Not so Great in the Social Sectors

UPDATE 2/25/2008: Skeptics read this. Then read this.

I read Jim Collins' Good to Great a few months ago. It really helped me articulate and connect some intuitive ideas that were rolling around in my head. Collins' unassailable methodology gives me great confidence and enthusiasm when I put his ideas to use.

I was very excited to learn about the recently released companion monograph, Good to Great and the Social Sectors, in the hopes that it would throw some light into a few dark corners that we in the social sectors seem to have all to ourselves. The corner left least illuminated by the first book was one of the three components of "The Hedgehog Concept". The Hedgehog Concept is the critical fulcrum at which your business or nonprofit may turn from good to great if you have methodically and diligently applied the principles of leadership, discipline, and careful recruitment of the right people.

The Hedgehog Concept has three key components: what you can be the best in the world at; what you are deeply passionate about; what drives your economic engine. Like a Venn diagram, the point where these three components overlap is your Hedgehog Concept, and you channel all your resources toward that, and shear away anything that does not support it. By doing so, your business can generate flywheel momentum - through discipline and time - that will carry your outfit to greatness.

Good to Great does an excellent job of laying out the scheme for this - not in a hokey, self-help business-section-at-Barnes-and-Noble way, but in a substantive, thoughtful, and convincing way. Collins received a huge response from people in the social sectors asking how to apply the theories to the arcane-seeming machinations of the nonprofit world. The monograph is worth reading and has some great things to say about leadership styles, discipline, and the vagaries of finding the right people when you're not paying much, or not paying at all.

To my great disappointment, however, Collins really drops the ball on a crucial bit of information (which I hope he can rectify in promised future studies of the social sector): the economic engine circle of the Hedgehog Concept. The beauty of the Hedgehog Concept rests in its directness and simplicity. The profit/x formula for meausuring the power of your economic engine is the core of evaluating the viability of your Hedgehog Concept. In Good to Great Collins makes a relatively innocuous comment about applying the profit/x concept in the social sector by saying you can substitute "cashflow/x" instead. In Social Sector Collins replaces the "cashflow/x" concept with a "resource engine" comprising three more parts: time, brand, and money.

Money is easy, time is workable, but "brand" he describes as a sort of emotional capital and makes several references to how difficult this and other social sector outcomes may be to evaluate. What made me cross, was that, aside from complicating a beautifully simple idea, it also created an unquantifiable variable right smack in the middle of what used to be a simple mathematical equation designed to focus energies of your organization and drive your flywheel to greatness. Brand-building seems to be a gooey sort of concept that you work really hard at and hope like hell it catches, but that has always been slippery and difficult to quantify. Unless Collins comes up with a better way to quantify the "brand" part of that circle, I'm going to stick with "cashflow/x" for the time being.

It's tricky, but you can apply it in theatre if you really work at it. Some "x" I've come up with are "board member," "artist," "audience member." Each one reflects a different focus - "board member" on fundraising, "artist" on production quality, "audience" on the experience of the production.

If Collins (or anyone) can get a better grip on the "brand"problem as it relates to the Hedgehog Concept, I think it will still be a great tool for social sector organizations. To his credit, he says that "the inherent complexity [of social sector economic structures] requires deeper, more penetrating insight and rigorous clarity than in your average business entity." Unfortunately, he provides only a relatively simplistic matrix as the only tool to assess that complexity.

The other parts of the modified "resource engine" circle can be quantified - I've got an idea I'm going to try out soon that involves creating a volunteer incentive and rewards program that operates in a way similar to a food co-op with working members. I'll keep you posted.

In the meantime, absolutely read Good to Great, read Good to Great and the Social Sectors - especially the part about leadership, and keep on ranchin' 'till the money runs out.