Think of founding principles to avoid losing focus

In 2001 the list of companies with the highest market caps was dominated by blue chips. General Electric, Microsoft, ExxonMobil, Walmart, and CitiGroup — all were businesses led by managers who were experts in efficiency and optimization and who grew their businesses by making them work better than they had previously.

Fast forward to the present, and the list looks strikingly different. Apple, Alphabet, Microsoft, Amazon, and Berkshire Hathaway now top the list, with Alibaba, Facebook, and Tencent close behind. They are for the most part young firms led by founders and their teams, bold leaders who continually prioritize new growth over efficiencies to their core businesses.

Many things have happened in the intervening years to contribute to this shift, but the signal is undeniable. The market now rewards the long-term vision and continual investment in new growth represented by these younger enterprises.

Large enterprises have been responding to these developments for some time, mainly by applying the methods of startups such as lean experimentation, design thinking, and agile development. While these tactics are necessary and useful, when used alone they serve merely as Band-Aids to the problem.

The change that enterprises need to undergo in order to regain their growth trajectories is more profound, and it must start at the very top. To generate new growth, CEOs must stop thinking of themselves as chief managers and start thinking of themselves as refounders.

Refounders are leaders who, despite not having started the company, think with the mindset of a founder. They do not focus their energies on incremental growth through endless optimization, but instead look to leverage their company’s assets to build new offerings, move into new markets, and create next-generation solutions.

Satya Nadella of Microsoft is a great example of a refounder. When Nadella took over the CEO role in 2014, he immediately began refocusing the company on growth. “If you don’t jump on the new,” he proclaimed, “you don’t survive.” Nadella challenged the company to see beyond its legacy products like Windows, invested heavily in new technologies like AI and SaaS, purchased LinkedIn to plug Microsoft services into the company’s social graph, and more. Through it all, he has emphasized the importance of long-term thinking, taking a test-and-learn approach, and obsessing over customer satisfaction, among other values. The market has rewarded Nadella’s moves and his mindset: Since he took the helm, the company’s share price has more than doubled, and in 2016, after years of stagnation, Microsoft regained its place on the top-five market cap list.

You don’t need to be Satya Nadella to be a refounder, though. We work with CEOs of large enterprises who are in the process of refounding their companies, and while coaching them on this process we’ve seen firsthand what works best for them. Based on these experiences, here are five actions that leaders can take to move from a manager mindset to a refounder one.

Shift Your Mindset

Strategists in mature businesses think in terms of total addressable markets (TAM), which allows them to size a potential business and plan accordingly; refounders think in terms of total addressable problems (TAP). They ask, How many people have a problem that this solution could address? Besides exposing existing markets, a TAP mindset uncovers potential opportunities before there’s a market for them.

For example, in the 1980s a standard TAM view of cell phones would have suggested a modest market consisting of mainly lawyers, business leaders, and doctors — after all, they were the demographic using the first generation of phones. A TAP view, by comparison — asking “Who has problems that a mobile phone could address?” — would have suggested larger potential markets, ranging from everyone trying to make ad hoc plans with friends to entire populations without landlines looking to get their first phone connections. A TAP worldview allows you to discover future markets instead of playing only in developed ones.

Don’t Seek Consensus

When it comes to decision making, big-to-bigger enterprises look to gain consensus as a way of minimizing the risk of failure; in contrast, refounders recognize that new opportunities lie outside of the realm of consensus. As Marc Andreessen, of venture capital firm Andreessen Horowitz, says, “If something is already consensus, then money will have already flooded in and the profit opportunity is gone.”

Knowing that, refounders seek, as Jeff Bezos says, to disagree and commit — acknowledge differences of opinion and move forward together anyway, recognizing they are making a bet on a conviction and may ultimately be wrong. Grounding decisions in evidence-based conviction allows them to move faster while arriving at potentially great ideas before the rest of the consensus-driven world.

The need for better negotiation

A quick survey of the news on almost any day reveals the compelling need for a better way to deal with differences. How many people, organizations, and nations are stubbornly bargaining over positions? How much destructive escalation results in bitter family feuds, endless lawsuits, and wars without end? For lack of a good process, how many opportunities are being lost to find solutions that are better for both sides?

Conflict remains a growth industry. Indeed, the advent of the negotiation revolution has brought more conflict, not less. Hierarchies tend to bottle up conflict, which comes out into the open as hierarchies give way to networks. Democracies surface rather than suppress conflict, which is why democracies often seem so quarrelsome and turbulent when compared with more authoritarian societies.

The goal cannot and should not be to eliminate conflict. Conflict is an inevitable—and useful—part of life. It often leads to change and generates insight. Few injustices are addressed without serious conflict. In the form of business competition, conflict helps create prosperity. And it lies at the heart of the democratic process, where the best decisions result not from a superficial consensus but from exploring different points of view and searching for creative solutions. Strange as it may seem, the world needs more conflict, not less.

The challenge is not to eliminate conflict but to transform it. It is to change the way we deal with our differences—from destructive, adversarial battling to hard-headed, side-by-side problem-solving. We should not underestimate the difficulty of this task, yet no task is more urgent in the world today. We are living in an age that future anthropologists might look back on and call the first human family reunion.

For the first time, the entire human family is in touch, thanks to the communications revolution. All fifteen thousand or so “tribes” or language communities on this planet are aware of one another around the globe. And as with many family reunions, it is not all peace and harmony, but marked by deep dissension and resentment of inequities and injustices.

More than ever, faced with the challenges of living together in a nuclear age on an increasingly crowded planet, for our own sake and the sake of future generations, we need to learn how to change the basic game of conflict.

Go beyond inner fears

Fear is a natural and universal human phenomenon, affecting top executives as much as anyone else. The majority of management literature is focused on helping leaders conquer their fears. The problem is that stifling fear doesn’t make it go away. In fact, failing to address it can lead to highly unproductive and dysfunctional behaviors.

Through our firm’s work with thousands of executives over 30 years, we have come to believe that unrecognized or unacknowledged core fears are almost always a root cause of professional distress and unattained potential. Yet those fears are not necessarily bad. We have met met many leaders who have chosen to understand and learn from their fears, turning them into fuel for performance. If you are willing to take a hard look at your fears and where they’re coming from, you can channel them productively. If, for example, deep down you’re afraid that you don’t measure up (a common executive fear), you can find ways to engage that desire to be your best without driving your team into the ground.

It may be that outside help is in order — an executive coach, a good therapist, supportive family and friends. But there is a lot of work leaders can, and should, do on their own.

Fear is a natural and universal human phenomenon, affecting top executives as much as anyone else. The majority of management literature is focused on helping leaders conquer their fears. The problem is that stifling fear doesn’t make it go away. In fact, failing to address it can lead to highly unproductive and dysfunctional behaviors.

Through our firm’s work with thousands of executives over 30 years, we have come to believe that unrecognized or unacknowledged core fears are almost always a root cause of professional distress and unattained potential. Yet those fears are not necessarily bad. We have met met many leaders who have chosen to understand and learn from their fears, turning them into fuel for performance. If you are willing to take a hard look at your fears and where they’re coming from, you can channel them productively. If, for example, deep down you’re afraid that you don’t measure up (a common executive fear), you can find ways to engage that desire to be your best without driving your team into the ground.

It may be that outside help is in order — an executive coach, a good therapist, supportive family and friends. But there is a lot of work leaders can, and should, do on their own. From our work, we’ve created a four-step process of rigorous self-reflection that countless executives have used to understand their fears and become better leaders.

  • Fear of being wrong. People harboring this fear are extremely focused on rules, ethics, standards, and “right vs. wrong.” They are deeply afraid of making a choice that will later prove to be “objectively” wrong. These perfectionists put a lot of pressure on themselves and their coworkers.
  • Fear of not being good enough. Those with this fear tend to be insecure, intensely focused on their image, and desperate to prove their worth. This may come at a cost to their authenticity, not to mention their capacity for joy. What’s more, because their core motivations relate to how they are seen by others, they tend to fudge facts.
  • Fear of missing out. This drives leaders to constantly seek new opportunities and experiences. The downside? It can scatter their attention and muddy their decisions. As they pursue multiple interests at once, they leave their teams frustrated and confused. Deep down, executives with this fear are afraid of being alone.
  • Fear of being victimized or taken advantage of. Those suffering from this fear push for truth and justice; they are afraid of being seen as weak. They feel the need to win every battle, and can be defensive and controlling.

Protecting oneself from the imagined consequences of these fears can be helpful — pushing you to work harder and achieve more. But there is also, often, a sizable cost.

The experience of Suzanne (not her real name, but indeed a real person), a highly successful strategy consultant we met 10 years into her career, illustrates both the costs of unacknowledged fear, and the benefits of reconciling it.

Suzanne was a shining example to her peers — a top-performer known for delivering solid results on every project she’d taken on. Nonetheless, she believed her career had stalled, and some feedback she’d received gave her a clue as to why. A 360-degree review revealed her team didn’t trust her. That hit Suzanne hard because she’d considered herself a good boss, which was very important to her. What’s more, her personal relationships were suffering. Eager to always make a good impression, she had become an expert in putting a positive spin on clearly questionable events. No wonder her team was wary. Those two revelations were sufficient motivation to take on the hard job of change.

What others didn’t see — and what Suzanne had to contend with — was her underlying anxiety that she might fail, and how that anxiety was crippling her emotionally. She suffered from the fear of not being good enough. While many admired her, they said she seemed more interested in her own image than anything else, and lacked the capacity to care about others. The truth was that she had failed to make true connections because she was overly committed to protecting her own reputation.

Step 1: Acknowledge the fear. As a high achiever, Suzanne cared deeply about how her colleagues saw her. True to her nature, she set about to rectify her behavior. Her first step was to understand and admit her fear — not an easy thing to do. After all, she had done a great job of covering it up for years. On the surface she was very polished and put together, and extremely smart and successful. But cracks were beginning to appear.

In the acknowledge phase, we suggest that people take a close look at their history and examine the choices they’ve made and the reasons behind those choices. In Suzanne’s self-examination, she reached back to the most meaningful times of her life, beginning with high school and onwards through college and her professional life. Looking at the activities she’d chosen, she realized she had not put much effort into pursuing her own interests but rather activities in which she was certain she could excel.

Desperate to project an image of excellence, she lost her sense of self along the way. Recognizing this was a real awakening for Suzanne. She needed to reconsider who she was and what she wanted. Only then would she be able to let her true self come through and make genuine connections.

Step 2: Interrogate the fear to better understand it. Suzanne had to critically assess her current reality and look at the costs of her fear. After learning her team didn’t trust her, she had to face the fact that by constantly comparing herself to others and trying to look good above all, she’d lost touch with what actually mattered to her and how her behavior affected others.

So she spent time considering what it would mean if she failed at something. Who would she be? What would happen if she took on a project that didn’t play to her strengths? What if she delivered B+ work? Her instinct told her that failure would leave her with nothing, so she had to acknowledge that instinct but move past it. Other people make mistakes and they move on. They didn’t walk around with a scarlet F on their chests. As Suzanne began to see how her unfounded fears were worsening her behavior, she began to understand she didn’t have to meet an unattainable ideal.

Step 3: Choose a different course of action. This is about deciding what to do next and making commitments —understanding what truly matters to you. Some questions to ask yourself:

  • If I objectively evaluate my actions and behavior right now, what would the evidence say that I’m committed to?
  • How does this differ from what I say I want?
  • Practically speaking, if my desires and actions are not fully aligned, what does that indicate?

Suzanne held honesty as one of her core values. But as she asked these questions, she realized her behavior didn’t always match up with it. Similarly, she cared about relationships with colleagues. But in her desire to impress, she’d become less trustworthy, which pushed people away. She made a conscious choice to work hard on aligning her values and behaviors more closely.

Step 4: Act on that choice — in a way that aligns with your values. The last step is to deliver on your commitments. For Suzanne, part of this was taking on projects that weren’t a slam dunk — challenging herself to learn from a place of uncertainty. She also made efforts to get in touch with what sheliked, rather than choose things that other people admired. One useful exercise she did was to walk through museums and identify paintings that she liked and why, without asking anyone else’s opinion. It sounds simple, but it was no easy task for Suzanne, accustomed as she was to pleasing others.

Suzanne’s arduous self-examination of her fears has turned her life around. It drove her to make positive changes, both personally and professionally. Ten years on, her career has taken off. She received a series of promotions, taking on bigger and more important projects.

She eventually went on to form her own successful firm, and is regarded as a highly effective and genuine leader. Her employees love her. In the last decade, she’s evolved her leadership style to the point where she is now known for being trustworthy and selfless.

When leaders are controlled by fear — or when they pretend it’s not there — they can be crippled by it and become powerless. None of us will ever be free from fear, and it’s unrealistic to expect that we can always put our fears in their place. But even when the stakes of admitting their fears feel high, leaders are always more effective when they are candid and do the hard work to right-size their fears.

What’s more, when executives open up about their fears, it makes them much more relatable and approachable as leaders. That will make any executive team far more cohesive and effective, and ultimately the business they run stronger and more successful.

m our work, we’ve created a four-step process of rigorous self-reflection that countless executives have used to understand their fears and become better leaders.

We’ll explain the process and how one leader used it to turn around her career. But before we do, here are the fears we’ve found that most commonly plague executives. (These fears are generally tied to personality types as defined by the Enneagram personality model; you can find a more complete discussion of the fears and personality types in our whitepaper on the topic.) They are:

  • Fear of being wrong. People harboring this fear are extremely focused on rules, ethics, standards, and “right vs. wrong.” They are deeply afraid of making a choice that will later prove to be “objectively” wrong. These perfectionists put a lot of pressure on themselves and their coworkers.
  • Fear of not being good enough. Those with this fear tend to be insecure, intensely focused on their image, and desperate to prove their worth. This may come at a cost to their authenticity, not to mention their capacity for joy. What’s more, because their core motivations relate to how they are seen by others, they tend to fudge facts.
  • Fear of missing out. This drives leaders to constantly seek new opportunities and experiences. The downside? It can scatter their attention and muddy their decisions. As they pursue multiple interests at once, they leave their teams frustrated and confused. Deep down, executives with this fear are afraid of being alone.
  • Fear of being victimized or taken advantage of. Those suffering from this fear push for truth and justice; they are afraid of being seen as weak. They feel the need to win every battle, and can be defensive and controlling.

Protecting oneself from the imagined consequences of these fears can be helpful — pushing you to work harder and achieve more. But there is also, often, a sizable cost.

The experience of Suzanne (not her real name, but indeed a real person), a highly successful strategy consultant we met 10 years into her career, illustrates both the costs of unacknowledged fear, and the benefits of reconciling it.

Suzanne was a shining example to her peers — a top-performer known for delivering solid results on every project she’d taken on. Nonetheless, she believed her career had stalled, and some feedback she’d received gave her a clue as to why. A 360-degree review revealed her team didn’t trust her. That hit Suzanne hard because she’d considered herself a good boss, which was very important to her. What’s more, her personal relationships were suffering. Eager to always make a good impression, she had become an expert in putting a positive spin on clearly questionable events. No wonder her team was wary. Those two revelations were sufficient motivation to take on the hard job of change.

What others didn’t see — and what Suzanne had to contend with — was her underlying anxiety that she might fail, and how that anxiety was crippling her emotionally. She suffered from the fear of not being good enough. While many admired her, they said she seemed more interested in her own image than anything else, and lacked the capacity to care about others. The truth was that she had failed to make true connections because she was overly committed to protecting her own reputation.

Step 1: Acknowledge the fear. As a high achiever, Suzanne cared deeply about how her colleagues saw her. True to her nature, she set about to rectify her behavior. Her first step was to understand and admit her fear — not an easy thing to do. After all, she had done a great job of covering it up for years. On the surface she was very polished and put together, and extremely smart and successful. But cracks were beginning to appear.

In the acknowledge phase, we suggest that people take a close look at their history and examine the choices they’ve made and the reasons behind those choices. In Suzanne’s self-examination, she reached back to the most meaningful times of her life, beginning with high school and onwards through college and her professional life. Looking at the activities she’d chosen, she realized she had not put much effort into pursuing her own interests but rather activities in which she was certain she could excel.

Desperate to project an image of excellence, she lost her sense of self along the way. Recognizing this was a real awakening for Suzanne. She needed to reconsider who she was and what she wanted. Only then would she be able to let her true self come through and make genuine connections.

Step 2: Interrogate the fear to better understand it. Suzanne had to critically assess her current reality and look at the costs of her fear. After learning her team didn’t trust her, she had to face the fact that by constantly comparing herself to others and trying to look good above all, she’d lost touch with what actually mattered to her and how her behavior affected others.

So she spent time considering what it would mean if she failed at something. Who would she be? What would happen if she took on a project that didn’t play to her strengths? What if she delivered B+ work? Her instinct told her that failure would leave her with nothing, so she had to acknowledge that instinct but move past it. Other people make mistakes and they move on. They didn’t walk around with a scarlet F on their chests. As Suzanne began to see how her unfounded fears were worsening her behavior, she began to understand she didn’t have to meet an unattainable ideal.

Step 3: Choose a different course of action. This is about deciding what to do next and making commitments —understanding what truly matters to you. Some questions to ask yourself:

  • If I objectively evaluate my actions and behavior right now, what would the evidence say that I’m committed to?
  • How does this differ from what I say I want?
  • Practically speaking, if my desires and actions are not fully aligned, what does that indicate?

Suzanne held honesty as one of her core values. But as she asked these questions, she realized her behavior didn’t always match up with it. Similarly, she cared about relationships with colleagues. But in her desire to impress, she’d become less trustworthy, which pushed people away. She made a conscious choice to work hard on aligning her values and behaviors more closely.

Step 4: Act on that choice — in a way that aligns with your values. The last step is to deliver on your commitments. For Suzanne, part of this was taking on projects that weren’t a slam dunk — challenging herself to learn from a place of uncertainty. She also made efforts to get in touch with what sheliked, rather than choose things that other people admired. One useful exercise she did was to walk through museums and identify paintings that she liked and why, without asking anyone else’s opinion. It sounds simple, but it was no easy task for Suzanne, accustomed as she was to pleasing others.

Suzanne’s arduous self-examination of her fears has turned her life around. It drove her to make positive changes, both personally and professionally. Ten years on, her career has taken off. She received a series of promotions, taking on bigger and more important projects.

She eventually went on to form her own successful firm, and is regarded as a highly effective and genuine leader. Her employees love her. In the last decade, she’s evolved her leadership style to the point where she is now known for being trustworthy and selfless.

When leaders are controlled by fear — or when they pretend it’s not there — they can be crippled by it and become powerless. None of us will ever be free from fear, and it’s unrealistic to expect that we can always put our fears in their place. But even when the stakes of admitting their fears feel high, leaders are always more effective when they are candid and do the hard work to right-size their fears.

What’s more, when executives open up about their fears, it makes them much more relatable and approachable as leaders. That will make any executive team far more cohesive and effective, and ultimately the business they run stronger and more successful.