Since 2008 the economy has put a serious beat down on many governments, businesses, and non-profit (social sector) organizations in the United States and abroad. Leave it to the primal forces of greed and corruption to give a good trimming to the number of non-profit organizations left standing. Many of the rest have much less resources to rely on than when the economy was booming.
Yet, many companies continue to thrive in this doomsday climate. Take Apple or Google for example. They and companies such as Western Digital and DirecTV have grown between 40-58 annual EPS. ( http://money.cnn.com/magazines/fortune/fortune500/2011/performers/companies/fastgrowprofits/5yr.html) This is also true of organizations in the social sector. Many are thriving.
Why is this true? Is it happenstance? Not according to Jim Collins in his book, Good To Great And The Social Sectors: A Monograph to Accompany Good to Great. There are reasons non-profits do well and those reasons are the same as what applies to business. “Mediocre companies rarely display the relentless culture of discipline—disciplined people who engage in disciplined thought and who take disciplined action—that we find in truly great companies. A culture of discipline is not a principle of business; it is a principle of greatness.” ( Collins, Jim (2011-09-27). Good To Great And The Social Sectors: A Monograph to Accompany Good to Great (Kindle Locations 26-28). Harper Collins, Inc.. Kindle Edition)
I’m certain there are many reasons non-profits fail. But what is worth focusing on is why some are succeeding in this economy and some are not. Collins believes there are keys to the success of organizations whether the are for profit or not for profit:
Issue 1: Defining “Great”—Calibrating Success without Business Metrics
Is your organization great? Are you delivering a great ‘product’ (ministry) on the field? Is it compelling and sustainable? If not, you will struggle to attract new donors and big donors. Effectiveness and impact are the keys. “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?” (Ibid, Kindle Locations 88-89)
Issue 2: Level 5 Leadership—Getting Things Done within a Diffuse Power Structure
Leaders know how to delegate and share the power. If a CEO operates out of fear or insecurity, then they will maintain all of the power, stifling the company. People in the organization will get discouraged and frustrated. The other issue can be that the CEO doesn’t know how to make decisions and the environment stagnates.
Issue 3: First Who—Getting the Right People on the Bus, within Social Sector Constraints – One of the most critical elements to success. An insecure, fear-based leader won’t get talented people on the bus because they see it as a threat to their leadership. Whatever you do, overcome this deficit because this is true: “Greatness flows first and foremost from having the right people in the key seats.”
Issue 4: The Hedgehog Concept—Rethinking the Economic Engine without a Profit Motive – Are you clear about how you produce results and the ‘best long term results?’ Can you say ‘no’ to the myriads of requests of donors to do things that are not within your sweet spot? The key here is to be the best in the world at what you do and learn to say no to everything else.
Issue 5: Turning the Flywheel – Building Momentum by Building the Brand
Build on your successes and allow the momentum to make your organization great. Everything an organization does builds their brand. How they treat their donors, how quickly they respond to requests and errors, how their constituents feel about the impact the organization is making.
On a personal note, I’ve studied Collins principles for years and done my best to apply them. The results have been, even in this downward economical environment, double-digit growth for the last three years. If you lead a non-profit organization or are involved in one, the questions isn’t, “Can you succeed?” but, “Will you make the right choices that lead to success?”
“Every institution has its unique set of irrational and difficult constraints, yet some make a leap while others facing the same environmental challenges do not. This is perhaps the single most important point in all of Good to Great. Greatness is not a function of circumstance. Greatness, it turns out, is largely is largely a matter of conscious choice, and discipline.” (Ibid, Kindle Locations 475-476)