05/07/2011

Good To Great In The Social Sectors

By Brian Chernett, Founder, The Academy For Chief Executives

In my recent articles, I have been considering the Third Sector — charities, cooperatives and social enterprises — and the need for leadership as the Big Society begins to fill in the gaps between public and private provision of services. I’m also a great fan of Jim Collins, an American business thinker of some note, and author of Good to Great, one of the most insightful books I’ve read on the subject of building businesses that are excellent to run, to work in and to do business with.

So when (by way of Andy Coote, who picked up a reference on Twitter from Mike Chitty, a Leeds-based entrepreneur) I came across a short booklet by Collins called Good to Great and the Social Sectors (Random House 2005), I was pleased to be able to bring the thinking together around Collins’ models. In this and one other article this week, I’ll consider some transferable points from his work.

Collins makes the point that for the Social Sectors, it is not a good idea to try to just transfer business ideas into the sector in pursuit of better performance,“most businesses fall somewhere between mediocre and good. Few are great,” he says and concludes that you should not export average or mediocre into the social sector,“The question is not about business versus social but good versus great.”

The principles in Good to Great, whilst reasonably simple to grasp, may be difficult to implement but that is their value and their charm. They are about the difference between good and great, about hard work and ‘a culture of discipline' that is needed to make that transition. Collins notes that the businesses in his study that achieve greatness concentrate on finding the right people before deciding on the destination (right people on the bus). Businesses, indeed organisations generally, also find it easier not to confront the brutal facts — they are after all not nice things to consider — and thus are unprepared when they happen.

Finding a hedgehog approach — the point where what you are passionate about meets what you can be excellent in delivering and what drives your economic engine - and then building on it steadily, moving the flywheel consistently in the same direction to build momentum is often not as compelling to a leadership team as appearing to be doing something dramatic to make the breakthrough.

Many businesses operate ‘death by initiative', announcing headline changes but never installing them into the heart of the business — so whatever is being said at the top may not be reflected in their operation. The greatest businesses have been built quietly and steadily, keeping their economic engine firmly in view and adjusting, through minor changes, to keep on course for eventual success. They are in for the long term.

Collins suggests that with minor adjustments, these principles will also work for the social sectors. They are not business ideas, he contends, rather they are what separates good from great. The culture of discipline applies to excellence in business. Social, military and education sectors. Deciding what to do and seeing it through with the right people works across sectors. Leadership in great organisations is often achieved through what Collins calls Level 5 leaders. In the original book he says “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious — but their ambition is first and foremost for the institution, and not themselves”.

The principle of identifying the right people from the start is not easy to apply where an organisation already has people in place. However, making sure the right people are in the right places can be applied to an existing organisation over time. It is about finding people with the passion and motivation to succeed rather than motivating people who do not have that passion in the first place.

Collins also appeals to funding organisations to be less prescriptive in their requirements on organisations they fund. He uses a metaphor from his book Built to Last. Instead of ‘Time-Telling’, he believes that they should move to ‘Clock Building’ allowing the organisation to find the best way to achieve their Hedgehog Principle with “no given ideas and no given leaders. The biggest impact on society will come from a great organisation not a great programme or a great leader.” So he urges, “get out of the way and let them build a clock.” I agree. So often I see creative people being prevented from expressing their ideas and making a difference in their organisation. Such people will eventually leave and it will be wasteful of scarce resources.

Whilst the Hedgehog principles of being passionate about and being the best at what you do transfer to the social sectors quite easily, Collins replaces the ‘economic engine’ with the concept of a superior resource engine — reflecting time donation as much as money.Collins advocates defining ‘Great’ not by inputs but by outputs. For a business that is most likely to be economic results. For the social sectors, he suggests asking the question, “How effectively do we deliver on our mission and make a distinctive impact, relative to our resources?” It is possible to be accountable for outputs even if those outputs defy measurement, he contends.

His final point, about changes to the flywheel concept, will be the subject of my next article in this newsletter.

Successful third sector organisations can do much with the ‘good to great’ approaches and principles. What we need, now more than ever, is some greatness in what are, often, critical areas of social delivery.

Resources

The Article can be accessed at Text excerpts from...Good to Great and the Social Sectors

The book;Good to Great and the Social Sectors, can be purchased on Amazon.

The book; Good to Great, can be purchased on Amazon.

The Video & Audio of; Good to Great and the Social Sectors, can be accessed at at jimcollins.

Watch the video below featuring Brain Chernett, Founder of The Academy For Chief Executives, discussing three top tips for a sustainable growth in your business.

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