…or how management mindsets can help businesses survive
There are two trends that have been diverging from each other increasingly rapidly ever since the 1970s. The first is the technologically-driven transformation of every area of our economy and society that is taking place in the context of global competition and the emerging knowledge economy. The second is the growing inability of institutions and businesses to cope with the pace of change. In this article for TRANSFER, Steinbeis expert Professor Dr. Mario Vaupel discusses the implications of these trends for businesses, how companies can overcome the associated challenges, and the role of management mindsets.
The seven management mindsets and their key assets (management mindsets as defined by Prof. Dr. M. Vaupel)
The inability of businesses to leverage change is graphically illustrated by the decline in corporate longevity (in the last 50 years, the average corporate lifespan has declined from 35 to 18 years) [1], as well as by the marked erosion of employee motivation [2].
But businesses aren’t going to keep up with the times by bemoaning unexpected technological leaps, unfair international competition, or the skills shortage. Instead, their leaders must adopt ways of thinking and acting – management mindsets – that are fit for the future. These mindsets are the drivers of effective leadership – without them, companies are often unable to survive change. They are not to be confused with the endless lists of management skills that don’t translate into practice anyway. Based on a market perspective, it is possible to describe and develop seven mindsets that enable sustainable leadership performance.
Ensuring survival and shaping the future
The reflective and innovative mindsets are particularly relevant to businesses trying to cope with the faster pace of change. The assets needed to enable the management mindsets are based on market requirements (outside-in) rather than being psychological in nature.
The reflective management mindset makes an important contribution to ensuring a company’s survival by focusing attention on developments that are relevant to the business. To achieve this, the reflective management mindset must do three key things: distance, anticipate and adapt. These performance requirements translate directly into day-to-day strategic and operational management activities. The “distance” asset involves being able to distance oneself – with a good understanding of the market-driven change requirements – from the business’s established strategies, processes, structures and products. Failure to do this can result in “cultural lock-in”, where market trends are disregarded and the old solutions are perpetuated or even strengthened (“active inertia”). [3] By distancing oneself from the established solutions that are no longer suited to meeting future market requirements, it becomes possible to see new trends as a business opportunity rather than a threat. This in turn makes it possible to gear strategic realignment toward changes in the market (anticipation) and redirect resources accordingly (adaptation).
When combined with the reflective mindset, the innovative management mindset also significantly improves a company’s ability to survive, through specific assets. The first function that the innovative management mindset must bring to day-to-day management activities is a willingness to learn. Why is learning the basis of the innovative mindset? The answer lies in the opposite of willingness to learn, in other words a closed mentality that doesn’t learn. This “negative mindset” leads to a reluctance to change, missed opportunities because the manager was unaware of them and, ultimately, growing uncertainty. [4] A leader’s willingness to acquire new knowledge in order to understand technological, economic and social developments and be able to provide entrepreneurial solutions to them is thus key to innovative behavior.
However, the willingness to learn needed by managers can still have functional priorities. In other words, it can focus mainly on the market trends for business models, strategies, structures, processes, technologies and products that need to be understood and addressed. In addition to the basic willingness to learn, the innovative management mindset must focus on translating the market-driven adaptation measures into a planned innovation program for the company rather than leaving them up to spontaneous creative processes.
Seven mindsets – one goal
Although this overview has focused on two specific mindsets, effective management to ensure that a company survives turbulent market conditions calls for a combination of all seven sustainable management mindsets. In addition to the two mindsets described above, a further five mindsets must inform management’s day-to-day performance. The analytical mindset must enable managers to tap into and utilize important business management information. Today, this is often supported by the use of AI and data analytics. The objective-oriented mindset involves the company setting a clear strategic direction that provides its employees with unambiguous guidance. The network-oriented management mindset enables leaders to generate the necessary resources, innovations and rate of development within the new economic network structures. Since competitiveness is no longer measured on a national scale, the international mindset helps managers to think and act internationally with regard to procurement, human resource deployment and the development of marketable product solutions. And finally, the “law of management”: without an effective action-oriented mindset that ensures an effective focus on decision making and implementation, the other mindsets are, for the most part, of purely philosophical value. [5]
Within the Steinbeis Network, the Steinbeis University – Schools of Next Practices specializes in delivering effective programs to help leaders develop and strengthen their management mindsets. To do this, the Steinbeis Enterprise employs professional learning journeys that take the shape of talent pipelines for all management levels or specially designed executive programs.
Contact
Prof. Dr. Mario Vaupel (author)
CEO
Steinbeis University – Schools of Next Practices GmbH (Berlin)
References
[1] Viguerie, S. Patrick / Calder, N., / Brian Hindo, B. (2021): Innosight. Corporate Longevity Forecast
[2] Gallup Engagement Index Germany (2023)
[3] Foster, R. / Kaplan, S. (2001): Creative destruction. Why companies that are built to last underperform the market and how to successfully transform them, New York
[4] Schein, E. (2002): Blut, Schweiß und Tränen – von der Angst zu lernen, Edgar H. Schein im Gespräch mit Diane L. Coutu. In: Harvard Business Manager, 5/2002, pp. 72-79
[5] Vaupel, M. (2011): Rising Stars – welche Mindsets zukunftsfähige Führung braucht. In: Wirtschaftspsychologie aktuell, 1/2011, 21-2 and Vaupel, M. (2008): Leadership Asset Approach: Von den Herausforde- rungen der Führung zur Steuerung der Führungsperformance, Wiesbaden
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