Recent research from the National Center for the Middle Market (NCMM) found there are four distinct decision-making styles for strategic leaders in the middle market, each with impacts on performance and growth. Doug Farren, executive director of the NCMM, is back with the Middle Market Growth podcast to talk about those decision-making styles and what they mean for business leaders and investors.

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Read a transcript of the podcast below.

Middle Market Growth: Welcome to the Middle Market Growth Conversations podcast, an ACG production, I’m Carolyn Vallejo. Here at ACG, we’re always curious to learn what drives performance in the middle market today. And new research finds a powerful driver in the decision-making mindsets of strategic leaders. Here to share more about that research and what it means for middle-market business leaders and investors is Doug Farren, executive director of the National Center for the Middle Market. Doug, welcome back to the podcast.

Doug Farren: Thanks, Carolyn. It’s great to be back.

MMG: So, you last joined us on the podcast about six months ago; you spoke with my colleague Katie Maloney. But for any new listeners who may not know you, can you share a little bit about your role at the National Center for the Middle Market?

DF: Absolutely. So as executive director, I oversee all of the activities of the center. We were launched about 14 and a half years ago, and are based here at the Ohio State University, Fisher College of Business. And so we really, we think about our activities in three large buckets. One is research on the US middle market. We collect a lot of data. Most people are mainly familiar with our middle market indicator, which is a semi-annual survey of a thousand middle market companies across the country. We’ve been doing that since 2012. But we also do special projects like the one we’re going to talk about today, where we find industry partners who, you know, bring a certain amount of subject matter expertise to the project. And then we go really deep on an issue of importance to the middle market. The second thing we do is outreach and engagement. So partnerships like ACG have been incredibly valuable for the center because that allows us to take these insights out to different parts of the country. And, you know, we’re typically traveling to 30 or 40 events a year and, and really presenting on the middle market and educating a variety of audiences on kind of the big issues that are happening and, and why these businesses are so important. And then the last bucket of activity that we do is education. So, you know, being here at a business school, it’s always been important for us to think about how we take all these insights and create curriculum out of it. And for many years, that was for undergraduate students here at Fisher College of Business. I taught a middle-market class that over 10 years had about 200 students go through that, which was really fun. And more recently we’ve been focused on executive education. So taking this content and really training middle-market companies, both the, the leaders both here in Ohio and, you know, soon nationally on how they can best scale their business. So it’s a really, you know, exciting platform. And again, we’re the only middle market center of our kind in the country. So it’s been a really fun ride.

MMG: I’m excited to get into our main topic today, but before we do that, I want to know: If you could learn any new skill in 2026, what would that be?

DF: Well, I mean, the cliche thing would be to become more proficient at AI. You know, like everyone else, I’ve been keeping my eye on it and actually, you know, we have the benefit here being at a university of having some courses that have been offered. So I’ve, I’ve taken some prompting courses and definitely want to get better on that. But I think more on a personal side from a skillset standpoint I’ve been trying to learn Italian. Just kind of adding a new language. Have had a chance to have a few trips to Italy for personal reasons, but also have taken OSU students there for four different trips. And every time I leave I’ve told myself, next time I come back, I want to become a little bit more fluent, at least conversationally in language. So yeah, that’s one that I continue to work on.

MMG: Learning new languages is always a great skill for sure.

DF: Absolutely.

MMG: All right, well, let’s get into the main topic today. So NCMM and CBiz collaborated on a special report, it was released in March, and it really dove into how decision-making mindsets are shaping middle-market performance. So for our listeners, that full report is available at NCMM’s website, middlemarketcenter.org. Doug, can you first give us kind of a high-level overview of this research and maybe some of your main findings?

DF: Yeah, happy to do that. So we started having conversations with CBiz, who is a leading national professional services firm, oh, probably in the summer of 2025. They are an Ohio-based company. They’re, you know, just a couple hours up the road near Cleveland. And so we met with their leadership team, and, you know, we’re thinking about ways that we might be able to collaborate. And we landed on this research study that really would allow us to understand how middle market leaders are making decisions, particularly as we all well know that when they’re faced with resource constraints, so what are those trade-offs that are required on a daily basis that allows them to really, you know, think about managing growth, profitability, risk innovation, their workforce, regulatory, I mean, these are issues that all businesses face, but you know, we have found that there are some distinct differences in the middle markets, especially when you think about comparing them to either small businesses or startups, and then enterprise organizations. So working with CBiz. And then we also had some expertise from some of our strategy faculty here at the college. We collected survey data from 400 leaders at middle market companies across the country, all geographies, all sizes. But we really focused on three key industry sectors. Those would be construction, real estate, and consumer and industrial products. And what we found was that there are many factors that contribute to middle market success, and it’s really innovation-oriented companies that are often associated with the strongest growth. However, execution clarity, you know, communication from the top down to the entire team decisive decision making are equally important. And, and the thing that really came out of this, we were able to take all the data and bucket into four, what we call distinct decision-making mindsets. So really kind of like personas that emerged out of this, some of these personas, you know, emphasize protecting profits and being resilient. Others maybe a little bit more aggressive on growth and expansion. But each, each of the four kind of reflects a balance between you know, the very real short term pressures that a lot of these middle market businesses face, but also their longer-term ambitions.

MMG: What are those four mindsets that, that you’ve kind of defined?

DF: Yeah, so it was an interesting breakout. So, you know using a set of questions that, and, and, you know, I, I can talk about this later, but it was basically f you know, f forcing the respondent to say, what would you prioritize this over this, this over this? And those four buckets really kind of shook out in this way. So the first was the disciplined grower, roughly a third of the companies that we sampled fell into this category, mainly described by a very controlled, centrally managed leadership mindset when they think about expansion, oftentimes more long-term focused, definitely focused on profitability and maybe as compared to the other groups, had slower employment growth. So adding, you know, people at a slower rate. So again, discipline grower about a third, another third were what we call performance protectors. So these are very cautious decision makers. They’re probably going to have a more robust risk management mindset, tools, you know, mitigation, protection, things like that. More of a balanced approach. When they think about their goals, they are more likely to deprioritize innovation, growth, and perhaps the workforce. So some, those are some of the defining characteristics. The third group we call centralized innovators, and this was about 18% or so of the businesses, heavy investment in talent and technology, still having, you know, as the name implies, a centralized decision-making process, but a little bit more focused on the future and much more confident about where their companies were heading. And then finally, at 17%, we had the last bucket, which we called the decentralized accelerator. And as that name would imply, these are the businesses that were very aggressive about prioritizing innovation, about how they scale. They’re probably more likely to invest in talent and empower those people in their teams to, to, to make their own decisions. Along with that, they’re going to accept higher levels of risk and maybe even shorter term margin pressures as a tradeoff to rapid growth. So those were the kind of the four categories of mindsets that we came up with.

MMG: Okay. So the disciplined grower, the performance protector, the centralized innovator, and the decentralized accelerator…is one of these four mindsets, the quote unquote right one, or are there certain mindsets that correlate with better outcomes?

DF: Yeah, that’s, it’s a great question, and that was one of the things that we wanted to understand. And I think the beauty of the middle market, and I’ve, I’ve seen this now, it’s going to be almost 15 years, I’ve, I’ve been at the center. There’s not a right, a single right one. As we’ve seen, for example, in our middle market indicator overall growth across the middle market, particularly as we think about, you know, since 2022 has averaged, you know, 12% year over year top line revenue growth. So what this research project really emphasized to us is it really comes down to the leadership team, the history and culture of the business, the goals that are associated with how it’s run, right? Like, so there are other factors that contribute. It’s not about being in one of these buckets, it’s, it’s more about separating them out into some of those other characteristics. Yes, decentralized accelerators are growing the fastest, but there are risks associated with that, right? Think about all the disruptions that we had in 2025, trade regulations, resulting supply chain issues. There are yes promises of really good technology that I think a lot of middle market companies are exploring and taking advantages of, but we’re also hearing that there’s challenges in implementing those. And then there’s always the competition for really good talent, and particularly talent that has the right skills. So those could all post threats to a company that may be overly aggressive. But again, regardless of the decision-making category, like none of that really matters if execution doesn’t match the ambition of the leadership team.

MMG: Tell me a little bit about what you found in terms of how the sector or the size of the business may interact with one of these four mindsets and any correlations there. You know, for example, are smaller companies more likely to have leaders that are performance protectors?

DF: Yeah, it’s, it’s a really good point. I mean, size does matter, right? We, in our, a lot of our work, we think about the middle market and kind of three segments. You’ve got the lower middle market, which for the center is, you know, generally businesses 10 million to 50 million. So they’ve grown out of that startup stage, they’re scaling, but they’re still very similar in structure and maybe decision making as, as a small business at the core, you’ve got kind that 50 million to a hundred million annual revenue bucket, and then the upper middle market is a hundred million to a billion. And so what that means is there are going to be different resource availabilities across those size range. So the upper middle market company, that scale could mean easier access to capital. They’re probably going to have more organizational bandwidth. They can absorb maybe shorter-term negative impacts at the expense of longer term in investment. Another thing is, like pursuing innovation. We’ve done some work over the years on innovation. And what we’ve found in the middle market is it’s about, you know, how much risk you want to take on, how many of these little bets do you want to place on innovation projects? And what I mean by that is, you know, say a $500 million company, they may have at any time, five or six innovation projects running, and if, you know, four of them don’t pan out, they can absorb that. Whereas a lower middle market company, they may only be able to take on, you know, one, one of those projects or bets annually. So it’s a kind of a different math equation there when you think about innovation. But let’s just think about the three buckets. So at the lower end, yes, more focused on protecting profits, thinking about cash flow, managing risk, they need to keep their businesses going and running the upper, much more focused on long-term growth, aggressive investment, as I mentioned earlier, particularly in these innovation projects and in technology in the core, that’s this transitional phase where you’re now, you’re balancing the growing operational pressures as a scaling business, but also thinking about how to best expand. And I want to emphasize that, you know, that’s not universal. Of course, we’ve seen, you know, lower middle market companies that have been very aggressive in growth, but oftentimes they feel the constraints of maybe capital or not having the right expertise on their team. And honestly, that’s where we’ve seen private equity take a role, for instance, they can come in and provide not only the funding, but also access to some of that you know, intelligence best practices, maybe sharing what other companies in their industry have been doing. So yeah, it really kind of runs, runs the, the gamut, but that’s what we are seeing in this work.

MMG: Now, you talked a little bit just now about the different priorities of each of these individual mindsets, and I’m curious what that kind of looks like when put into practice when making decisions. So how do these four mindsets impact strategic decision making?

DF: You know, this is new work and clearly as this becomes you know, shared and, and absorbed by our di different audiences, it’ll give companies a chance to kind of think about where they fit into these buckets. But, you know, I would say even before they do that, it’s just about mainly knowing who they are and what type of business they want, want to run. As an example, we’ve worked for years with a local manufacturing company here in the central Ohio area, and the CEO has this motto that, and it’s, if you’re not growing, you’re dying. So that motto from him personally kind of drives everything that that business does. They think about, you know, m and a expansions. They think about expanding internationally, of course, they’re very diligent. They, they are very disciplined when it comes to evaluating the decisions they make. They vet those decisions. They have, you know, various assessments and things that they go through, but oftentimes they also look to trusted advisors to do that could be their banker, their lawyer, their accountant. And so, yes, it’s important to make these decisions and, and the mindsets are going to have an influence, but there’s also going to be outside factors that can help in that decision making as well. AI is another great example, right? We’re seeing rapid utilization of AI across the middle market, but we’re also seeing pretty significant variations on how that’s happening across different industries and also across different size companies. I mean, ones that work more closely with a lot of data, you know, I’m thinking about financial services, healthcare companies and particularly those, you know, as I mentioned earlier in the, in the upper end of the middle market, tend to be a little bit more aggressive in their use of AI. So at the end of the day, it’s about figuring out a use case, running some pilots, and then making investments and, and kind of impacting, you know, how that decision panned out. And then thinking about how it may change going forward in under similar circumstances.

MMG: One finding from this report that I think is interesting is about how leaders approach tradeoffs when they’re making decisions—for example, choosing between growth and profitability. Can you tell me about what the research showed about how these different mindsets decide on which tradeoffs to make?

DF: Yeah, so one of the things that we consistently saw across mindset is that growth tends to rank as a top three goal regardless of, you know, kind of what bucket they fall into. But there are a lot of other factors that varied greatly across the different mindsets. So, you know, we looked at issues like competition talent, how they think about their workforce market uncertainties the cost of capital as well as access to capital. Those had differences. The regulatory environment from which they operate, you know, I mentioned kind of three very broad categories of industry sectors that we targeted. But within that, a lot of nuances in terms of the regulations that they’re forced to operate under. Another one would be risk mitigation. So each group kind of had their own distinct views on how important each of those factors were and how to best manage them. So what I would say is, as a result of that, the actions that each of them take can vary quite a bit. So let’s look at some of the industry differences. For example, construction firms in the middle market would tend to focus more on increasing their efficiency operationally attracting and retaining talent, which that makes a ton of sense. I mean, that’s a very labor-intensive industry, so it would, you know, make a lot of sense that they would focus on that and reducing cost. So not, not a huge surprise there, but you compare them to real estate companies. Real estate companies in the middle market would tend to consider things like technology, how they expand into new markets as they make, you know, new real estate acquisitions and investments as well as developing their current talent. Finally, you’ve got consumer and industrial product companies who are a bit more focused on their margins, on how they grow sales and how they improve cash flow. And yet when you look at them as a whole, all of these businesses report relatively successful performance. When we, you know, when we look at their growth rates, both from a revenue standpoint, employment standpoint, and to the center, that just reinforces the fact that this is truly not a one size fits all way to think about it. There really is quite a bit of variation across a lot of the different demographics in the middle market.

MMG: One of the biggest pressures that businesses, frankly, of any kind, any industry, any size face today are, are cost pressures. You know, fuel costs of course are rising. It’s, it’s really top of mind for a lot of businesses right now. So I’m curious how decision-making mindsets play into how leaders cope with rising costs?

DF: Yeah, it’s a great question. You know, one of the data groupings in the survey was we, we had each respondent look at a, at a set of areas, and we asked these leaders how they would prioritize when faced with different decisions. So for example, one would be innovation versus risk, or another might be margin versus market share. And there was about a dozen of those. And in reality, that was the backbone behind how we created the four decision making categories. But what we saw when they were forced to choose, most companies were prioritizing accuracy, quality, and long-term value. But our split on a lot of the other dimensions, so to your question, Carolyn, about costs, 75% tell us that they would prioritize quality over cost, but 47% prioritize labor costs over employee workloads. So we know this is a real thing. I mean, these are daily issues and, and constraints and pressures that a lot of middle market companies are faced with. And you think about an area like raw materials, costs or cost of doing business. You know, last year we saw, you know, with all the tariff disruption and things that were going on, that decision making really came to the forefront. And it became a very challenging for a lot of middle market companies if they saw their cost of business rise, because now they were paying more for, you know, raw materials or things like that. What do they do? Do they absorb that cost? Do they pass it on to their customer? Do they think about changing suppliers? Do they try to go to the negotiating table and ask for, you know, cost or price breaks in exchange for longer term agreement? Like, there were just so many factors. And so it’s been interesting for us to watch that. And then, you know, as I travel around the country, I meet with a lot of middle market leadership teams, and I’m always curious to just hear from them because it, I need that context to put up against this data that we collect to say, yes, this is a real thing. And these are kind of the pain points that these decision makers are struggling with regularly.

MMG: It’s an important point, I think that you mentioned going around the country, speaking with these businesses themselves, because it really puts these findings into context, it makes it real. That being said, to close out our interview today, I want to talk about any insights you can offer us into how understanding these mindsets can actually help middle market business leaders and their investors, put this into context, put this into real life for us. How can this information kind of help investors and business leaders make the right decisions to boost performance and promote growth in their business?

DF: So the NCMM has had a goal really ever since we launched about understanding how middle-market businesses operate in the face of challenges and opportunities that in reality are quite a bit different from a small business and certainly are different from enterprise companies. And as we’ve seen over the 14 years of work it varies quite a bit when you think about industries, when you think about disciplines and capabilities within these companies. And what’s exciting is that for a long time the center has been able to talk about the what, but this work actually gives us insights into the why, and that’s really important. So for the center, you know, it’s less important about prescribing what’s best. We’re not going to tell a company, oh, you’re a, you know accelerator and you need to be more protective of your profits. That that’s not what this is about. That’s going to depend kind of as I talked about earlier on the business and the leadership team and, and how they, they think about those things. We know that industry size, geography, even ownership type all play a role in this too. So those demographics of the business are important. You know, last year we did a, a private equity study with Future Standard, which found that operational levers are going to be the key to maximizing kind of private equity value going forward. So what these personas can really do is allow a company to maybe think about themselves, you know, say, okay, if I were to think about how I prioritize these certain things, you know, let’s do that somewhat of a self-assessment and then where would they fall? And that may surprise them, you know, some performance protectors may think of themselves as really strong innovators, but at the end of the day, that may not be true when compared to their peers. And you know, I think that’s what the center has tried to do as well, is that we know that peer information and best practices is really difficult to find in the middle market. So the more of this we can start to unpeel and share and allow for some of that comparison, I think it just adds really to more of the self-reflection and understanding about how and why some of these decisions get made. So, so for me, it’s really about just adding to that body of knowledge and hopefully the takeaways are, yeah, okay, bus, like you’re a business, where do you think you fall in these buckets? And that could be a really interesting exercise for a leadership team to think about.

MMG: Absolutely. Certainly illuminating findings from this report. Doug Farren from the National Center for the Middle Market, thank you again so much for coming back onto the podcast.

DF: Yeah, thanks for having me. You know, one other thing that I would share is we are working on an assessment tool. I kind of mentioned that, allowing a company to do kind of a self-assessment. So using that, you know, 12 or 13 questions scale, and I think CBiz is in the process of doing this as well. We hope to have something available that would allow companies to go in and kind of take that and it would place them into one of the four buckets. So we’re really excited about that. Because again, after reading the research, the obvious question might be, okay, so where are we? And then they could follow up with the tool that will give them that answer, and then they can start to have deeper discussions about the different priorities, priorities and decision-making trade-offs that they themselves make. So really excited about it. Really appreciate a CG and the support for the middle market and for the center. And it was a pleasure being on here today with you.

MMG: It’s always a pleasure, Doug, thank you so much.

DF: Thanks.

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