I recen tly opened the pages of a busi ness magazine that rated charities based in part o n the percentage o f budget spent o n management , overhead and fund raising.
It's a well-intent ion ed idea, but reflects profound confusion between inputs and outputs. Thin k about it this way: If you rank collegiate ath letic de pa rtm ent s based on coaching salari es, you'd find tha t Stanford University has a higher coaching cost struc ture as a percentage of to tal expenses than so me ot her Division I schools.
Should we therefore rank Stanfo rd as "less great"? The confusion between in puts and outp uts stems from one of the pri mary differences between business and the social sectors. In business, money is bot h an input a resource for achieving greatness and an outp ut a measure of greatness. In the social sectors, money is only an in put , and not a measure of great ness.
For a business. For a social secto r o rganizatio n, however, perfor mance m ust be assessed relative to mission, not financial returns. In the social sectors, the critical question is not "How muc h mo ney do we make per dollar of invested capital?
Wh at if your o utputs are inh erently not me asurable? Prio r to taking th e po sition , Morr is asked two key board members, "Wh at do rO ll want me to do if I come here?
To m Mor ris co uld no t precisely measure artistic excellence, bu t that docs not change the fact that artistic excellence is the primary definition of performanc e fo r T he Cleveland Orches tra. Are we getting more standing ovatio ns?
Are we expanding the range of what we can play with perfectio n-from clean classical pieces to co mplex modern pieces? Are we invited to the most prestigious festivals in Europe? Are tickets in greater dem and, no t just in Cleveland , but when we play in New York? Do people increasingly mimic the Cleveland style of programming? Do composers in creasing ly seck to have their wo rk debuted at Cleveland? He accomplished this because he understood that endowme nt, revenues and cost structure were input variables, no t the output variables of great ness.
They sepa ra ted in pu ts fro m o ut p u ts, a nd had the d iscip line to hol d their o rganizations account able for achievement in the outputs. That Bratton had the adva ntage of quantitative metrics, and Mo rris did not , is largely besid e the po int. It doesn't really matter whether you can quantify your results. What matters is that yo u rigorously assemble evidence-Quantitative or qualitative-to track your progress. If the evidence is primarily qualitative, think like a trial lawyer assembli ng the combined body of evidence.
If the evidence is primarily quantitative, then think of yourself as a laboratory scientist assembling and assessing the data. To throw our hands up and say, "But we cannot measure perfor- mance in the social sectors the way yo u can in a busin ess" is simply lac k o f di scipline.
Test scores are flawed , mamm ograms are fl awed, cr ime d ata are flawed , cus tomer service data are flawed, pat ient -o ut com e da ta arc flawed. What mailers is no t find ing the perfect indica tor, but sett ling upo n a consistent and intelligent m eth od o f assessing you r output results, and then trac king yo ur traject or y with rigor. Wha t do you mea n by grea t performance? Have you established a baseline?
Are you im proving? If no t, why not? How ca n yo u improve even faster toward your audaci ous goals? I n the social sec tors , performance is defi ned by results enc etticlen cy in deli vering on the STAGE 2, soc ial m ission. You can think o f the entire good-to-grea t framewor k as a generic set o f input vari ables that correlate strongly with creat ing the ou tp uts of grea tness. Any jo urney from good to great requir es relentl essly ad her ing to these inpu t variables, rigoro usly tracking your trajecto ry on the output vari- ables, and then dr iving your self to even higher levels of performance and impact.
No matter how muc h you have achieved, yOll will always be merely good relative to what you call becomc. Greatness is an inher- en tly dyn ami c process, no t an end poi nt. Th e mome nt you thi nk of yours elf as great, your slid e toward me d iocrity will have already begun. With patience, like a teacher pausing to impart an important lesson , Hcssclbein proceeded to rearrange the lunch table, c reating a set of co ncen tric circles radiatin g o utward- plates, cup s, saucers- co nnected by knives, forks and spoo ns.
Hessclb ein point ed to a glass in the middle of the table. Facing a complex governance structure co mpo sed of hundred s o f local Girl Scou t cou ncils each with its own govern ing bo ard and a vo lu nt eer force of ,, I-lesselbein sim ply d id not have the fu ll power o f decision.
Even so, she moved peopl e to confront brutal facts facing girls in modern America, such as teen pregnancy and alcohol use, by creatin g materials on se nsi tive issues. Proficie ncy badges sprouted up in top ics like math , technology an d co mpu ter science, to reinforce the idea that girls are-and sho uld think o f the mselves as-s-capable ind ividu als who can take con trol o f their own lives. Hesselbe in did not force this change dow n peop le's th roats, bu t simply gave the inter- depe nd ent counci ls the opport unity to mak e ch an ges at the ir ow n d iscre tio n.
Most did. There is the power o f inclu sion, and the po wer o f language, and the power of shared interests, and the power of coalition. Power is all aroun d you to draw upo n, but it is rarely raw, rarely visible. When you add in tenure d faculty, civil service, volunteers, police union s, or any nu mber of other in ternal fact ors, mo st non b usi ness lead er s simply do no t ha ve the concen trated decision power of a business CEO.
Social secto r leaders are not less decisive tha n busine ss leaders as a general rule; they only appear that way to those who fail to grasp th e comp lex govern ance and diffuse power str uct ures common to social sectors.
Frances Hesselbein was just as decisive as nearly any corporate CEO, but she faced a governance and power structure tha t rend ered executive-style leadership impracti cal. Thi s is why some busines s execu tives fail when they move into th e social secto rs. One co rpo rate CEO tu rned acade m ic dean tri ed to lead faculty toward his vision. The mor e he brough t to bear his executi ve skill, the more th e facult y decided they had better things to do than to atte nd the dean's facult y meetings.
After all, wha t was he go ing to do? Fire them? Th ey all had ten ure. After "o ne of the most dra ining experiences in my life," thi s CEO ret urn ed to th e busin ess world. He did no t unde rsta nd-u nt il it was too late- what one un iversity president called the reality of tenu red faculty: "A tho usand point s of no. In executive leader ship, the individu al leader has eno ugh concentrated power to simp ly make the righ t decision s. In legislative leadership , on the o ther hand , no individu al leader-s-no t even the nomi nal chief executive- has enoug h struc tur al power to make th e most impo rt an t d ecision s by him self or herself.
Legislative leadershi p relies more upon persuasion, politica l cu rrency, and shared in terests to create the con di tio ns for the right decisio ns to happen. And it is pre cisely th is legislative dynamic tha t ma kes Level S leadersh ip part icularly im port an t to the social sectors. Our good -to -great research uncovered that leadersh ip ca pabilities follow a five-level hierarchy, with Level S at the top.
Level S leaders d iffer from Level 4 leaders in tha t they are amb itio us first and foremost for the cau se, the movement, the mission, the work-not tlzcmsdl'cs-and they have the will to do whatever it takes iwlmtcvcr it takes to make good o n that ambit ion. See dia gram: " Level S Leadersh ip" on page In the social sectors, the Level 5's compelling combination of personal hu m ility an d profession al will is a key factor in creating legitimacy and in fluence.
After all, why sho uld th ose over who m yo u have no d irect po wer give them selves over to a decisio n th at is primarily abo ut you?
As o ne soci al secto r leader co nfided, " I' ve learn ed tha t LevelS leadersh ip requ ires bein g clever for the greater goo d. In the end, it is my respo nsib ility to ens ure th at the right decision s happen- even if I don 't have the sale power to make those decis ions , and even if those de cisio ns could not win a pop ular vo te. The o nly way I can ac hieve th at is if peo pl e know th at I'm moti vat ed firs t and always fo r th e greatness of our wor k, not myself. The executive versus legislative distinction remains a working hypoth- esis, awaiting rigorous research.
The best leaders of the future-in th e soci al secto rs and business-will not be purely executive or legislative: they will have a knack for knowing when to play their execut ive chips, and when no t to. There is an irony in all this. Social sector organizations increasingly loo k to business for lead ership model s and talent, yet I suspect we will find more true leadership in the social sectors than the business sector. How can I say that?
Because, as James MacGregor Burns taught in his classic text, Leadership, the practice of leadersh ip is not th e same as the exercise of po wer.
Tw e leadership ' exists if people [ollow when the ' hnvc the freedom 1I0t to. If peop le follow you because they have no choice, then yo u are not leadin g. Today's bu siness leaders face h ighl y m obile kn ow ledge wo rkers. T hey face Sarba nes-Oxley, enviro nmental and co nsume r groups, and shareho lder activists.
In shor t, business executives don 't have the same conce ntration of pure executive power th ey o nce enjoyed. Level 5 leadership combined with legislative skill will become even more important to the next generation of bu siness execut ives, and they would do well to learn from the social secto rs.
Indeed, perhaps tomorrow 's great business leaders will come from the social secto rs, not the othe r way around. As he settled into daily teach- ing. But what could he do? He wasn't principal. He wasn't superi ntendent. He wasn't governor. Roger Briggs wanted to remain on the front line of edu cation, sho ulder to shoulder with fellow teachers. After beco ming depart ment chair, Briggs decided to turn his little arena int o a pocket o f greatness. I co uld n't change the whole system, bu t I could change our person science departm en t: ' He began the same way all the good-to-great leaders began: First get the right people o n the bus.
Given the low compe nsation for teachers and the paucity of incent ives, Briggs had to fill faculty seats with people compu lsively driven to make whatever they touch the best it can be-not because of what they would "get" fo r it, but because they simply could not stop themse lves from the almost neurotic need to improve. He began to view the first three years of a teacher's career as an extended inte rview. He inverted the three-year tenure reco m mendation from a defau lt of "Yes, you'll likely get tenure, unless you've done something egregiou s" to a default of "No, you will most likely nat get tenure, unless you have proven yourself to be an exceptional teacher:' A turning point came when an adequate teacher came up for tenure.
Soo n thereafter, a spectacular young teacher becam e available, and the science department hired her. As the culture of disciplin e tightened, the wrong teach- ers found themselves to be viruses surrounded by antibodies, and some self-ejected. T he science de partment m inibus changed-hire by hire and tenure deci sion by tenu re decision-un til a critical mass coalesced into a culture of discipline.
First, and most important, you can build a pocket of greatness without executive power, in the middle of an orga niza tio n.
If Roger Briggs can lead his m inibu s from good to great within the constraints of the public scho ol system, you can do it nearly anywhere. Second, you start by focusing on the First Who pr inciple-do whatever you can to get the right people on the bu s, the wro ng peop le off the bu s, and the right peop le in to the right scats. Tenu re po ses one set of challenges, volunteers and lack of resources another, but the fact remains: greatness flows first and foremo st from having the right people in th e key seats, not the o the r way aro und.
Third , Br iggs acco m plished all thi s with the use of ea rly-assessme nt mechanism s. There is no perfect interviewing tech nique, no ideal hiring method; even the best execu tives make hiring mistakes. You can only know for certain about a person by working with that person.
Business executives can more easily fire people and-equally impor- tant- they can use mon ey to buy talent. Most social sector leaders, o n the other hand , mus t rely on peop le underp aid relative to the pr ivate sector o r, in the case o f volunteers, paid not at all. Yet a finding from o ur research is instructive: the key variable is not how o r how much you pay, but who you have on the bus.
The comparison companies in our research- those that failed to become great- placed greater emphasis on using incentives to "motivate" o therwise unmo tivated or undisci- plin ed people. The grea t com pa nies. In the social sectors, when big incentives or compe nsatio n at all, in the case of volunteers arc simply no t possible, the First Who principle becomes even more impor- tant. Lack of resources is no excuse for lack o f rigor-it makes selec- tivity all the mo re vital.
In the sp ring of , Wendy Kopp graduated from Princeton with an elegant idea: why not convince graduates from leading universities to spend the first two years of their careers teaching low-inco me kids in the public education system? She had no mon ey, no o ffice, no infrastructure, no name, no credibility, no furniture, not even a bed or a dresser in which to store her clot hes. In her boo k, Olle Dill'. All Children.
O ne year la ter, Kopp sto od in fro nt of recent-grad uates from co lleges like Yale, Harvard and Michigan, assembled for traini ng and deployment into America's underserved classrooms. And how did she co nvince these gradua tes to wo rk for low pay in tough classrooms? First, by tappi ng their idealistic passions, a nd second , by making the process selective.
You sho uld prep ar e yo urs elf for rejec tio n , because it takes a special capability to succeed in these classroom s. First, th e mo re selective the process, the more attractive a position becom es-even if volunteer o r low pay. Seco nd, the social sectors have one compelling advantage: desperate craving for meaning in our lives. Purity of mis- sion- be it abou t ed ucati ng young peop le, co nnecting people to God, making our cities safe, touching the so ul with great art, feeding the hun- gry, serving the poor, or protecting our freedom-has the power to ignite passion and commitm ent.
The right peopl e can often attract mon ey, but mon ey by itself can never attract the right people. Money is a commod ity; talent is not. Time and talent can ofte n compensate for lack of mone y, but money cannot ever compensate fo r lack of the right people. The essence of a Hedgehog Concept is to attain piercing clarity about how to produ ce the best lon g-term results, and then exercising the relentl ess discipline to say, "No than k you" to oppor tu nities that fail the hedgehog test.
Wh en we examined the Hedgehog Concepts of the good-to-great companies, we foun d they reflected deep understanding of th ree intersecting circles: 1 what you are deeply passionate about, 2 what you can be the best in the wo rld at. Social sector leaders fou nd the Hedgehog Concept helpful, b ut many rebelled against the third circle, the econo mic engine.
I found this puz- zling. Then I had a co nversation with John Morgan, a pastor with more than 30 years of experience in co ngregatio nal wo rk, then serving as a m inister of a chur ch in Readin g. Penn sylvania. We're pa ssiona te abo ut trying to rebu ild thi s communit y, and we can be the best in our region at creating a generation o f tran sfor mationa l leaders that reflects the fu ll diversity of the commun ity. That is o ur Hedgehog Co ncept:' And what abo ut the eco no mic eng ine?
First, we face a cul tur al problem of talking abo ut mo ney in a religious setting. And second, we rely upon much more than mon ey to keep thi s place go ing. How do we get en ou gh resources of nil typ es-not just mon ey to pay the bills, but also tim e, emo tio nal com mitmen t, hand s, hearts, and mi ndsi'"" Morgan put his finger on a fundamental difference between the business and social sectors. The third circle of the HedgehogConcept shifts from being an economic engi ne to a resource engine.
The critical question is not "How much money do we make? In Good to Great, we uncovered the idea o f the "economic denom - inator.
This economic ratio ties perfectly to the eco- nomic core in all bus inesses, namely the profi t mechan ism, translated into retu rn o n invested capital. Circle 2: Best at - Understanding what your organization can un iquely contrib ute to t he people It touches, better I han any other organization on the planet.
Circle 3 : Resource Engine - Understandi ng what best drives your resource engine, broken into three parts: l ime, money, and brand. What you are dee ply passionate about What you can What drives be best in the you r resource world at engine Th e same idea docs not translate to the soc ial secto rs. For another. The whole purpose of the social secto rs is to mee t social object ives, h uman needs and nati onal pr iorities that enl lllol be priced at a profit.
If you place social sector entities in a two-by-two matrix, with one axis representing char itable do nat ions and pr ivate grants and the other axis representin g business revenue fee for service. Even institution s in the same "ind ustry" ca n fall into differ ent eco n o m ic quadran ts.
G irl Scouts co u nci ls, for in stan ce, der ive su bs ta n tial cash flow from selling Gi rl Scout Cookiesw, and almo st non e fro m gover nme nt su ppor t! Further mo re, each eco nomic qu adrant dem ands its own unique skills. Those that rely on govern - ment fun ding m ust emp loy pol itical skill and cultivate pu blic support; NASA, for instance, must con vince Congress that it merits a budget that would place it high on the list o f Fortune corpo ratio ns.
T hose th at rely on cha ritab le dona tions, on th e o the r hand , m ust develop fundra ising mechani sms and build emotional connection-" helping to cure cancer will make you feel good "- whereas tho se that rely heavily on busin ess revenues, such as hospitals, more closely resembl e the econom ic dynam ics of a business cor poration.
Yet the wide variatio n ;11 ecoflomic st ructures ill the social sectors increases the importance oj the hedgehog principlc-s-u»: inherent com - plexity requires deep er, more penetrating insight and rigoro us clar ity than in your average business entity.
Yo u begin with passion , then you refine passion with a rigorous assessment of what you can best contrib- ute to the comm un ities yO li tou ch. Th en you create a way to tie your resou rce engine dir ectly to the other two circles.
Organizations such as NASA. The resource engine in this quadrant depends heavily on pol itical skill and main taining public support. Quadrant II : Thi s quadrant reli es heavily upon charit abl e support by private ind ividuals. Many cause-driven nonprofits fall into this category-such as the American Cancer Society, the Special Olympics, and Habi tat for Humanity-as do many religious institut ions, community foundatio ns, and local charities. The resource engine in this quadrant depends heavily on personal relat ionships and excellent fundraising.
Quadrant lIl : This hybrid quadrant consists of th ose that blend charita ble donations with business revenues. Performing arts organizations gravitate toward this quadrant. This quadrant requires both business acumen and fund raising skil l. Quadrant IV; This quadrant captures those t hat rely heavily on a business revenue stream.
Organizations that fund themselves primarily through products, services, tuit ion. Many nonprotu hospitals fall into this quadrant as do many higher education inst itut ions. The resource engine in this quadrant most cl osely resembles that 01 a for-profit business. You must be able to answer the question, "How does foc using on wh at we can do best tie directly to our resource engine, and how does our resource engine directly reinforce what we can do best?
T hey believed th e Center could become th e best in th e worl d at breaking th e cycle of homelessness in Bible- town s of the Midwest by challenging homeless peopl e to take respo nsi- bility for their own lives. They soo n realized that buil ding a resource engine primarily around government funding wou ld run co unter to the Center's Hedgehog Concept. We organized our whole organization around connecting peoplc- ho mel ess peop le, benefactors, volu nte ers, and staff- to self, fam ily and comm unit y.
Aggressively pursuing go vernm ent money docs not make any sense with this type of thinkin g, but aggressively con necting volunteers and local do nors o n a person al level with hom eless people makes absolute sense. Jl As Peter Druck er ad mo nished, the fo un da tio n fo r doi ng goo d is doing well. T he old adage "no cash flow, no mission" is tru e, b ut o nly as pa rt of a larger truth.
A great social sector orga nization must have the d iscipline to say. T hose who have the discipline to attrac t and channel resou rces direc ted solely at their Hedgehog Concept, and to reject resources that drive them rum ' f rom the center of their three circles, will be of greater service to the world. Rath er, ou r researc h showed that it feels like turning a gian t, heavy flywhee l. Pushing wit h grea t effo rt-days, weeks and mo nth s o f wo rk, with almos t imperceptible progress- you fina lly get the flywheel to inch forward.
But you don't sto p. Yo u keep pus hing, and with persistent effort, you eventually get the flywheel to co mplete o ne entire tu rn.
Yo u don't stop. Yo u keep pu shing, in an int elligent and co nsiste n t direction, and th e flywh eel moves a bit faste r. Yo u keep pus hing, and yOll get two turns then fou r Then , at some po int- breakth rou gh! Each tur n bu ilds upo n p revious wor k. T he flywheel flies forward with almost u nstoppable mo men tum.
This is how you build greatness. By focusing o n yo ur Hedge hog Co ncept, yu u bui ld results. Your current opinions to reserve Good to Great and the Social Sectors: Why Business Thinking is Not the Answer : different followers is able to make a decision in regards to guide. These guidance will make you more Combined! Nonetheless, we will value for those who have any info on the item, and so are willing to supply the item.
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