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Book: Good to Great and the Social Sectors

Author:  Jim Collins

Purchase:  Print | eBook | Audiobook

Citation: Collins, J. (2005). Good to great and the social sectors : why business thinking is not the answer : a monograph to accompany Good to great : why some companies make the leap--and others don't. Boulder, Colo: J. Collins.

Big Takeaways & Key Ideas:

A great organization is one that delivers superior performance and makes a distinctive impact over a long period of time. For a business, financial returns are a perfectly legitimate measure of performance. For a social sector organization, however, performance must be assessed relative to mission, not financial returns. In the social sectors, the critical question is not "How much money do we make per dollar of invested capital?" but "How effectively do we deliver on our mission and make a distinctive impact, relative to our resources?" (Collins, Social Sectors, pg. 5)

It doesn't really matter whether you can quantify your results. What matters is that you rigorously assemble evidence - quantitative or qualitative - to track your progress. To throw your 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. What matters is not finding the perfect indicator, but settling on a consistent and intelligent method of assessing your output results, and then tracking your trajectory with rigor. (Collins, Social Sectors, pg. 12)

Social sector leaders are not less decisive than business leaders as a general rule; they appear that way to those who fail to grasp the complex governance and diffuse power structures common to social sectors. Many social sector leaders are just as decisive as any corporate CEO, but they face a governance and power structure that renders executive-style leadership impractical. (Collins, Social Sectors, pg. 15)

The complex governance and diffuse power structures common in nonbusiness lead me to hypothesize that there are two types of leadership skill: executive and legislative. In executive leadership, the individual leader has enough concentrated power to simply make the right decisions. In legislative leadership, on the other hand, no individual leader - not even the nominal chief executive - has enough structural power to make the most important decisions by himself or herself. Legislative leadership relies more on persuasion, political currency, and shared interests to create the conditions for the right decisions to happen. And it is precisely this legislative dynamic that makes Level 5 leadership particularly important to the social sectors. (Collins, Social Sectors, pg. 16)

Level 5 leadership is not about being "soft" or "nice". The whole point of being a Level 5 Leader is to make sure the right decisions happen - no matter how difficult or painful - for long-term greatness of the institution and the achievement of its mission, independent of consensus or popularity. (Collins, Social Sectors, pg. 16)

Social sector organizations increasingly look to business for leadership models and talent, yet I suspect we will find more true leadership in social sectors than the business sector. How can I say that? Because in business you have power, while in social sectors you have leadership. True leadership only exists if people follow when they have the freedom not to. If people follow you because they have no choice, then you are not leading. Business owners can lead more with power because their power is more financially driven. In the social sector - which is not financially driven - people must learn how to lead with leadership. (Collins, Social Sectors, pg. 17)

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. (Collins, Social Sectors, pg. 19)

Business executives can more easily fire people and - equally important - they can use money to buy talent. Most social sector leaders, on the other hand, must rely on people relative to the private sector or, in the case of volunteers, paid not at all. In the social sector, where big incentives are simply not possible, it becomes more important that you hire the right people. Lack of resources is no excuse for lack of rigor - it makes selectivity all the more vital. (Collins, Social Sectors, pg. 20)

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