Carol Dweck is one of the leading researchers on motivation and mindset. She has a PhD from Yale University in 1972 and published Mindset in 2006.


The main thesis of the book is that there are two types of people in the world: those with a fixed mindset and those with a growth mindset. The book outlines a study done with children involving puzzles. One group was given easy puzzles to complete and their reactions monitored, and the same with another group that was given tough puzzles.

When the easy puzzle group completed their task one of two things happened when asked if they wanted another puzzle to take home. Either the children wanted to repeat the same easy puzzle and take it home, or they wanted a harder puzzle. In the challenging puzzle group, children were either motivated by the challenge or despaired at its difficulty. When asked if they would like a more challenging puzzle the motivated children were eager to play with a new puzzle at home!

The book looks at the truth about ability and accomplishment, the mindset of a champion, mindset in business and leadership, mindsets from parents, teachers, and coaches, and changing mindsets.

Key Themes


The key difference between those with a growth mindset and those with a fixed mindset was that those with a growth mindset found setbacks motivating. They saw it as an opportunity to learn and improve. Those with a fixed mindset found setbacks crushing as they saw it as a failure – they believed successful people didn’t need to put effort in or fail. People with a fixed mindset defined themselves by their successes or failures, and this could harm their sense of self-esteem and worth.

Fixed mindset

The fixed mindset assumes people are born with talent and that their talent or potential is fixed. You either have it or don’t. It is a broader expansion of the ‘nature versus nurture’ debate

Other comments can be harmful regardless of mindset and we have to be careful of criticisms. Julie Lynch wrote computer code in high school as her father and two older brothers worked in technology. Her teacher didn’t like the shortcut she took (despite the code working fine) and criticised her. Julie never wrote code again and instead became X.

The growth mindset

The growth mindsets assumes that people can change and grow and that their potential is unlimited. This is something I believe and especially when it comes to trading and investing. Anyone can do it, regardless of intellectual ability. The growth mindset seeks to learn from failure and sees failure as an opportunity to learn, rather than a crushing setback.

Nature versus Nurture

Despite the overwhelming evidences of ‘geniuses’ being distinctly ordinary children and some at the time believing they would ever amount to much, and that their success always has a single mutual factor of dedication and effort, we still revere the ‘naturals’. I believe this is because it gives us an excuse not to push out of our comfort zone and shine ourselves. Why bother putting your head above the parapet and risk ego damage if you know you don’t have it?

It’s difficult to believe that one  coach that cut Michael Jordan from the varsity squad. Yet, at the time, Michael just wasn’t good enough. His mother said that he had to discipline himself, and from then on he left the house at six in the morning to practice before school. Even when his team lost the last game of the season Michael stayed behind for hours to practice his shots – he was already preparing for the next season. Michael once said “the mental toughness and the heart is a lot stronger than some of the physical advantages you have”, and it is hard to disagree with him. People once believed that you could not physically train for golf, and then came along Tiger Woods with his workouts and strength routines, and then won every tournament there was to win. He knew that when he stepped onto the green it was highly unlikely his competitor had outworked him.

The key takeaway with all of the successful people mentioned in the book is that they all worked harder than their competition and applied this efficiently.

Enron and the culture of ‘talent’

It’s amazing to believe that the street lapped up Enron for so long looking back with hindsight, and yet this fraud was the Wall Street Darling for years. The book describes how Jeff Skilling and his egocentric fixed mindset used his smartness not to create value, but to intimidate. When financial analysts would question Skilling’s poor explanations, rather than explain he would say how obvious it was and contemptuously ask how they could not get it! In one quarterly conference call, an analyst commented that Enron was the only company that could not release a balance sheet or cash flow statement with their earnings. “Asshole”, was the response Skilling gave.

Skilling had such unquestionable belief in his own greatness he actually believed that his ideas created value, and therefore profit. In time, this was how the company came to be run, and is a great example of ‘tone at the top’. Enron went on to record millions of dollars in profit before they had actually generated the revenue or collected the cash. However, once the business had recorded the profit people stopped caring about the follow through. Eventually, the world did get it, and shareholders and employees who were putting their life savings into the company lost everything (I did have the pleasure of a guest lecture from CFO Andy Fastow when studying at university – I believe that he was genuinely remorseful about his actions, but that didn’t stop him charging $50,000+ per appearance, so don’t feel too sorry for him).

The importance of a CEO’s mindset

If a CEO does not have a growth mindset, then this will trickle down into the company’s culture and negatively affect it. A good example given is Lee Iacocca, who wanted to be the next Henry Ford at the Ford automobile company. However, he was eventually forced out, and this blindsided him as he had always thought himself as different when watching others be forced out. Getting fired from Ford actually helped him to achieve better things, and he became richer and more influential for it, but he still could not let go. When his second wife pointed this out to him, they soon divorced shortly after!

Iacocca implemented a series of success strategies at Chrysler to save it from the brink, reorganising the company, bringing in new models, and lobbying the government for a bailout. It was a brilliant turnaround, but the old fixed mindset came back to haunt Iacocca. He still needed to prove his continuing greatness and invested company money into furthering his own image and for short term Wall Street expectations, at the expensive of investing in continuing development that would have been more profitable for the company in the long run. He began to disapprove of new model developments, worried that other people would get the credit for them. When people questioned him, he tried to remove then. When the Japanese brought out new and better models, rather than rise to the challenge, Iacocca came out with even angrier tirades and excuses. Pay remained low and working conditions poor even in the good times, and when things began to falter again Iacocca spent $2 million renovating his corporate suite in the Waldorf.

Iacocca had the chance to materially change the automobile industry with his ideas and creativity, but ultimately his fixed mindset prevented him from doing so and he focussed on improving his own image in the eyes of others.

Cognitive therapy

In the 1960s a psychiatrist, Dr Aaron Beck, came to the realisation that it was his patients’ beliefs that’s were causing their problems. How they saw the world, or what they believed in, was causing them stress and unhappiness. Eventually, he was able to help patients identify and work with these beliefs, and so cognitive therapy was born. The key takeaway from this part of the book is that we should consistently monitor our beliefs and thoughts and make sure we are open to change. Especially in investing, changing our minds when the facts materially change is highly rewarding financially.

Process not results

An example of a student who is achieving almost perfect grades at school and excelling in music is given. The student suffers from ulcers and as it turns out the student is suffering from extreme stress because they are so focussed on the results and possible outcome. To alleviate this stress, the parents had to adapt and ensure that they praised the process, not the results. This taught the child that growing and learning was being rewarded, not the results gained. The child then began to play the flute without stress, and started to genuinely enjoy what she did. This increased her emotional involvement and furthered her learning but without all the unnecessary stress.

In investing, if we focus on the results then this will mean we are more likely to take on higher risk to achieve our targets. This is no different to firms pandering to Wall Street’s expectations for EPS and not focusing on building a sustainably profitable business. We should focus on getting better in our execution of our methods, and improve our methods too, and the results will follow.

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