This article originally appeared in Fortune as part of our Breakthrough series.
A company achieving a decade or more of sustained, profitable growth is a rarity: Only one in nine enterprises hits that mark, according to research from top management consulting firm Bain & Company. But there’s a common theme among many of the businesses that succeed: Their leaders have kept (or rediscovered) their “Founder’s Mentality.”
Put simply, the Founder’s Mentality encapsulates the mindset and behaviors of a company’s founder in the early days of business—unrelenting focus on customers, willingness to make decisions quickly, and refusal to slow down for unnecessary bureaucracy. But a common problem often arises as a businesses scale, says Dunigan O’Keeffe, leader of Bain’s global strategy practice: Growth creates complexity, and this complexity can overwhelm an organization and stifle it from moving forward.
“Emboldened by early success, companies will naturally start adding customers, regions, countries, services, and so on,” says O’Keeffe. “As a result, this very success often leads to losing the signal of what really matters to the customers, and what’s working and not working within an organization. It’s a fascinating paradox.”
Companies on their way toward becoming global leaders don’t have to lose the values that helped them succeed, O’Keeffe says, if they learn to embrace the Founder’s Mentality long-term. This approach helps businesses restore their original values, behaviors, and sense of purpose, while addressing the issues keeping them from focusing on customers and scaling solutions. It requires a transformation of both the organization and executive behavior, but it’s possible. Below is advice for reviving the Founder’s Mentality in any modern organization.
Steps for getting back to the Founder’s Mentality
1. Reclaim the founding mission
The Founder’s Mentality has three main characteristics: a commitment to a bold mission, a sense of frontline and customer obsession, and an owner’s mindset. These are the traits companies have when they are starting out and see the opportunity to disrupt an existing industry, explains O’Keeffe.
Restoring the Founder’s Mentality starts with a reminder of why the company exists and taking a gut check. O’Keeffe has a simple checklist of questions he tells business leaders to ask themselves to see if they’ve got it:
“You need to answer ‘yes’ to three questions: 1. Is the future of my industry more exciting than ever? 2. Are my company’s prospects more exciting than ever? And 3. If I were to begin my career again, would I start as an entry-level employee at my company? Saying ‘yes’ to these questions means you don’t want to be anywhere else: That’s the Founder’s Mentality.”
2. Reconnectwith customers
As a company grows to scale (and goes public), its driving purpose can quietly shift focus to financial results or competition—to increase shareholder returns, for instance, or to take shares from a rival. Adopting the Founder’s Mentality helps leaders balance this focus with attention on what is required for the organization to truly thrive. It helps companies abhor bureaucracy, experiment relentlessly, have passion and curiosity for frontline details, and celebrate employees who do the same.
One thing O’Keeffe repeatedly hears from founders at Bain & Company founders’ forums is that when they started out, it was all about spending time talking to customers. Ten years later, they reflect that the leadership teams spend almost no time doing so.
“Rediscovering the Founder’s Mentality leads to decisions and direct actions that are going to make a difference with the customers, as they were during the early, hands-on leadership days of the company.”
—Dunigan O’Keeffe, Leader of Global Strategy Practice, Bain & Company
“In terms of allocation, a significant amount of the leadership team’s time should be spent elevating the customer, talking to them, and reflecting on the implications of those conversations,” says O’Keeffe. “Rediscovering the Founder’s Mentality leads to decisions and direct actions that are going to make a difference with the customers, as they were during the early, hands-on leadership days of the company.”
3. Encourage conflict to streamline decision-making and find solutions
Mature companies too often seek out consensus instead of having heated debates over the decisions that matter most. But successful businesses welcome conflict as a way to discover the right priorities and solutions.
“Bureaucratic layers are added incrementally over time and slow down organizations,” says O’Keeffe. “The Founder’s Mentality calls for simplifying internal decision-making processes to put energy back where it belongs, with the external customer.”
Conflict can be a productive tool for decision-making. It can demonstrate real passion for the customer and lead to better decisions. But understanding how the group will address and decide on issues is key. Leaders must determine the ways to surface and resolve issues at speed. O’Keeffe suggests a Monday meeting where any conflict can be brought to executives to be resolved, in exchange for the employees’ commitment to not let inaction fester for more than a week.
4. Elevate the art of business building
In the beginning, companies are often “future makers” that are actively identifying unmet customer needs and creating new business models to serve them. But as they grow, they risk becoming “future takers,” says O’Keeffe. This means they are more concerned with protecting their profit pool than capitalizing upon industry turbulence to identify the next big growth opportunity.
As companies focus on reshaping their core businesses, leadership must also look for opportunities to build new business models to reach new markets, new customers, and new capabilities. This is critical in today’s ever-changing business environment. And these new revenue streams can hedge disruption of the core business and help enter newly accessible adjacent markets. Harnessing the bold, ambitious behaviors of the Founder’s Mentality can help create these new revenue streams and offset the natural slowing of a mature core business.
The path to powering growth
“The Founder’s Mentality is imperative for companies who want to compete well into the future,” says O’Keeffe. How thoroughly a company adopts the Founder’s Mentality is an indicator of whether a company is thriving or flailing.
“Reclaiming the Founder’s Mentality isn’t for nostalgia purposes. Every company has an exciting history to tell, but the story is not the same thing as the principles upon which the company is built,” says O’Keeffe. “Incredible, odds-defying things happened to achieve scalability, but the Founder’s Mentality isn’t about looking back. It’s an affirmation that the principles are still vital and that the journey is far from over.”
If you want to learn more, feel free to get in touch with Dunigan O'Keeffe.