Many companies eventually stall out because they succumb to the growth paradox: Growth creates complexity, and complexity kills growth. In 200 seconds flat, James Allen, who coleads Bain's Global Strategy practice, describes the Founder's Mentality.
Read the transcript below.
JAMES ALLEN: Most companies eventually stall out. Growth slows, the organization seizes up, the talent you really need leaves or never even gives you a look. And this happens because eventually every leadership team encounters what we call the growth paradox. Growth creates complexity, and complexity kills growth.
At Bain, we've been helping business leaders battle the growth paradox for four decades. Sustainable, profitable growth demands a ruthless focus on the core business and a clear, repeatable model. But it also demands the rediscovery of what we've called Founder's Mentality. Founder Mentality helps leaders address the crisis of stall-out because it focuses on the internal root causes that have slowed them down.
I mean, think about it. Every business starts as an insurgent, at war against their industry on behalf of underserved or emerging customers. As the tiny David fighting the industry Goliath, these insurgents don't have size on their side. But they've got speed.
And this is because of Founder's Mentality, which is made up of three major elements. These companies have a clear sense of insurgency. Every employee is committed to the mission and knows why they come to work. They're redefining industries.
The leaders are obsessed with the customer and front line, and the organization is designed to help the front line. Those who execute aren't buried at the bottom of an org chart. They're at the company's center. They are the heroes.
And everyone shares an owner mindset. They worry about how each dollar is spent. They share a bias to act, and they hate bureaucracy. And as these companies grow, if they're wildly successful, they move from insurgency to incumbency. They become the leaders of their industry and by leveraging the benefits of their newly-found size, they share disproportionately in the industry's rewards.
But this success come to a cost. A gradual, imperceptible loss of Founder's Mentality. And with that loss, they lose the antibodies to complexity. People settle in and grow comfortable with the slowing metabolic rate. They settle for satisfactory underperformance.
But then stall-out really begins. Size is no longer a source of competitive advantage. Size only slows, making these firms vulnerable to the next generation of insurgents.
In our work with clients on Founder's Mentality, we focus on two things. First, what are the root causes of stall-out? We explore the forces the blow these companies off course. These aren't the market symptoms. We focus on deeper root causes, the ones that every leader feels. The ones that keep you up at night. The ones you can't quite put your finger on, but know that something's very, very wrong.
Second, we offer solutions. How do you stop the drift and recommit it to the ambition of becoming the scale insurgent in your industry? And this isn't an "or" game. You have to rediscover your Founder's Mentality and take advantage of your size. You need to get your mojo back and push your weight around.
You're probably facing stall-out. You feel it. You hate the complexity that surrounds you and see others moving faster in the marketplace. You feel like you're getting less and less return on the talent you've got in the company, and you're worried you're not getting the talent you need.
This is about recommitting to your core business. It's about simplifying what you do around a clear, repeatable model. And ultimately, it's about rediscovering your Founder's Mentality.
Fast-growing companies can become global leaders without losing the values that helped them succeed. Bain’s research explores how large incumbents can also reignite their growth by recapturing their Founder’s Mentality®.