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Focus on Leadership

“Good to Great and the Social Sectors”

August 14, 2009

Author: Anne Erickson

A small monograph by Jim Collins, author of Built to Last and Good to Great, seminal works about why and how some companies not only make it through hard times, but actually make the leap to become even better, recently caught my attention.  With the lead-in of “Why Business Thinking is Not the Answer,” Good to Great and the Social Sectors starts off by laying to rest an impossible challenge we all confront as leaders and managers in the “non-profit” sector:

“We must reject the idea – well-intentioned, but dead wrong- that the primary path to greatness in the social sector is to become ‘more like a business.’”

Most businesses, he notes, “fall somewhere between mediocre and good.”   The critical focus needs to be not on business practices per se, but on those practices that make any company – or any organization – rise above the mediocre: dissciplined people who engage in disciplined thought and take disciplined action.

Defining Great in the Social Sector

Collins relates the dynamic at the New York City Policy Department (NYPD) in 1995 when Commissioner William Bratton changed the focus of management from inputs – how many arrests made, how many cases closed, how many reports written – to outputs: how much crime is down.

He notes “the confusion between inputs and outputs stems from one of the primary differences between business and the social sectors.

In business, money is both an input (a resource for achieving greatness) and an output (a measure of greatness).  In the social sectors, money is only an input, and not a measure of greatness.”

For our organizations Collins says “performance must be assessed relative to mission not financial returns.”  The question becomes: “How effectively do we deliver on our mission and make a distinct impact, relative to our resources?”

How do we set goals and then measure our performance?

He relates the story of Tom Morris who became director of the Cleveland Orchestra in 1987 with deficits exceeding 10% of income, a stagnant endowment and a lousy local economy.  Morris set as his goal “artistic excellence” – notice, it was not increased revenues or a bigger endowment.

How did he measure success?  Collins puts the measurements into three categories that all organizations (and businesses) should strive for: Superior Performance, Distinct Impact, and Lasting Endurance.

Superior Performance: defined by high impact, significant results and efficiency in delivering on Mission.

The Cleveland Orchestra, striving for artistic excellence, measured this by increased standing ovations, increased complexities of the pieces the orchestra could play, increased demand for tickets for their more complex programs and invitations to higher end venues (they were invited to the Salzburg Festival for the first time in 25 years).

Distinct Impact: “the organization makes such a unique contribution to the communities it touches and does its work with such unadulterated excellence that if it were to disappear, it would leave a hole that could not easily be filled by any other institution…”

For Tom Morris and the Cleveland Orchestra their Distinct Impact was measured by how often their programming was copied by other orchestras,  by how often their leaders were sought out to share their insights in elite industry gatherings (being asked by the experts for their input) and by having Severance Hall filled to capacity two days after 9-11.

Lasting Endurance: delivering exceptional results over the long haul – beyond any one leader, any one idea, any one program – and I would add – any one administration – or funder!

The folks in Cleveland measured this by sustaining excellence over the change in “generations” of conductors, increasing the number of supporters donating time and money for longer periods, and maintaining excellence through a change in leadership.

By the way, as they focused on superior performance, distinct impact and lasting endurance, their ticket sales went up, donations went up and their endowment tripled in size.

And how’s this for a kicker from Collins: “No matter how much you have achieved, you will always be merely good relative to what you can become.” (his emphasis.)  Let that sit for a minute.

The Hedgehog Concept – Without the Profit Motive

In Good to Great, Collins lays out the Hedgehog Concept of great businesses: they are deeply passionate about what they do, they focus on what they are best at, and their passion and focus drives their income or their economic engine.  He presents them as three intersecting circles.  He also notes, that great companies – and great social sector organizations - have “the relentless discipline” to say No thanks to opportunities that fail the test – that you are not passionate about, that you are not best at, and that don’t drive your economic engine.

  • Passion: understanding what your organization stands for, its core values and why it exists, its mission and purpose.
  • Best At: understanding what your organization can uniquely contribute to the people it touches.
  • Resource Engine: understanding what drives your resources in terms of time, money and brand.

For the social sector, Collins notes, the economic engine is a resource engine – not a money    engine --  but an engine of time, money and (wait for it) brand.

  • Time is people time – the best people we can attract to do the work in fulfillment of Mission, both as staff and as volunteers.
  • Money is sustained cash flow, both in support of programs, but more importantly in support of Mission.
  • Brand in this view is “how well you organization can cultivate a deep well of emotional goodwill and mindshare of potential supporters.”

All well and good, until he turns to Tom Tierney of the Bridgespan Group, who notes that “social sectors do not have rational capital markets that channel resources to those who deliver the best results.”    He later notes that “there is no guaranteed relationship between exceptional results and sustained access to resources.”

Ain’t that the truth.  In fact, if we look at – say the federal government which under certain leadership decided to decimate legal services financially and structurally with cuts and restrictions – we see a market working in direct opposition to high impact results. Legal services was having too great an impact for certain political leaders’ comfort.  Thankfully we have built organizations that can meet the test of  Lasting Endurance.

As Collins notes, much giving in the non-profit sector tends to favor programmatic funding, and is not focused building great organizations.  I would add a caveat:  right-wing funding for non-profit conservative think tanks DID focus on building great organizations and they have had tremendous impact as a result.  As Collins puts it “social sector funding often favors ‘time telling’… building a great organization requires a shift to ‘clock building’ – shaping a strong self-sustaining organization that can prosper beyond any single programmatic idea or visionary leader.”

“Restricted giving misses a fundamental point: to make the greatest impact on society requires first and foremost a great organization, not a single great program…(For) a disciplined organization that delivers exceptional results, the best thing supporters can to is to give resources that enable the institutions’ leaders to do their work the best way they know how.  Get out of their way and let them build a clock!” 

Fly Away

So how do we in the social sector deal with the fact that we can’t always control the “capital   markets” we work in?  Try the Flywheel.   It takes  constant steady turning with all your effort moving in the right direction, one rotation at a time, to get a flywheel moving.  Once it takes off, “each turn builds upon previous work, compounding your investment of effort,” Collins writes, “The flywheel flies forward with almost unstoppable momentum.  This is how you build greatness.”

We may not be able to control government or foundation funders, we may not be able to get them to fund the clock, but we can certainly keep pushing those rotations on our own flywheels.  As long as at the center of that wheel, we Preserve our Core Principles while allowing operating practices and programmatic strategies to move forward and adapt as needed, we can turn the flywheel with everything we do and every program we operate.

In the circular motion of the wheel, Collins shows the flow:  we Attract Believers who provide time and money which Builds Strength which allows us to Demonstrate Results which Builds Brand and Reputation which Attracts Believers  which Builds Strength and so on – until the flywheel is flying and the momentum is carrying us forward.


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