This is based on a monograph (no, I didn’t know what a monograph was either) by Keda Consulting on a book by Jim Collins, “Good to Great and the social sectors.” I think it contains thoughts and perspectives well worth paying attention to. I have taken some of these threads, and woven them a little further.
Read the full monograph from Keda Consulting - see https://www.kedaconsulting.co.uk/2023/06/05/building-a-great-charity/?mc_cid=e52665a7df
In the private sector, measurement of success can realistically be measured by profit, or profit per something, or profit to shareholders. The measurement of success for the charity sector is much harder to define. It is more ‘how we deliver on our mission, or our impact relative to our resources.’ Obviously, how to measure this becomes an issue.
Collins describes three components of a great charity
Superior performance, as defined by results and efficiency in the delivery
Distinctive impact - the contribution to the community is such that if that organisation ceased operating, it would leave an unfillable hole
Lasting endurance - the delivery of results lasts over time, over leaders, over market cycles and over funding cycles. The business engine is robust enough to endure changes in its components
Track progress to become a great charity
This is a hugely important principle. You are unlikely to improve by simply continuing what you are already doing - let alone becoming great. In order to make changes that lead to improvement, you have to be able to judge that improvement. Otherwise how can you judge the effect of the change? You need to be able to both track and measure it.
The crucial step of this is not so much finding the right indicator. All indicators are flawed. For example, proving causality in a complex system. Rather it is about settling upon a consistent and intelligent method of assessing your output results, and then tracking your trajectory with rigour.
Consider
What do you mean by great performance?
Have you established a baseline?
Are you improving? If not, why not?
How can you improve even faster toward your audacious goals?
Cleveland Orchestra - A case study
Cleveland Orchestra was the example used in Collins’ book. They set a ‘Big Hairy Audacious Goal’, which was to become recognised as one of the three greatest orchestras in the world. They asked a simple question – what do we mean by great results? They tracked a variety of indicators as shown below:
Superior performance
Emotional response of audience; number of standing ovations increased.
Wide technical range: can play any piece with excellence, no matter how difficult – from soothing and familiar classical pieces to difficult and unfamiliar modern pieces.
Increased demand for tickets – even for more complex, imaginative programmes, not just in Cleveland, but also when visiting New York and Europe.
Invited (and then reinvited, and reinvited again) to Salzburg Festival – for the first time in 25 years, signifying elite status with the top European orchestras.
Distinctive Impact
The Cleveland style of programming increasingly copied and becoming more influential.
A key point of civic pride; cab drivers say, “We’re really proud of our orchestra.”
Severance Hall filled to capacity two nights after 9/11, as a place for the community to grieve together through the transformative power of great music.
Orchestra leaders increasingly sought for leadership roles and perspectives in elite industry groups/gatherings.
Lasting endurance
Excellence sustained across generations of conductors from George Szell through Pierre Boulez, Christoph von Dohnanyi, and Franz Welser-Most.
Supporters donate time and money, investing in the long-term success of the orchestra; endowment tripled.
Strong organisation before, during and after Tom Morris’s tenure.
The five principles of Good to Great and the Social Sectors
1. Right leadership
In the non-profit sector, good leaders show a compelling combination of personal humility and professional will - a key factor in creating legitimacy and influence. This is particularly relevant within the complex governance and diffuse power structures of the non-profit sector where CEOs tend to have less direct power than their peers in the private sector.
Good leadership is not only about being “inclusive” or “consensus-building.” As one social sector leader confided, “It is my responsibility to ensure that the right decisions happen – even if I don’t have the sole power to make those decisions, and even if those decisions could not win a popular vote. The only way I can achieve that is if people know that I’m motivated first and always for the greatness of our work, not myself.”
2. Right people - do whatever you can to get the right people on the bus (organisation), the wrong people off the bus, and the right people into the right seats (positions). Most humans value ‘meaning’ in their lives. Charities can provide this meaning, or at least something meaningful.
3. Key Triad (hedgehog concept) - this represents three circles or triads that need to be connected and balanced. This is where the real pivot between good and great happens. It is significant to understand your answers to these three questions, and how the principles underlying them interact.
What is our organisation most passionate about? Why do we exist?
What can we uniquely contribute to the people we serve? What can we be best at?
What drives our resource engine (time, money, brand)?
Typically, capital markets channel resources into businesses that deliver the best, and typically that best is profit. For non-profits, this is much harder to define. What does ‘deliver the best’ look like? It does not necessarily, directly follow that the most effective or impactful gets the most resources. Some charities are excellent at delivery, less so in funding. Others are excellent at funding, less so at providing the services. An excellent charity needs to excel at both. For this to happen, in a complex environment, charities require deeper, more penetrating insight and rigorous clarity than your average business entity. A great charity must connect these three in a way that they reinforce each other. A great charity needs to recognise how delivery of the mission supports the resource engine and vice versa.
4. Building momentum by building the brand - turning the flywheel
By focusing on your Key Triads, or Hedgehog Concept, you build results. Those results, in turn, attract resources and commitment, which you use to build a strong organisation. That strong organisation then delivers even better results, which attracts greater resources and commitment, which builds a stronger organisation, which enables even better results. This is the flywheel. Success breeds support and commitment, which breeds even greater success, and round we go. In the for-profit world, this works well. Deliver superior financial results and the world will line up, eager to give you capital. This is much more difficult in charities - there is no guaranteed relationship between exceptional results and sustained access to funds. It can actually detract. Many funders wish to place restrictions on how their funding can be used. But restricted giving misses a fundamental point: to make the greatest impact on society requires first and foremost a great organisation, not a single great programme.
5. Building greatness to last
Truly great organisations prosper through multiple generations of leaders, the exact opposite of being built around a single great leader, or great idea or specific programme. Leaders in great organisations build processes and procedures that stimulate progress and engender improvement. They are not dependent on one personality or one program.
Enduring great organisations are characterised by a fundamental duality. On the one hand, they have a set of timeless core values and a core purpose that remains constant over time. On the other hand, they have a relentless drive for change and progress - ‘preserve the core and stimulate progress’.
No journey towards excellence is easy. It simply doesn't happen with an attitude of, “whatever … that’s good enough.” It takes discipline and consistent applications of right action. That is true of life as well as business. You need clarity on what excellence looks like, what to aim at - then commit to it.
No matter how much you have achieved, you will always be merely good relative to what you can become. Greatness is an inherently dynamic process, not an end point.
In Conclusion
Nowhere in life do you excel by being half-hearted or wishy-washy. You need to put in the right effort, in the right direction, for the right reason - consistently. How can you expect otherwise? In health, in business, in life. Excellence does not happen by accident.
To summarise all of this:
There are three components of a great charity
Superior performance, as defined by results and efficiency in the delivery
Distinctive impact - the contribution to the community is such that if that organisation ceased operating, it would leave an unfillable hole
Lasting endurance - the delivery of results lasts over time, over leaders, over market cycles and over funding cycles. The business engine is robust enough to endure changes in its components
Crucial components of the journey towards greatness include
Measuring and tracking progress. For this to happen you need to identify what is most useful, sensible and relevant to track. Having established that, track it with rigour. This will involve asking the right questions.
Right leadership - getting this in place is essential
Right people - get the right people on the bus (organisation), the wrong people off the bus, and the right people into the right seats (positions)
Key Triad (hedgehog concept) - this represents three circles or triads that need to be connected and balanced. This is where the journey to great really starts. The three principles are reflected by the three questions
What is our organisation most passionate about? Why do we exist?
What can we uniquely contribute to the people we serve? What can we be best at?
What drives our resource engine (time, money, brand)
Turning the flywheel - turn the wheel of resources and commitment … build a strong organisation. That strong organisation then delivers even better results, which attracts greater resources and commitment, and so the wheel turns
Building greatness to last - I think this is the most significant of all. Greatness does not happen by accident. It takes a deliberate decision and then sustained commitment and resources to achieve. Bumbling along, with an attitude of, “well, we’re doing okay - let’s just keep doing what we have always done” does not lead to greatness.
What do you think? Where are you on your journey towards excellence?
This article is part of a larger piece of work around business resilience
and governance.
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