Mission, Hedgehog, Flywheel

 

Good to Great in the Social Sector

For a summary of notes on company building from Jim Collins’ Good to Great, click here.

“During my first year on the Stanford faculty in 1988, I sought out Professor John Gardner for guidance on how I might become a better teacher.  Gardner…stung me with a comment that changed my life:  “It occurs to me, Jim, that you spend too much time trying to be interesting,” he said.  “Why don’t you invest more time being interested?” (Author’s Note)

“When you compare great companies with good ones, many widely practiced business norms turn out to correlate with mediocrity, not greatness” (p. 1).

Defining Great:  Calibrating Success Without Business Metrics

“[The] distinction between inputs and outputs is fundamental, yet frequently missed” (p. 4).

“A great organization is one that delivers superior performance and makes a distinctive impact over a long period of time” (p. 5).

“For a social sector organization…performance must be assessed relative to mission, not financial returns” (p. 5).

“It doesn’t really matter whether you can quantify results.  What matters is that you rigorously assemble evidence–quantitative or qualitative–to track your progress” (p. 7).

Level 5 Leadership–Getting Things Done Within a Diffuse Power Structure

“‘You always have power, if you just know where to find it.  There is the power of inclusion, the power of language, the power of shared interests, and the power of coalition'” (p. 10).

“In executive leadership, the individual leader has enough concentrated power to simply make the right decisions.  In legislative leadership…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 upon persuasion, political currency, and shared interests to create the conditions for the right decisions to happen” (p. 11).

“Level 5 leaders differ from Level 4 leaders in that they are ambitious first and foremost for the cause, the movement, the mission, the work–not themselves–and they have the will to do whatever it takes (whatever it takes) to make good on that ambition” (p. 11).

“Level 5 leadership is not about being ‘soft’ or ‘nice’ or purely ‘inclusive’ or ‘consensus-building.’  The whole point of Level 5 is to make sure the right decisions happen–no matter how difficult or painful–for the long-term greatness of the institution and the achievement of its mission, independent of consensus or popularity” (p. 11).

“If I place a loaded gun to your head, I can get you do to things you might not otherwise do, but I’ve not practiced leadership: I’ve exercised power.  True leadership exists only if people follow when they have the freedom not to” (p. 13).

First Who–Getting the Right People on the Bus, Within Social Sector Constraints

“The great companies…focused on getting and hanging on to the right people in the first place–those who are productively neurotic, those who are self-motivated and self-disciplined, those who wake up every day, compulsively driven to do the best they can because it is simply part of their DNA” (p. 15).

“First, the more selective the process, the more attractive a position becomes–even if volunteer or low pay.  Second, the social sectors have one compelling advantage: desperate craving for meaning in our lives….Third, the number-one resource for a great social sector organization is having enough of the right people willing to commit themselves to the mission” (pp. 16-17).

The Hedgehog Concept-Rethinking the Economic Engine Without a Profit Motive

“The essence of the Hedgehog Concept is to attain piercing clarity about how to produce the best long-term results, and then exercising the relentless discipline to say, ‘No thanks you’ to opportunities that fail the hedgehog test.”  When we examined the Hedgehog Concepts of good-to-great companies, we found they reflected deep understanding of three intersecting circles: 1) what you are deeply passionate about, 2) what you can be the best in the world at, and 3) what drives your economic engine” (p. 17).

“[A] fundamental difference between the business and social sectors [is that the] third circle of the Hedgehog Concept shifts from being an economic engine to a resource engine” (p. 18).

I submit the resource engine has three basic components: time, money, and brand.  ‘Time’…refers to how well you attract people willing to contribute their efforts for free, or at rates below what their talents would yield in business (First Who).  ‘Money’…refers to sustained cash flow.  ‘Brand’…refers to how well your organization can cultivate a deep well of emotional goodwill and mind-share of potential supporters” (p. 18).

“The critical step in the Hedgehog Concept is to determine how best to connect all three circles, so that they reinforce each other.  You must be able to answer the question: ‘How does focusing on what we can do best tie directly to our resource engine, and how does our resource engine directly reinforce what we can do best?” (p. 22).

Turning the Flywheel–Building Momentum by Building the Brand

“By focusing on your Hedgehog Concept, you build results.  Those results, in turn, attract resources and commitment, which you use to build a strong organization.  That strong organization then delivers even better results, which attracts greater resources and commitment, which builds a stronger organization, which enables even better results” (pp. 23, 24).

“[Building a great organization requires a shift to ‘clock building’–shaping a strong, self-sustaining organization that can prosper beyond any single programmatic idea or visionary leader” (pp. 24, 25).

“[A] key link in the social sectors is brand reputation-built upon tangible results and emotional share of heart–so that potential supporters believe not only in your mission, but in your capacity to deliver on that mission” (p. 25).

“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….Greatness is not a function of circumstance.  Greatness…is largely a matter of conscious choice, and discipline” (p. 31).

Company Building: Greatness Vs. Success

Good to Great

By Jim Collins

Flywheel vs. Doomloop

  • “No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand problem, no one killer innovation, not solitary lucky break, no miracle moment” (p. 186)
  • “Sustainable transformations follow a predictable pattern of buildup and breakthrough. Like pushing a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough” (p. 186).

Greatness vs. Success

  • “Enduring great companies don’t exist merely to deliver returns to shareholders…” (p. 194)
  • “Indeed, the real question is not, ‘Why greatness?’ but ‘What work makes you feel compelled to try to create greatness?’ If you have to ask the question ‘Why should we try to make it great? Isn’t success enough?’ then you’re probably engaged in the wrong line of work.

Disciplined People

  • Level 5 Leadership
    • A paradoxical mix of personal humility (give others credit [window] for what when right and take the blame [mirror] for what went wrong and professional will (results, diligence)
    • Equals Servant Leadership
  • First Who, Then What
    • “Who?” questions come before “what?” questions
    • Sustainable succession vs a genius with a thousand helpers” (p. 47)
    • Right people “on the bus;” wrong people “off the bus”
    • Best people on greatest opportunities, not problems
    • No doubtful hiring.
    • Validate change (change when it is not just a matter of having someone in the wrong seat on the bus)
    • Leading people is inspiring them with a vision and example
    • Compensation doesn’t motivate the right behaviors from the wrong people; “Whether someone is the ‘right person’ has more to do with character traits and innate capabilities than specific knowledge, background, or skill” (p. 64); the right people are self-motivated
    • Layoffs are not a strategy to meet numbers

Disciplined Thought

  • Confront the Brutal Facts
    • Create a culture in which the truth can be heard
      • Lead with questions
      • Encourage engagement/participation (LDRS 291!)
      • Review (“conduct autopsies”) without blame
    • Retain hope that no matter what your team will succeed
  • Hedgehog Concept
    • “Hedgehogs simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything (p. 91).
      • Understanding what the team can be best at the world at doing (vs. want to be best at) and what it cannot be best at the world at
      • Understanding what the team is most passionate about doing
      • Understanding what sustains the team economically – it’s economic engine
      • Defining the Hedgehog Concept is an iterative process

Disciplined Action

  • Culture of Discipline
    • “Bureaucratic cultures arise to compensate for incompetence and lack of discipline, which arise from having the wrong people on the bus in the first place. If you get the right people on the bus, and the wrong people off, you don’t need stultifying bureaucracy” (p. 142)
    • “The single most important form of discipline for sustained results is fanatical adherence to the Hedgehog Concept and the willingness to shun opportunities that fall outside the three circles” (p. 142)
    • Is there such a thing as a once-in-a-lifetime opportunity?
  • Technology Accelerators
    • “Does the technology fit directly with your Hedgehog Concept?” (p. 162)
    • “Great companies respond with thoughtfulness and creativity…mediocre companies react and lurch about…(p. 162).