loren Eric Swanson: Good to Great in the Social Sector

Tuesday, December 06, 2005

Good to Great in the Social Sector

Yesterday I was in a half-day meeting with Bob Buford and a few other folks here in Dallas. At the end of a meeting, Bob read to us a few exerpts from his conversation with Jim Collins which were subsequently put in his newsletter (www.activeenergy.net). I received the newsletter this morning and wanted to pass this along. At the end of the letter Bob asks for a bit of help in answering a question Jim Collins asked. I'll attach my answer in the next posting. Enjoy!

At our dinner, Collins provided more insight. Two years ago (perhaps influenced by Peter Drucker's question--"Are we motivated by achievement or contribution?), Collins said that he next wanted to research the implications of his Good to Great discoveries to see if they applied not only to business, but also to nonprofit organizations, such as the ones in which I was investing my time and resources. I've been curious ever since. On the way into dinner, he handed me what he described as "the one and only copy" of the galleys for a 35-page monograph describing what his preliminary research had uncovered. His team had done work with more than 100 social sector leaders. To say the least, this set the agenda for the next two hours!

I can't do better then to direct you to the monograph, which is now available (see resources below), but here are some of the "sound bites" I wrote down furiously - making notes on the back of the monograph as we made our way through a largely ignored, albeit elegant, dinner:
1. Somewhere between 30 percent and 50 percent of those who have read Good to Great came from societal sectors other than business.
2. The Good to Great principles - things like Level 5 Leadership - do indeed apply to the social sector, maybe even better than we expected, but the realities that social sector leaders face are perceived to be quite different from the business sector.
3. Do not assume your business success will cause you to be successful in a nonprofit. The metrics are different. In business, money is both an input and an output. In nonprofits, money is an input, but not a measure of greatness.
4. There are not rational capital markets for the social sector. Notice that foundations are ranked based on dollars spent, i.e., by inputs, not outputs. In nonprofits, the confusion between inputs and outputs is rampant. Money is both an input and an output in business.
The output of the social sector is to meet social objectives, human needs and national priorities.
5. What Collins described as "driving an economic engine" in business shifts to driving the resource engine in the social sector. There are three key resources in a nonprofit: volunteer energy, money (an output) and brand capital. Collins described brand capital as reputation, track record and trust. "When people believe in the story of an organization and its ability to deliver superior results," Collins told me last Saturday by phone, "it becomes easier to build sustained resources in the absence of rational capital markets."
6. Collins said, "What leaps out is that our work is not fundamentally about business; it is about what separates good from great in all sectors. A social sector organization can't be expected to learn what makes for great from a mediocre business organization."
7. Sometimes, impact is inversely proportionate to scale. Sometimes, less is more.

There was lots more that evening. It is well captured in Collins' Monograph (This is available on Amazon). I can't more strongly recommend that you obtain and use it as the basis for discussion in the nonprofits in which you are involved.

But for now, I will ask you to ponder a very profound question that Collins posed for me. How would you have answered?:

Collins began with a parable that went something like this: "If I came to you today and said there was a man wandering around in the Middle East with fifty followers. In 300 years, his religion would be the formal religion of the United States. What did they do to connect the dots? Put aside that it had to happen because it was true. How did it happen?"

In our phone conversation this past Saturday, Collins clarified what I had expected all along. He was talking about Jesus Christ and the 300 year period between His crucifixion and the time when Constantine made Christianity the established religion of the Roman Empire. Collins said, "People say I am constructed for curiosity. No one has ever solved this one for me. What were the social mechanisms and organizational tools that allowed this statistically remote outcome to happen? What took place in the 300 years between Christ and Constantine?
Here's what I propose - send me your answers by e-mail in the next two weeks. I will collect them and send them all on to Collins. I will feature some of your answers and give you my answers in a future ACTIVEenergy newsletter. Here's your chance to influence an influencer - a genuine seeker after truth


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