One of the business best-sellers in recent years was Good to great: if you have been in an airport in the last couple of years, you are sure to have seen it 😉 A while ago Jim Collins produced Good to great and the social sectors. In this he takes a look at not-for-profit and mission-driven organizations, and what approaches make them ‘great’. His tag line is the title of this entry: why business thinking is not the answer.
We must reject the idea – well-intentioned, but dead wrong – that the primary path to greatness in the social sectors is to become “more like a business.” Most businesses – like most of anything else in life – fall somewhere between mediocre and good. Few are great. When you compare great companies with good ones, many widely practiced business norms turn out to correlate with mediocrity, not greatness. So, then, why would we want to import the practices of mediocrity into the social sectors? [Page 2]
He argues that a great organization is one that delivers “superior performance and makes a distinctive impact over a long period of time.” How do you measure superior performance? Well for a business financial returns are a reasonable measure, he notes. But he goes on to say:
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?” [Page 5]
A business has financial inputs and financial outputs, and financial outputs are a core performance measure. An organization in the social sector has financial inputs, but does not have financial outputs. A key part of Collins’ argument is that organizations need to define outputs which are a measurement of ‘greatness’. Outputs which can be tracked and managed towards. He suggests a framework into which these might fit: superior performance, distinctive impact, and lasting endurance, and gives some examples.
This is quick read, and well worth while. We often hear that libraries ought to be run more like businesses. But this is silly. Libraries should look for good models in business as well as in other social sectors. And increasingly, libraries and library organizations need to look to a variety of expertises – technical, logistics and supply-chain management, marketing – to improve their services. They ought to be well-run, which means being clear about what value they create and working towards it with the best available models and expertise. It does not mean being ‘more like businesses’.
Here are the bibliographic details: Collins, J. C. (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].
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