This week
we are going to cover a short piece of writing by Jim Collins called “Good to
Great and the Social Sectors”. It was a
very interesting read and addressed the steps that non-profits, government
organizations, charities, etc. should take in order to become great. Collins starts out by saying that the
principle that the primary path to greatness is to become more like business
(2005). When he said this to a group of
top executives from the business sector he did not get a very good
reception. A member of his audience
spoke up and said that he has noticed most non-profits or charities need a
greater level of discipline (Collins, 2005).
Of course the businessman in the audience considered discipline to be a
concept of business. Collins did not
quite see it that way and said that “greater discipline is not a business principle,
but a principle of greatness” (2005, p. 1).
Collins then points out five principles that he says will make you good
to great.
The first
Good to Great principle is Defining “Great”- Calibrating Success Without
Business Metrics. Collins says the basic
idea is to separate inputs and outputs while holding yourself accountable for
the success of the outputs (2005). The
discussion of inputs versus outputs will come up in other subjects such as
strategic management. An example of an
input would be the number of homeless people helped by a program. An output would be the percentage of the
homeless people helped that are no longer homeless. An input is what you do and the output is the
results. In this principle, Collins is
saying the outputs need to be identified, separated from the inputs, and success
measured by the outputs (2005).
The second Good
to Great principle is Level 5 Leadership- Getting Things Done Within a Diffuse
Power Structure. Collins defines a
diffuse power structure as one where no individual leader has enough power to
make the big decisions on their own (2005).
An example of this would be the Federal Government. The President cannot make the really big
decisions like going to war or selecting a new Supreme Court Justice without
the approval of Congress. Congress needs
the President to sign the laws that it passes and needs a greater majority to
override the President. Persuasion,
political currency, and shared interests are required for the right decisions
to happen (Collins, 2005). Obviously if
level 5 leadership is required there are 4 levels below it. The image below shows the different levels of
the Level 5 Hierarchy.
Source: Collins, J. (2005). “Good to great and the social sectors: A
monograph to accompany good to great”. Jim Collins.
The third
Good to Great Principle is First Who- Getting the Right People on the Bus,
Within Social Sector Constraints.
Collins explains this principle by using a story of a teacher that
becomes promoted to department head.
When the teacher became department head he had the power to deny
tenure. He changed the thought of tenure
from getting it if you don’t mess up to not getting it unless you do great
(Collins, 2005). He changed the
expectations of tenure from just getting by and getting it to having to
succeed. The department head used his
ability to deny tenure to get rid of the wrong people and open up positions for
the right ones (Collins, 2005). This is
an issue in my current organization as well.
The highest level of pay is basically guaranteed to us as long as we don’t
mess up and the union makes it difficult to fire under performers. Concentrating on hiring the best people for
the job is more successful than trying to motivate employees that are not
motivated or are undisciplined (Collins, 2005).
The fourth
Good to Great Principle is The Hedgehog Concept- Rethinking the Economic Engine
Without a Profit Motive. Non-profits,
charities, government organizations, etc. are obviously not-for-profit
entities. They do not have a built-in
success variable that for-profits organizations have. According to Collins, the hedgehog concept is
identifying clarity about how to produce the best results and maintaining
discipline to say no to opportunities that do not pass the hedgehog test
(Collins, 2005). Basically what Collins
is saying is that an organization should identify the best way to achieve the
best long-term results and reject anything that will not achieve that
goal.
The fifth
and final Good to Great principle is Turning the Flywheel- Building Momentum by
Building the Brand. Collins says that
building a great organization is like turning a large flywheel where it starts
out very difficult but you keep turning and as the momentum builds it will
eventually turn itself (Collins, 2005). It
is very difficult to start a small business or organization, but the more
persistent you are at “turning the flywheel” the easier it gets until one day
it is operating almost on its own. I worked
in an auto part factory and getting the machines calibrated correctly was the
most difficult part. However, the more
we worked at it the better it became.
Pretty soon the machines would be operating flawlessly and making a
perfect part every minute. The initial
push is difficult, but persistence and effort will pay off in the end. Brand reputation is a key link to the
flywheel effect for the social sector according to Collins (2005). Collins asks the question if Harvard is
really a better education than other schools, but then points out that it doesn’t
matter and the Harvard reputation makes it easier for them to raise funds
(2005).
Collins
makes many good points on how to become a great organization in the social
sector. Not-for-profit organizations
have challenges that for-profit businesses do not. It is important to be able to identify the
different challenges and the best ways to deal with them. Business may be able to operate more efficiently
than government in some aspects, but they also do not operate under the same
constraints. Some projects are made for
the private sector while others for the public sector.
Reference:
Collins, J. (2005). “Good to great and the social sectors: A
monograph to accompany good to great”. Jim Collins.
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