In October of 2001, Jim Collins published his most popular book to date, Good to Great: Why Some Companies Make the Leap….. and Others Don't, describing and demonstrating for us some of the critical ways in which organizations can successfully adapt and advance in a rapidly changing technological, economic, and social environment. But, with numerous examples of the successful implementation of these principles in corporations across the USA and even across the world, I and many others have nonetheless wondered about their application to the not-for-profit and social sector.
Like most of us, I have read Collin’s book but, more recently, I also had the opportunity to meet and discuss with him some of the principles for great organizations that he presented in his book, and it was on this question of applicability to the social sector – and especially to education – that we focused our conversation. Collins referred us to his 2005 Monograph, a supplement to his book Good to Great entitled Good to Great and the Social Sectors, wherein he noted a number of ways in which public colleges differ from for-profit businesses, two of which I want to focus on here: Differences in Leadership, and Differences in the Relationship Between Mission and Money.
Differences in Leadership
- Whereas the CEO of a for-profit business has the power to make and implement any decision she chooses (what Collins calls “Executive Leadership”), the power of a college President is more contingent upon internal ownership and support (“Legislative Leadership”). For a college to change its direction, sense of purpose, goals, or even the processes by which those goals are pursued, a president must engage in and attempt to steer the formal and informal community convenings and conversations by which such decisions are given efficacy. Bargaining, leveraging, and negotiating trade-offs are all part of being a president, but the true power of this role comes in being able to tell stories and form images that capture and then coalesce the emotional energy of those who make up that community, that college. Always messy, always incomplete, this nonetheless is the work of the effective legislative leader.
Differences in the Relationship Between Mission and Money
- Whatever else may be the “mission” of a for-profit business, making money is at the core of this purpose. Money is “invested” with the explicit expectation that money will be made – Return on Investment (ROI). But, for the not-for-profit, Mission is almost never connected to money, making the connections between “investment” and “mission attainment” much more difficult to effect, or even discern. ROI becomes a much more complicated calculation.
So, what does all this have to do with Outcomes Funding? Well…………
Outcomes Funding is most often presented in terms that reflect a belief in what academics call Resource Dependency Theory – the idea that changing the sources and configurations of financial inputs will result in an organization’s adjustment of external coalitions and internal practices in order to stabilize and maximize these financial inputs. This makes intuitive sense and, for the most part, seems to hold true when we look at for-profit businesses: Companies DO adapt to maximize profits, ROI.
But, when we try and apply this principle to the not-for-profit/Social/Education sectors, the dynamics of Resource Dependency Theory in general and, I believe, Outcomes Funding in particular, begin to break down. And here’s why……
Resource Dependency Theory is explicit in its recognition that its impact is limited to BEHAVIORS and not BELIEFS. Changes in Resources will tend to have the effect of changing the Standard Operating Procedures (SOPs) of an organization in order to stabilize and maximize the benefit from these changes in Resources, but it will have little or no effect on the “deeper processes” of an organization, such as its sense of purpose, or Mission. Of course, for organizations where profit – or ROI – IS the purpose, this does not create any problems, any conflict. In fact, for these organizations, Resource Dependency Theory actually EXPLAINS the relationship between Mission and organizational behavior. But for the not-for-profit where Mission has nothing to do with profit (as Collins notes in his 2005 Monograph), such organizational manipulation via changes in resources often creates a tension between Practice and Purpose and, even when you are successful in changing SOPs, the efficacy of these changes is severely limited by that tension. In short, you cannot effectively incentivize an organization to accomplish something that it does not believe in.
So, what can we do to “move the dial on 40-40-20”? I believe the answer lies in the work of Simon Sinek, author of the 2011 book Start With Why. As he suggests, in order to make effective and lasting change in an organization, you have to start by asking – and answering – the question of WHY that organization exists. What is its Purpose; What is its Mission? And, as Collin’s work suggests, answering these questions for the not-for-profit organization is NOT accomplished by edict, administrative decision, or legislative mandate. Instead, it takes the kind of “legislative leadership” that focuses on capturing and then coalescing the emotional energy of those who make up that organization, that tells stories and forms images that make it possible for the organization’s members to gather around a Purpose that they believe in enough to pursue. (If you doubt the need for this affective approach to organizational change, I’d like to suggest you read some of Jonathan Haidt’s work, especially his most recent book, The Righteous Mind: Why Good People Are Divided by Politics and Religion (2013).) This is hard and difficult work. But I believe that, when given the guidance, support, and time necessary, our college presidents can lead what I refer to as the “Passionate Persistence in the Pursuit of Purpose” that is essential to our collective success. But we have to “Start with Why” and not with “What” or “How.”
In the end, when we together do the hard work of forming a collective Purpose that reflects a commitment to 40-40-20, then Outcomes Funding becomes not an incentive to do something we might not otherwise do but a resource that enables us to pursue something we already believe. And this is how we will experience success.