Why Shopify Hires For Potential Not Talent And How You Can Too

While watching a podcast on Youtube last week, I had one of those aha moments.

The podcast was one of those random suggestions on Youtube and featured Tobi Lutke (Founder of Shopify). He was talking about how to build a team without access to a ‘primary’ talent market.

Silicon Valley is a well known primary talent market. The Bay area offers a high concentration of well qualified and talented people with specific skill sets. Drawn by the success of other startups, many people move there in the hopes of tasting their version of startup success.

Whereas Ottawa, where Tobi founded Shopify, is closer to a political hub for Canada. Ottawa is a centre for the arts and cultural institutions, national museums, etc. Most of the “talent” not interested in Arts or Politics moved out of the area.

Tobi mentioned that many best selling business books are written about building unicorn companies in primary talent markets. He thought many of the ‘best practices’ for building a team encouraged in business books are not relevant to the average business.

One of the common maxims you’ll come across is ‘hire people who are better than you at what you don’t like to do.’ When all the books, articles, blog posts, podcasts, etc., that we consume tells us this, it’s easy to believe that this is the only way to build a company.

The problem is these people are often too expensive or not available in a given talent pool.

Most of us don’t have the luxury of hiring from a ready-made workforce. We have to hire from talent pools with weaker skill sets but, importantly, find people with the same amount of potential.

Shopify realised this difference very early in their journey. Instead of focusing on hiring the best talent available, they built their business around hiring for potential and then developing that potential.

Fixed vs. Growth Mindsets

In secondary Talent pools, Tobi explains we need to create learner’s organisations. As much as a company aims to produce a product or service that people want and need. A company also needs to build a culture that encourages learning and development.

Shopify has created a hiring process that focuses on people’s potential rather than skill. 

They look for people that will far exceed the role they are currently hiring them for; they are looking for tomorrow’s company leaders.

Because their focus is to hire based on potential, then they need to hire people who have the capacity and want to reach their potential.

Shopify differentiates between two types of people when it comes to potential.

1. People with a fixed mindset
2. People with a growth mindset.

People with a fixed mindset “believe their qualities are fixed traits and, therefore, cannot change. These people document their intelligence and talents rather than working to develop and improve them. They also believe that talent alone leads to success, and effort is not required.” – Unknown.

While people with a growth mindset “have an underlying belief that their learning and intelligence can grow with time and experience. When people believe they can become smarter, they realize that their effort has an effect on their success, so they put in extra time, leading to higher achievement.” – Unknown.

We can see this in many areas of life.

My housemate is a personal trainer, and time again, he faces this difference in mindset. Some of his clients believe they are the way they are, and they can’t be helped. In comparison, others look forward to improving and watching their growth.

I’ve noticed people with a fixed mindset are on defence. “I can’t” or “I don’t have time” or “I’m not XYZ” There’s always a reason not to.

In contrast, people with a growth mindset are open to developing themselves and exploring new opportunities.

Fixed Mindset people make excuses and pass responsibility. Growth mindset people find a way and take responsibility.

Shopify internalised this distinction between people’s mindsets and used it to create ‘The Shopify Way.’ A system they have developed to hire for potential and develop that potential into world-class talent.

THE SHOPIFY WAY

This is how it works.

1. 1st Shopify hires for potential. They look for in others what others don’t see in themselves.

2. They focus on helping people develop a growth mindset, converting people from a fixed mindset to a growth mindset.

3. They give them a Shopify education: Company history, previous mistakes, employees who previously held a fixed mindset. Reasons for doing what the company does. Not just saying this is the way it is, and you need to accept it. Instead, they provide context and explanations so people can find the reason by themselves.

4. They develop skill sets. Only then do they focus on building a person’s necessary skills. “Shopify aims to help people fulfill their potential 10 – 20 years earlier than they otherwise would have”.

5. They support them with mentors. One skilled person is paired with five unskilled workers. Mentorship is essential in helping inexperienced employees navigate the nuances of personal growth. We don’t develop the same way and come unstuck at different points. We need people to support us through these moments.

6. Finally, they provide their employees with challenges designed to push their staff past what they thought was previously possible. “Hey, we have this problem, and it’s vital for our company’s continued success, and we think you’re the right person for the job.” They remove self-imposed boundaries that people put on themselves.

Hire for potential, unlock a growth mindset, and support the journey. That’s the Shopify way.

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