Don't Let A Scarcity Mindset Derail Your Success
Authored by: Susan Van Klink
Chief Executive Officer, Susan Van Klink Consulting and Advisory
In my coaching practice, I work with executives with a variety of mindsets.
The majority of those who have made it to the C-suite display some combination of the six mindsets that corporate psychologists believe are crucial to success:
Growth (versus Fixed)
Self-determination (versus Fatalistic)
Resilience (versus Defeatism)
Win-win (versus Zero-sum)
Serendipity (versus Zemblanity)
Abundance (versus Scarcity)
In challenging economic times, it can be harder to hold onto our Serendipity (the belief that we are lucky and that things are always working out for us) and Abundance (the belief that there are enough resources and successes for everyone) mindsets -- if we even had them in the first place. Thoughts like "I don't know how I'm going to make ends meet/make payroll/ have enough runway to outlast this recession" or “Nobody's buying anything and I don't know how we’re going to meet our revenue goals” can dominate our thinking.
If you find yourself thinking these thoughts and/or are fearful and anxious about not having enough, you may be struggling with a scarcity mindset, which can be defined as “a psychological perspective in which an individual or organization views resources, opportunities, and possibilities as limited or scarce”.
At the individual contributor level, this can lead to defeatist thoughts, such as “No matter how hard I work, I’m never going to get ahead” -- which may, in turn, threaten personal productivity and engagement. But having a scarcity mindset at the executive or entrepreneur level can lead to behaviours that have a disruptive effect on the whole company.
Here are the four key risks you may encounter if you and/or your leadership allow a scarcity mindset to set in:
1. Limited Innovation and Risk-taking:
When executives and entrepreneurs operate from a scarcity mindset, they tend to focus on protecting and hoarding resources, rather than taking calculated risks and being innovative. This can lead to a conservative approach to decision-making, where creativity and experimentation are stifled. As research by Stankov et al. (2020) suggests, a scarcity mindset can hinder entrepreneurs’ willingness to take risks and pursue novel opportunities, thereby limiting innovation and hindering organization growth. And in my own personal experience, companies tend to pull back on go-to-market activities right when they should be leaning in to building market presence and awareness through a downturn, planting prospect seeds for when the growth comes back.
2. Short-Term Focus and Lack of Strategic Vision:
A scarcity mindset can also result in a short-term focus, where executives and entrepreneurs prioritize immediate gains over a long-term strategic vision. Scarcity mindset may lead to a myopic view of resources and opportunities, resulting in a narrow focus on short-term survival rather than long-term growth and sustainability. As highlighted in a study by Li et al. (2020), scarcity mindset-driven short-term focus can hinder strategic planning and limit organizations’ ability to adapt to changing environments, resulting in suboptimal outcomes. We see this, for example, in cosmetic lay-offs which are often used as a way for companies to demonstrate to their shareholders or stakeholders that they are proactively responding to market conditions – even when the lay-offs are not essential. The harm to a company in cutting its workforce before the cuts are actually required can be detrimental to its long-term growth, to its competitive advantage, and to the culture of trust necessary for high performance.
3. Fear of Failure, Loss Aversion, and Diminished Resilience:
A scarcity mindset often creates a fear of failure, loss aversion, and diminished resilience, where executives and entrepreneurs become overly cautious, fearing the consequences of making mistakes or losing resources. This can lead to a reluctance to take necessary risks, such as entering new markets, investing in new technologies, or exploring unconventional strategies. As cited in a study by Katona et al. (2019), loss aversion, driven by a scarcity mindset, can negatively impact decision-making in entrepreneurial contexts, leading to missed opportunities and stagnation. And a study by Gupta et al. (2019) highlighted that a scarcity mindset can limit entrepreneurial resilience, leading to decreased organizational performance. I have found that during difficult, recessionary times many of the executives I work with come to our sessions exhibiting the fight or flight reflex. The effect of this is that their logical abilities are reduced because their sympathetic nervous system is activated, often leading to tunnel vision and micromanagement.
4. Negative Organizational Culture and Employee Morale:
A scarcity mindset can impact organizational culture, leading to a negative work environment where fear, competition, and hoarding of resources prevail. This can create a toxic workplace culture, where employees feel anxious, insecure, and unsupported, leading to decreased motivation and productivity. As discussed in a study by Carnevale et al. (2018), a scarcity mindset among executives can trickle down to the organization’s culture and impact employee morale, collaboration, and overall performance.
So while it is important to be mindful of limited resources and manage accordingly, it is also essential to cultivate an abundance mindset as an executive or entrepreneur. This mindset can help leaders make informed decisions, take calculated risks, and promote a positive organizational culture.
Here are some steps that you can take for overcoming a scarcity mindset as an executive or entrepreneur and foster a positive and growth-oriented mindset that can lead to greater success:
1. Focus on Growth and Learning:
Emphasize a growth mindset, which is the belief that you can continually learn and develop new skills and abilities. Seek out references such as books, articles, or courses that promote a growth mindset and adopt a mindset of continuous improvement.
2. Embrace Abundance Mentality:
Shift your mindset from scarcity to abundance by recognizing that there are ample opportunities and resources available. Reframe challenges as opportunities for growth and learning, and approach problems with a solution-oriented mindset. Practice gratitude and acknowledge the abundance in your life, such as supportive relationships, skills, and experiences.
3. Foster a Collaborative Environment:
Encourage collaboration and cooperation among team members, partners, and stakeholders. Foster an inclusive and supportive culture that promotes sharing, cooperation, and mutual success. Avoid a zero-sum mentality and seek win-win solutions where everyone can benefit.
4. Set Realistic Goals:
Establish realistic and achievable goals that are based on a realistic assessment of available resources and opportunities. Avoid setting overly ambitious or unattainable goals that may lead to a scarcity mindset throughout the organization. Break down larger goals into smaller, manageable steps to create a sense of progress and accomplishment.
5. Cultivate a Positive Mindset:
Practice self-awareness and self-reflection to identify and challenge negative thought patterns that contribute to a scarcity mindset. Use references such as books, podcasts, or coaching to develop positive thinking habits, self-compassion, and resilience. Surround yourself with positive influences and support networks.
6. Take Calculated Risks:
Overcome the fear of failure or scarcity by taking calculated risks in your entrepreneurial or executive endeavors. Use references such as case studies, success stories, or mentors to learn from others' experiences and gather insights on risk management. Embrace failure as a valuable learning opportunity rather than a confirmation of scarcity.
7. Practice Strategic Resource Management:
Be strategic in managing your resources, such as time, money, and energy. Use references such as productivity tools, financial management strategies, and prioritization techniques to optimize your resource allocation. This can help you create a sense of abundance by utilizing your resources effectively.
8. Foster Innovation and Creativity:
Encourage a culture of innovation and creativity within your organization or entrepreneurial ventures. Embrace a mindset of abundance by believing that new ideas, solutions, and opportunities are limitless. Use references such as books, workshops, or brainstorming techniques to stimulate creativity and generate new possibilities.
9. Seek external help with a coach or a therapist:
Not everyone can overcome the impacts of a scarcity mindset on their own. If you find yourself unable to alleviate the symptoms through your own efforts, seek professional help to work through the elements of scarcity mindset that you’re experiencing.
Overcoming a scarcity mindset requires intentional effort and practice. By leveraging the nine strategies above, executives and entrepreneurs can overcome a scarcity mindset and create a more abundant and thriving mindset in their organizations and ventures.
Sue Van Klink is an executive coach with over 20 years of software leadership experience. She successfully navigated male-dominated cultures and held several C-suite roles before transitioning into self-employment. Susan is dedicated to helping clients achieve their dream careers and live their best work lives authentically. For any questions or inquiries, contact her via her website at https://susanvanklink.com/contact/ or via email at firstname.lastname@example.org