Bain: Founder’s Mentality

By | September 22, 2016

Founder’s Mentality is a simple and elegant framework from Bain that describes how companies lose their way as they grow. The path from start-up to global juggernaut is not a straight line and Bain research shows that only 1 in 9 companies show sustainable growth for 10+ years. They call it the growth paradox – growth creates complexity and complexity kills growth. As consultants – I am sure you have seen this and can violently agree to it.

It’s me, not you. Perhaps what I find so surprising and universally relevant is this gem: Bain research shows that most companies which fail to reach their corporate growth objectives actually blame themselves, not the market conditions for their non-growth. This is both new and refreshing – I am not used to executives “manning-up” to their company’s dysfunction or complacency. Executives cited internal obstacles of complexity, bureaucracy, lack of talent etc. . . as the root causes of failure. Sounds – oh so – familiar.

Face it, culture trumps strategy in the long-term. Business is won/lost daily in the habits and practices of the front line. When those closest to the customer start to succumb to complex, confusion, and waste – bad things will happen quickly. The market is unforgiving.

I use founders mentality in my daily consulting vernacular. I shared it with clients, gave presentations to 50+ people internally, and (inappropriately?) emailed it to my boss’ boss. As far as I am concerned, this is management consulting at its best. Thoughtful, simple, and actionable. Will spend the next 500 words or so describing it, but your best bet is to NOT read the blog post and instead watch the 18 minute video here.

Consultantsmind - Founders Mentality

Basic concept. If I were to sum up the idea, I would look at the 2×2 matrix they created with founder’s mentality on the bottom and scale on the left-hand side. The idea is brutally simple. Young companies act like insurgents against the status quo – and have MAJOR passion and founder’s mentality. They are gutsy, lean, and kick-ass. As they grow and look to scale up – well – they start to lose their mojo. Think about a middle-aged married guy gaining weight. . . yes, used to be the all-star basketball point guard, but looking kind of overweight now. Yep, that is the story of corporations too.

Consultantsmind - Bain Founders Mentality Matrix

Best place is top right. Looking at the 2×2 matrix, clearly the best place to live is the top right – high on founders mentality (strong culture, good profitability, can-do attitude) and high on scale and scope (global, economies of scale, bigger and badder than ever).  This is ENORMOUSLY hard to do. Ask anyone who has been in a company with 5 people that grew to more than 100 and they will tell you about the trials and tribulations.

Gravity pulls you to the bottom left. No surprise, we have to fight inertia, ennui, and messy human nature which pushes us to the bottom left.

  • Worst case, you lose the passion that made you aggressive, crafty and innovative.
  • Worst case, you lose any scale which lowered your cost of competition, or ability to easily cross-sell or hit multiple markets at one time.
  • Worst case, you are at the bottom left – bureaucratic and boring. You are a mess.

Bad News #1: Killers of Founder’s Mentality. Yes, here are the 4 things that kill a small company culture. I could boring-ly recount and explain each of these. . .but honestly, readers of this blog are smarter than that. Watch the video – you will easily get the point. 1) Cannot find the right people 2) people forget who is responsible for what 3) people stop talking about the customer 4) the founder sticks around too long, unable to adjust

Consultantsmind - Bain Founders Mentality Westward Winds

Bad News #2: Killers of Scale. Yes, here are the things that kill the power of a large company. Sadly, I see this in almost all the companies I have consulted: 1) matrix organizational structure that does nothing 2) no sense of the customer experience 3) process-upon-process complexity for-no-reason 4) losing the soul of the business.

Consultantsmind - Bain Founders Mentality - Southward Winds

The fun video. Okay, if you did not watch the proper 18 min video earlier (which I still recommend here), you can also watch the 3 min kitsch-y, fun video (Yes, when I say “fun management consulting video”, please take this all with grain of salt). For you low-patience 3 min video-type people, watch here.

Diagnose yourself. Bain put together a 20 question survey for you to diagnose your own (client) company here. How much mojo does your company have and where are the gaps that can be improved?  As consultants, we need to be able to articulate to our client when they are losing their way – forgetting the nobler mission, losing the client experience, getting mired in a doom-loop of complexity, hiding behind matrix organizations, or generally dodging accountability. These are all signs the client is losing the founder’s mentality.
consultantsmind-founders-mentality-diagnostic

Yes, there is a book. Since I first picked up on this framework 2 years ago, Bain have since published a book here (affiliate link). They are prolific with blog posts, videos and dozens of examples. From my vantage point, they do a good job of creating a thematic ecosystem of content for people to follow.  Much better than BCG or McKinsey.

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