economy of scale & economy of scope.  Economies of scale are the cost advantages that arise when the volume of production increased. Economies of scope are about decreasing the average cost price of produced units by expanding product offering.

Focusing on scale and scope has led organizations to become bigger and leaner. The efficiency effect on productivity is significant but decreasing over time. The main reason for this decrease is that additional application of increasing the scope or scale yields sub-optimal results. We are now starting to see people exploring a new source of productivity. At Motion5 we believe the new wave of productivity can be found in mindset. We call this the Economy of beliefs.

Mindset Graph

Economy of Beliefs

Team members who believe in what they do and feel intrinsically motivated are likely to be more productive, more persistent, creative, and deliver a higher quality of work. Hence, investments in people to (re)shape their belief-framework will have a significant effect on productivity, retention of top performers, quality of work and, in the end, lower costs per unit.

It is interesting to see that management teams increasingly spend time and effort on implementing new processes and structures. In fact, the creation of new systems may be important, but what makes the systems successful is whether or not they are fully adopted and effectively used. Then why do a lot of change initiatives fail to yield the desired results? From here, I can see two major explanations:

1 | The tendency to think and act from a system approach

System thinking is a fully automatic process to deal with the complexity of our modern world. Finding recurring patterns and discovering systemic causalities and correlations allows us to understand the world around us, to plan more effectively and to make more informed trade-off decisions. In my experience in researching Commercial Excellence (ComEx for short) in many international organizations I noticed the tendency to overlook the interconnected variables that influence key organizational challenges, like mindset and leadership skills.

2 | Making the business case

The second reason we don’t see a lot of attention for mindset in initiatives to boost productivity is that managers struggle to make a business case. When someone says to them “Show me the money”, they often don’t know how. There are various ways in which you can make a business case for a ComEx investment. Ideally, you want to build your argument around a cost-benefit analysis or ROI (Return on Investment), a concept that is used to evaluate and compare the profitability of investments and it can also be used to make investment decisions. In this case, we talk about projected ROI, and it can be easily calculated by using a formula:

ROI = Gain from Investment – Cost of Investment
                            Cost of Investment

But a formula is not enough, there are 3 other factors that should be taken into consideration:

  1. The what-factor: ambitions and strategy are formulated for the long-term; the organization has made clear choices for the future and cascaded them into clear goals and objectives per country and per department.
  2. The how-factor: having the right systems, structures, tools and working methods; having the right capabilities.
  3. The do-factor: there is a true willingness to change and to implement consolidated commercial processes and tools, it boils down to having the right mindset and personal leadership skills.

Let’s assume that paying optimal attention to a certain factor, fully balanced with the two other factors, equals 1. A score lower than 1 affects the probability of success negatively, because you do not spend enough attention to this factor. A score higher than 1 is suboptimal, because spending more attention will even decrease the probability of success, because you spend too much energy on the topic, without effective results. The maximal result of an integrated approach will be:

Integrated approach = what-factor x how-factor x do-factor = 1 (1 x 1 x 1)

Many projects however are far from optimal. An average company might score 0.8 on the ‘what’, not more than 0.6 on the ‘how’ and even lower on the ‘do’ factor (0.4). When you put these three scores in the formula of an integrated approach you get:

Realistic outcome of the formula: what-factor 0.8 x how-factor 0.6 x do-factor 0.4 = 0.192 (0.2)

Now let’s say that you are able to increase the how-factor from 0.6 to 0.8 by implementing a corporate structure that is 80% adopted and you are able to push the do-factor score to 0.8 by focusing more on mindset through investing in personal leadership, teamwork and professional attitude. The result will be a 0.8 x 0.8 x 0.8 = 0.512. The possibility to improve sales excellence increased with a factor of 2.5. Hence, the probability to reach your ROI is increased by a significant 2.5 factor!

Motion5 approach

We tend to do things differently, because it’s refreshing to break the pattern. What sets Motion5 apart in addressing mindset and its impact on productivity? To put it simply, our implementations fits within a holistic approach. That means we look at beliefs within the context of the full organization and its people: strategy, structures, skills, motivation and execution power. When you understand the principles of successful organizational change, why people get into motion, you will naturally seek to align new initiatives with these principles.

It is our passion to engage managers in conversations about cultivating a successful mindset in their commercial organization and we are very interested in exchanging ideas with you about this topic. To learn more about mindset and how we can help you, contact us or follow us on social media.

About Peter Rademakers

Founder of Motion5, Peter has 30+ years of commercial experience, working in various top management roles and act as a program manager for a large number of national and international commercial effectiveness projects.


Sources (1):

Adams, Marilee. Change Your Questions, Change Your Life: 10 Powerful Tools for Life and Work. (Berrett-Koehler Publishers, 2009).
Dweck, Carol. Mindset: The New Psychology of Success. (Ballantine Books, 2007).
Schwarz, Roger. The Skilled Facilitator: A Comprehensive Resource for Consultants, Facilitators, Managers, Trainers, and Coaches by Roger Schwarz. (Jossey-Bass, 2002).