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May 12, 2006

Good to Great and the Social Sectors

In the very near future, ASAE & The Center will be releasing the not-for-profit version of Good to Great, which will be called Measures of Success. As a precursor to this project, Jim Collins published a short 35-page monograph called Good to Great and the Social Sectors. A few of my co-workers went to Digital Now, where Jim Collins was a speaker. They picked up some copies of this monograph and here’s a short review.

Collins identifies parallels in the social sector for five of the concepts laid out in Good to Great. They are:

1. Defining “Great” without business metrics. In the for-profit realm, money is both an input and an output. Businesses are judged to be great by how much profit they make and then distribute to shareholders over a long period of time. However, in the social sectors, money is only an input. There is no profit to return to shareholders. What makes a social sector organization great is its ability to deliver on its mission over the long term. Often times, delivering on mission is not empirically measurable. Nevertheless, in order to achieve greatness, we need to hold ourselves accountable to progress towards our mission. Therefore, in the social sector, we need to “assemble evidence – quantitative or qualitative – to track” our progress. Failure to do so is a lack of discipline.

2. Level 5 Leadership in a diffuse power structure. Executive leadership doesn’t cut it in the social sector. Legislative leadership is required, says Collins. “Legislative leadership relies more upon persuasion, political currency, and shared interests to create the conditions for the right decisions to happen.” Ironically, as the social sector increasingly looks to the business world for leadership models and talent, Collins says the best leaders may be found in the social sector where they learn and practice legislative leadership.

3. Getting the right people on the bus within social sector constraints. As for employees, the same principle applies, except that social sector institutions like tenure make it difficult to get the wrong people off. Collins says that because of this, it is even more critical for social sector leaders to evaluate their employees’ discipline early, so as not to find themselves two or three years down the road with a tenured employee with no motivation. Collins also applies this concept to volunteers. “[U]sing incentives to motivate otherwise unmotivated or undisciplined people,” including volunteers, is a recipe for mediocrity. Instead, the best organizations will find and hang on “to the right people in the first place – those who are self-motivated and self-disciplined, those who wake up every day, compulsively driven to do the best they can because it is simply part of their DNA.” Extend the bus theory to volunteers.

4. Rethinking the Hedgehog concept without a profit motive. In the for-profit world, the hedgehog is singularly focused on the small number of things that lie in the intersection of what you are most passionate about, what you can be the best in the world at, and what drives your economic engine. Because money is not an output in the social sector, the hedgehog is singularly focused on the small number of things that lie in the intersection of what you are most passionate about, what you can be the best in the world at, and what drives your resource engine. Resources are the things social sector organizations need to achieve their missions: Money, volunteers, political capital, etc. But in the social sector, the discipline to say “no, thanks” to the opportunities that don’t fall in the intersection is still crucial.

5. Accelerating the flywheel by building the brand. In this section, Collins stresses the importance of unrestricted funds for nonprofits, imploring donors to get out of the way of staff, and allowing them to do their work. Restricted giving is a form of micromanagement. Nonprofit leaders need latitude to invest resources to do their work the best way they know how. Unfortunately, unrestricted funds are tough to come by for most nonprofits. What does this have to do with brand? I’m not exactly certain, but Collins says that brand in the social sector is “built upon tangible results and emotional share of the heart—so that potential supporters believe not only in your mission, but in your capacity to deliver on that mission.” Consistency helps build brand: “consistent intensity of effort, consistency with the hedgehog concept, consistency with core values, consistency over time.”

If you’re a believer in Good to Great, read this monograph to make explicit the concepts you’ve borrowed from Collins’ research in the business world to your not-for-profit association. Based on my reading of this short book, I’m definitely looking forward to Measures of Success.

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1 comment:

Jeff De Cagna said...

Ben, I suggest inserting some spaces between your paragraphs. The long block of text is daunting, especially against the black background.