I am a long-time subscriber to the Financial Times. I may move from time to time and change local papers, but the FT is always with me. One of the things I look forward to the most in their weekend paper is the “Lunch with the FT” interview, which this week was with Carol Dweck, the psychologist whose work led the world to better understand children’s motivations, and who gave us the concept of the “growth mindset”.

While the entire interview was delightful, one section jumped out at me:

Just as the original studies showed that fixed-mindset students resorted to cheating to live up to their perceived brilliance, Dweck says new work suggests fixed-mindset companies identified “more cheating, hoarding of information, keeping secrets [and] toxic competition.”

This is one of those scientific findings that is brilliant but also rings true as common sense. Growing up we all knew the kid who had a rigid image of him- or herself, and was more than willing to bend a few rules to perpetuate that image. That such behavior extends to adults and companies is not surprising. Dweck of course nodded to this concept long ago in her New Yorker piece The Talent Myth, which used Enron as an example of talent pursuit gone wrong, but also highlighted the ways things fall apart when one is part of a group convinced of its own cleverness. “The Smartest Guys In The Room” are not always the best ones.

Such a mindset can permeate not only a company but also an entire country or culture. It doesn’t take much effort to look around and quickly come up with a list of things we humans encounter daily that demonstrate the difference between fixed and growth mindsets:

  • Racism – the notion that our intellectual, cultural and moral value and potential is determined by ethnicity and cannot be changed by our own will and effort
  • Sexism – the notion that our intellectual, cultural and moral value and potential is determined by biological gender and cannot be changed by our own will and effort
  • Nationalism – the notion that our intellectual, cultural and moral value and potential is determined by country of birth and cannot be changed by our own will and effort

Such a list could be much longer, of course. The application of this idea that interests me today, however, is its relationship to my work in West Africa. I have written about building a team in that part of the world, and have also written about what that work has taught me about what countries in the region should do to begin to address their housing deficits. But I have yet to write about this mindset issue – not because I have not thought about it, but because it is a delicate topic, and until reading the FT interview with Dweck while at the same time reflecting on last week’s Investing For Good conference in New York, I was unsure of how to frame it.

Our work building homes in West Africa – and raising money outside West Africa to grow the business – is challenging. Of course, many people find challenge in their work, but ours may be rare in the way that it pushes against fixed mindsets in two completely different industries in completely different parts of the world.

In our work on the ground in Guinea, we have encountered a few fixed mindset challenges, including:

  • “We’ve always done it this way”
  • “Everybody else does it this way”
  • Some workers expect to execute orders rather than innovate and take responsibility

I spoke to the ways we have addressed these challenges on our team in my recent article on the topic; we actively encourage and promote autonomy, mastery, purpose, connection, and the ability to reduce (rather than increase) stress among your colleagues. Each of these elements draws on the team member’s ability to see themselves as someone improvable – and improving – across multiple dimensions.

This approach has yielded results: sales growth means we are running out of land in Guinea, and we are increasingly in demand by governments of neighboring countries in the region. To respond, we need to staff up, build a land bank, and invest in new technology – which means we need to raise capital. It will come as no surprise that we also face the fixed mindset hurdle in our work raising funds from private investors to grow our business in West Africa. Some of the fixed mindset objections from individuals and institutions we have seen include (translations mine):

  • Africa is a violent and dangerous place – your (x)% return is not high enough to compensate for the risk. (Translation: All of Africa – the second largest continent in the world – must be exactly like the worst parts of it I have seen on the news from time to time …). This is incorrect.
  • Real estate development is not a humanitarian activity – your (x)% return is so high it must reflect your mistreatment of workers, the environment, your customers, etc. (Translation: Homebuilding cannot be done in a responsible manner that creates jobs, protects the environment, creates access to potable water, develops opportunities for women, trains local subcontractors and suppliers, introduces new construction technology, puts in place better waste management systems, brings foreign direct investment into the country, improves the local infrastructure, AND creates so much value for the housing-starved local and diaspora populations that one makes a handsome profit building there – i.e., if you are not losing massive amounts of money in this business you must be a slum lord.) This is also incorrect.

Of course, a little African homebuilder started by a couple of former Peace Corps volunteers can’t change the prevailing global view of Africa as an investment destination. Fortunately, we see a growth mindset emerging when it comes to global perceptions of doing business in Africa. A pair of Jacks have been making news lately about their Africa passions:

  • Jack Dorsey of Twitter plans to move to Africa for six months out of the year in the wake of his recent visit there. “Africa will define the future,” he Tweeted. He’s right.
  • Jack Ma of Alibaba was on the continent recently as well, and said “Every time I come to Africa, the most impressive thing is the young people. On their face you see the energy, the passion, the confidence for the future … Today, most entrepreneurs in Africa are like those in China 20 years ago … they don’t wait: they create conditions.” He’s right too.

Jack Ma, interestingly, also has things to say about those whose ample endowments (and perceptions of their own wisdom) may make them pursue unproductive paths and forego other more valuable ones. Onstage with Masayoshi Son (the backer of WeWork and Uber) in Tokyo recently, Ma said bluntly, “You don’t make mistakes when you don’t have money … when you have too much money, you will make a lot of mistakes.”

I do believe that as one moves one’s company and country from a fixed mindset to a growth mindset one will experience less cheating, less hoarding of information, less keeping secrets and less toxic competition. In the West African context with which I am familiar, cheating can manifest as petty (or large) corruption, and hoarding of information / keeping secrets can manifest as bureaucratic inertia (in both public and private sector).

Fortunately, many countries on the continent (and more than a few companies like ours) are making strides against corruption. As Wessou, our country manager in Guinea likes to say, “Il n’y a pas de corrompu sans corrupteur” (there are no corrupt officials without private sector actors willing to corrupt them). Perceptions are changing: From 2012 to 2018, movement in the Transparency International Corruption Perceptions Index was generally positive in West Africa: Guinea improved from 24 to 28; Senegal from 36 to 45; Côte d’Ivoire from 29 to 35; etc. And things are changing for the better with respect to both efficient governance and land title verification.

In addition, many forward-thinking investors are shaking off the fixed mindset and taking a hard look at the difference they can make to the world and to their portfolio by supporting housing in West Africa. Our current capital raise has generated significant interest and commitments from across the spectrum of individual investors and institutions. Investors are increasingly prepared to approach each day with the spirit of the advice Dweck gives to her first year seminar students at Stanford: “Your new job starts today . . . Your new job is to use the incredible resources here to become the person you want to be, the person who will make a real contribution to the world.”

This is also happening across the sub-Saharan continent as global leaders and international investors flock to the region. African individuals, companies and governments are understanding more deeply the value of the resources they control, and the ways they can deploy those resources to become the person / company / country they want to be – one that will make a real contribution to the world. It’s an indescribable thrill to be able to observe this transformation up close.

Robert Hornsby, Co-Founder and CFO

American Homebuilders of West Africa

December 2019