In this week’s episode, Preston and Stig read a book that was highly recommended by billionaire Bill Gates. The name of the book is Mindset: The New Psychology of Success by Carol Dweck. Bill Gates says that through clever research studies and engaging writing, Dweck illuminates how our beliefs about our capabilities exert tremendous influence on how we learn and which paths we take in life.
Carol Dweck is a professor of psychology at Stanford University and is known for her work on motivation, personality traits, and development. The primary premise of her work is rooted in the idea of ability and where it comes from. Many people believe ability comes from natural skills opposed to hard work and continual learning – Dweck believes the opposite. More importantly, she suggests that when a person believes and encourages hard work over natural talent, numerous keystone habits and thinking occur that promote success. Although people might not be able to assess themselves well, they can conduct an analysis based on certain behaviors. Some of those ideas are what Preston and Stig discuss in the podcast.
If you would like to read our executive summary of Mindset by Carol Dweck, simply follow the link.
In this episode, you’ll learn:
- Why and how you should evolve from a fixed mindset to a growth mindset
- How ego stops your personal development and humility makes it grow
- Ask the investors: What would happen in the financial markets if everyone followed a value investing approach?
- Ask the investors: How does Stanley Druckenmiller use momentum investing to beat the market?
Summary of Mindset
If you would like to download the below summary of Mindset in .pdf format, follow the link.
Chapter 1: The mindsets
When Dweck was a young researcher, she was fascinated to explore how people perceived failure. While she expected her students to behave in a particular way, she was surprised to find that the children loved failure. As adults, we avoid failures for reasons best known to us, but children simply perceive failure as a way to expand their thinking and find different ways to improve. In other words, accepting things and limiting our thinking puts us in a “fixed mindset” whereas the hunger to grow beyond our limitations puts us in a “growth mindset.”
For instance, there are some of us who believe that things are meant to be the way they are. We usually convince ourselves to blame our fate and carry on with the belief that there’s nothing more to be done. But, on the other hand, there are many others who believe that even the bad cards they are dealt with serve as a starting point to grow. This particular growth mindset tears apart our inhibitions or limitations and sets the stage for us to achieve things that seem impossible.
Even Tolstoy and Darwin weren’t considered extraordinary as children. Many experts assert that a child’s IQ determines whether he/she is going to be successful or not; however, instead of falling into a fixed mindset by relying on the IQ, it’s best to develop a growth mindset that offers more opportunities. At the end of the day, people with fixed mindsets tend to avoid risks, but they also fail since they don’t believe in any effort. Contrastingly, the ones with growth mindsets remain resilient, confront risks, and thrive even in tough circumstances.
Chapter 2: Inside the mindsets
The beauty of our mindset is that it can be changed. Even if you recognize that you have a fixed mindset, you can do better by converting it to a growth mindset. Remember that when you embrace a particular mindset, things change drastically, which is akin to entering a new world. While a fixed mindset indicates that success is all about constantly validating yourself, a growth mindset gives you the leniency to stretch yourself and learn more. It’s never too late to learn anything no matter how old you are. Intelligence isn’t a trait we possess when we are born; in fact, it’s a skill that’s honed as time goes by.
To evaluate whether you have a fixed or a growth mindset, imagine that you have an option to solve an easy or a tough puzzle. If you play safe and choose the easy one, you’re limiting your ability to learn, but on the other hand, if you’re all excited and ready to take a tough challenge you’re already on the right path because you’re allowing yourself to learn. The moment you stop doing things to prove yourself, you shed your fixed mindset and enter the growth mindset where you aren’t afraid of making mistakes.
So, how do you get rid of the fear of making mistakes? Imagine a toddler. He simply starts crawling and begins to walk one day. He isn’t bothered about what anybody would think of him. Similarly, you have to stop thinking about others judging you. It’s okay to make mistakes and correct them rather than completely avoiding it.
Chapter 3: The truth about ability and accomplishment
Of all the myths surrounding achievements and abilities, the most common one is that success is instantaneous. For instance, almost everyone thinks that Thomas Edison invented the light bulb out of the blue while tinkering alone in his laboratory. But, the truth is far different. Not only did he have assistants toiling around him, but it took years and years of hard work for him to get anywhere. Success doesn’t suddenly drop into your lap – the reality is that it takes a lot of hard work.
When Dweck measured the mindsets of children that were transitioning to high school, she realized that although both sets of children with fixed and growth mindsets had the same grades earlier, the ones with the fixed mindsets began to get worse. They had their own excuses that ranged from blaming themselves to the teacher. While their grades fell, the growth mindset children began to excel. Even when they did poorly in a few tests, they bounced back immediately.
So, what was the difference between the two sets of children? Well, there are many, but the most notable one is the effort. The fixed mindset children tried their best NOT to put any effort since they wanted their work to be as simple as possible. When faced with tough homework, they only memorized it as a way of preparation for the exam; however, on the other hand, the growth mindset children were more interested to understand and learn their mistakes so that they could push forward. Similarly, a big difference between growth and fixed mindset is that while the growth mindset takes charge of learning, the fixed mindset will do everything other than exerting some effort to be successful, and this yearning to learn more is the secret ingredient of success that sets the people with growth mindset apart.
Chapter 4: Sports: The mindset of a champion
In sports, the consensus is that the one who’s naturally talented will always win. Most coaches don’t even bother to find out if the athlete can work hard because they judge players on their “natural ability.” This ability makes the players unable to accept their deficiencies; in fact, they are terrified of their shortcomings because they feel that their natural talent needs no effort. But, what they don’t realize is that talent is not as important as the mindset.
Take the example of one the greatest boxers in history. Muhammad Ali was never a natural. Not only did he fail the measurements that determined the physique of a fighter, but he wasn’t naturally built to be a boxer. On the other hand, Sonny Liston had it all. His moves were perfect, and he was meant to win. However, Ali beat Liston, and the match is most remembered even today. All the odds were stacked against Ali, but he managed to win. How did he do it? Again, the answer is in his mindset. He did his homework by understanding everything about Liston and used it against him. Perhaps, his boxing ability was second to Liston, but his perfectly working brain and mindset gave him the edge against Liston. The proof is all there, but we still refuse to see it.
Chapter 5: Business: Mindset and leadership
When the corporate giant Enron crumbled in 2001, the world was shocked. They had the best talent and paid big bucks for it, yet they were defeated. Just like the sports industry, Enron had created a legacy of hiring people who were naturals in business. These “naturals” they hired were so terrified of appearing inadequate that they failed to learn more. Not only did they not bother to correct their mistakes, but they continued with the same mindset until Enron diminished.
Today, a fixed mindset continues to plague employees in companies. Never mind the employees, even the CEO tends to have a similar mindset. For instance, when Jim Collins and his team embarked on a 5-year study to take a look at why some companies became great, and others didn’t, the results spoke for themselves.
It was spectacular to note that the leaders of the companies made all the difference. These leaders weren’t pompous people who advertised themselves, but they were hard-working and believed in their work. Their growth mindset is what separated them from the rest of the lot. It’s not that they didn’t face challenges – of course, it was a tough job for them too – but what made them great leaders is that they accepted their mistakes and did their best to correct them and grow further. Their will to improve set the stage for them. Therefore, even if you make mistakes, remember that it is okay, but the only way to succeed is to learn from those mistakes and not repeat them in the future.
Chapter 6: Relationships: Mindsets in love (or not)
The right mindset is critical not only for a successful career, sports, or education, but it plays a big role in relationships too. It’s inevitable to face rejection and sadness when it comes to relationships; however, the way we handle it matters a lot. While fixed mindset people refuse to correct their wrongdoings and accept the reality, they tend to lean towards revenge. They usually feel judged and unloved and ultimately resent everything as feelings bottle up.
A stark contrast is highlighted with the growth mindset people. As humans, they also face rejection, but instead of blaming the other individual, they choose to accept it and move on. As soon as they let go of all of the pain, they come out stronger and ready to face the world. An important distinction between the two mindsets is noted mainly in the behavior. Since a fixed mindset provides no opportunity to heal wounds, they get stuck in a rut and prevent further satisfying relationships. However, a growth mindset allows an individual to forget and carry on with their lives.
Chapter 7: Parents, teachers, and coaches: Where do mindsets come from?
Every parent wants to see his/her child succeed because there’s nothing more satisfying than participating in your child’s development. Understandably, you want to encourage your child to excel, but have you ever thought about the fact that you could actually be pushing them towards a fixed mindset? For instance, if you constantly praise your child about how smart he is, he might think that he has to prove himself every time. Constant judgments and labels will only make him worry more, and if he doesn’t succeed, he might make the same mistake as others and think that he’s fit for nothing.
The more you tell your kid to be intelligent or smart or witty, the more she will be obsessed with it. Unknowingly, you’re harming your child’s intelligence and ability to perform by harping on his skill sets now and then. Of course, kids will be kids, and they will always bask in glory when you praise them, but as an adult, you need to remember that a momentary praise can hamper their mindsets more than you can ever imagine. Therefore, instead of searching for perfection, teach your child to love challenges, accept failure, learn, improve, and make mistakes because that will only sharpen their skills.
Chapter 8: Changing mindsets
The best part of a mindset is that you can change from a fixed to a growth mindset with some effort. By asking yourself a few questions, you can determine whether you have a growth or a fixed mindset. Remember not to judge yourself harshly because growth mindset doesn’t encourage you to label yourself in any way. On the contrary, it allows you to explore your own mistakes and correct them.
Also, there’s no such thing as natural talent. A writer, athlete or a businessman can’t be successful if he relies only on his apparent talent. For instance, we don’t laugh at babies when they don’t understand anything. We rightly observe that they need more time to understand and make sense of things, so why do we laugh at others when they are still trying to learn something?
The problem with the fixed mindset is that it traps you with no way out. The more you feel like you have to prove yourself, the more you detest challenges and ultimately place the blame on something or someone else. Therefore, try to change your mindset into a growth mindset and see how it can impact your life. Yes, change can be hard, but it can also be easy if you start afresh and work at it earnestly.
Books and Resources Mentioned in this Podcast
Carol Dweck’s book, Mindset – Read reviews of this book
Bill Gates’ endorsement of Mindset
Preston and Stig’s first part interview with Dr. Wesley Gray about Quantitative Momentum
Wesley Gray’s book, Quantitative Value – Read reviews of this book
Jim Rodgers’ book, Investment Biker – Read reviews of this book
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