loren Eric Swanson: Good to Great and the Social Sector

Thursday, February 02, 2006

Good to Great and the Social Sector

Just finished reading Jim Collins' Good to Great and the Social Sector. Having greatly enjoyed both Built to Last, Good to Great and a variety of articles by Collins I have been looking forward to reading what he calls a 'monograph"--a lean 35 page missive. Here are a few notes.

"That's when it dawned on my: we need a new language. The critical distinction is not betweeen business and social, but between great and good. We need to reject the naive imposition of the 'language of business' on the social sectors, and instead jointly embrace a language of greatness" p. 2

Issue One: Defining "great"--calibrating success without business metrics
Collins 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. In social sectors, the critical question is not 'How much money do we make per dollar of invested capital?' but 'How do we deliver on our mission and make a distinctive impact, relative to our response?'" p. 5

Collins doesn't buy the excuse that you can't measure social sector like business. "It doesn't really matter whether you can quantify your results. What matters is that you rigorously assembel evidence--quantitative or qualitative--to track your progress. If the evidence is primaily qualitative, think like a trial lawyer assembling the combined body of evidence. If the evidence is primarily quantitative, then think of yourself as a laboratory scientist assemblin and assessing the data. To throw our hands up and say, 'But we cannot measure performance in the social sectors the way you can in a business' is simply lack of discipline. All indicators are flawed, whether qualitative or quantitative.... What matters is not finding the perfect indicator, but settling upon a consistent and intelligent method of assessing your output results, and then tracking your trajectory with rigor." p. 7

Issue two: Level 5 Leadership--Getting things done within a diffuse power structure
"Level 5 leadership (ambitious first and foremost for the cause, the movement, the mission, the work--not themselves--and they have the will to do whatever it takes...to make good on that ambition) is not about being 'soft' or 'nice' or purely 'inclusive' or 'consensus-building.' The whole point of Level 5 is to make sure the right decisions happen--no matter how difficult or painful--for the long-term greatness of the institution and the achievement of its mission, independent of consensus or popularity" p. 11

Issue three: First who--Getting the right people on the bus within socail sector constraints
"In the social sectors, where getting the wrong people off the bus can be more difficult than in a business, early assessment mechanisms turn out to be more important than hiring mechanisms. There is no perfect interviewing technique, no ideal hiring method; even the best executives make hiring mistakes. You can only know for certain about a person by working with that person." p. 15

"Great companies... focused on getting and hnging on to the right people in the first place--those who are productively neurotic, those who are self-motivated and self-disciplined, those who wake up every day, cupulsively driven to do the best they can because it is simply part of their DNA....Lack of resources is no excuse for lack of rigor--it makes selectivity all the more vital." p. 15

Issue four: the hedgehog concept--rethinking the economic engine without a profit motive
Collin's three circles now are "What are you passionate about? " "What can you be best in the world at?" and "What drives your resource engine?" "The critical step in the Hedgehog Concept is to determin how best to connect all three circles, so that they reinforce each other. You must be able to answer the question, 'How does focusing on what we can do best tie directly to our resource engine, and how does our resource engine directly reinforce what we can do best?' And you must be right." p. 22

"The old addage, 'no cash flow, no mission' [it can't be that old...I've never heard this before], but only as part ofa larger truth. A great social sector organization must have the discipline to say, 'No thanks you' to resources that drive it away from the middle of its three circles. Those who have the discipline to attract and channel resources directed solely at their Hedgehog Concept, and to reject resources that drive them away from the center of their three circles, will be of greater service to the world." p. 23

Issue five: Turning the flywheel--building momentum by building the brand
"By focusing on your Hedgehog concept, you build results. Those results, in turn, attract resources and commitment, which you use to build a strong organization. That strong organization then delivers even better results, which attracts greater resources and commitment, which builds a sronger organization, which enables even better results. People want to feel the excitement of being involved in something that just flat out works. When they begin to see tangible results--when they can feel the flywheel beginning to build speed--that's when most people line up to throw their shoulders against the wheel and push. This is the power of the flywheel. Success breeds support and commitment, which breeds even greater success, which breeds more support and commitment--round and around the flywheel goes. Peopl like to support winners!" p. 23

[Now I found this particularly interesting] "I find it puzzling how people who clearly understand the idea of investing in great companies run by the right people often fail t carry the same logic over to the social sectors. In lace of the 'fair-price exchange' of the free market model, those who fund the social sectors can bring an assumption of 'fair exchange' that is highly dysfunctional: if we give you money, we are entitled to tell you how to use that money, since it was a gift..., not a fair-price exchange. Put another way, social sector funding often favors 'time telling'--focusing on a specific program or restricted gift, often the brainchild of a charismatic visionary leader. But building a great organization requuires a shift to 'clock building'--shaping a stron, 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 formeost a great orgnization, not a single program. If an institution has a fucused Hedgehog Concept and a disciplined organization that delivers exceptional results, the best thing supporters can do is to give resources that enabel the institution's leaers to do their work the best way they know how. Get out of the way, and let them uld a clock!" p. 24

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