The Power of Mindset

CWS State of the Company Mindset

Last week we completed seven of our eleven State of the Company meetings that Tracy Hayes, the president of our sister company CWS Corporate Housing, and I have been doing for 26 years. And while it’s a lot of travel in a relatively short period of time, it’s something I look forward to every year. We visit all of the regions and discuss the year that transpired and what the plan is for the year ahead. 

Tracy Hayes Gary Carmell in North Carolina

Tracy Hayes and I in North Carolina

Team Treats

Team Treats

Chief Operating Officer Lisa Trapp and myself waiting for Tracy to go to dinner

Chief Operating Officer Lisa Trapp and I waiting for Tracy to go to dinner! We made the best of her being late.

Power of Mindset

We have a theme each year and this year it is the Power of Mindset. I’ve written about mindset in different forms over the years, particularly in the aftermath of Roneet’s passing, and how having certain mindsets has helped me immensely because without them I would have found it extremely difficult to get out of bed each morning given the magnitude of the loss.

One of the constant mindsets I’ve adopted over the years is based on the Stockdale Paradox which was articulated by Admiral James Stockdale who was the highest-ranking member of the United States military in the “Hanoi Hilton” prisoner of war facility during the Vietnam War. He was there for seven years and from that experience, he learned that to make it through any challenging situation one has to be both optimistic and realistic at the same time. You have to find reasons to be hopeful without being pie in the sky. Deal with reality but find the positive in it. I think this is one of the reasons why CWS has been able to survive and prosper for 50+ years. We have believed in the long-run growth potential and opportunities from investing in housing in the United States while also recognizing that when utilizing leverage in a cyclical business we have to be acutely aware of when excesses are developing so that we can avoid errors of optimism and being all in at the top with risky financial structures and getting too pessimistic towards the bottom and missing out on compelling opportunities. We always want to be on the playing field, which is another mindset. We are playing an infinite game, and not a finite game. A finite game is zero-sum in which the objective is for me to win and you to lose. An infinite game is one in which the objective is to keep playing.

You have to find reasons to be hopeful without being pie in the sky. Deal with reality but find the positive in it.Click To Tweet

A great example of this is NBA player Vince Carter who is in his 22nd year in the league, a record. During his career, he has been one of the most exciting and electric players in the league. Even at his age he still has that potential to light up a court but he purposely holds back because his goal is to keep playing. If he were playing a finite game then he would want to please the fans and win now at the expense of being in the league tomorrow. He knows his body and mind and no external force will get in the way of him managing himself in the way he knows how to sustain his longevity. It’s worth reading interviews with him to learn more about his approach to being able to sustain excellence for 22 years in a punishing sport.

From a business standpoint, Satya Nadella is probably the most public face for the power of mindset. After reading Carol Dweck’s book Mindset he was determined after taking over Microsoft in 2014 to shift the company from what he thought was a fixed mindset and transform it into a growth mindset. The former believes that people don’t change and what you see is what you get, while the latter adheres to the opposite belief that with the right leadership, motivation, support, process, systems, challenges, and learning opportunities, people can grow and adapt and produce amazing results, particularly if they are on functional and effective teams. Microsoft’s stock has more than tripled since he took over. Prior to his tenure, the stock was essentially flat for 13 years. Here is a chart of the stock price to show how explosive the appreciation has been under Nadella’s watch. Over $600 billion in value has been created since 2014. The company is now worth over $1 trillion.

Microsoft Stock Mindset

I recently read a Harvard Business Review article entitled To Be a Great Leader, You Need the Right Mindset. According to the authors,

Organizations worldwide spend roughly $356 billion on leadership development efforts. Yet, the BrandonHall Group, a human capital research and analyst firm that surveyed 329 organizations in 2013, found that 75% of the organizations rated their leadership development programs as not very effective. Why aren’t companies getting more bang for their leadership development buck? Our latest research suggests it’s likely because most leadership development efforts overlook a specific attribute that is foundational to how leaders think, learn, and behave: their mindsets.

So What is Mindset?

The authors define it as follows:

Mindsets are leaders’ mental lenses that dictate what information they take in and use to make sense of and navigate the situations they encounter. Simply, mindsets drive what leaders do and why.

Mindsets are leaders’ mental lenses that dictate what information they take in and use to make sense of and navigate the situations they encounter. Simply, mindsets drive what leaders do and why.Click To Tweet

At CWS we want to ensure that we have a mindset of weatherproofing the company. It’s been a great run for apartments over the last 10 years and the economy has not gone into a downturn since 2009 so we need to be prepared for a change in the weather and still be able to play offense when it happens. We think our exposure to variable-rate loans will help us in this regard in that if there is a downturn we would expect short-term interest rates to drop and have this spillover to Libor, This would lower our interest costs and help offset revenue declines that may occur during recessionary conditions.

At the same time, we are still optimistic about apartments for many reasons that I’ve written about over the years. It’s also more competitive to buy apartments given the amount of capital that is out there on top of the increased competition from new development. Thus, we are right in the heart of the Stockdale Paradox. We have to be realistic that times might get tougher and yet remain optimistic because we are in a very compelling business for the long run and we think the risk-reward relationship is still selectively favorable for certain acquisitions and developments. We intend to stay on the field.

I will wrap it up by giving kudos to one of our Assistant Community Directors in the Raleigh area who puts up motivational phrases in her office every month. The one I saw last week was the perfect example of a powerful mindset and one that I think represents CWS well.

It said:

Tough times don’t last

Tough teams do


One comment on “The Power of Mindset
  1. Mark Skowronski says:

    Mindset is a corrolary of Confirmation Bias (or is it the other way around?).

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