Tricky Business

Corporate executives might have a lot to learn from government leaders.

After Jim Collins released his best-selling business book Good to Great: Why Some Companies Make the Leap . . . and Others Don't (HarperCollins, 2001), he was surprised to discover that at least a third of the people who bought his how-to manual on business improvement were not corporate people, but managers and executives working in government and nonprofit organizations.

Over the past four years, Collins has turned his attention to government and nonprofits, intrigued by the far more complex challenges that leaders of agencies face when they are not driven by the profit motive. This winter, he issued a monograph titled "Good to Great and the Social Sectors" (available at online bookstores), which explores the differences between leadership in the for-profit and not-for-profit worlds.

"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,' " Collins writes in his 35-page report-a somewhat stunning revelation coming from someone with a history of analyzing private businesses. In interviews and discussions with about 100 government and not-for-profit leaders, Collins discovered that being a leader in government is harder than being a business executive. He is not surprised that so many business executives fail when they enter the public sector.

"Whether they answer to a nonprofit board composed of prominent citizens, an elected school board, a governmental oversight mechanism, a set of trustees, a democratic religious congregation, an elected membership association or any number of other species of governance, social sector leaders face a complex and diffuse power map," Collins writes. "Most non-business leaders simply do not have the concentrated decision power of a business CEO."

He points to Frances Hesselbein, former CEO of Girl Scouts of the USA, as a leader who understood the different power structure facing a not-for-profit leader. Whereas a business executive would describe himself as at the top of a power structure, Hesselbein arrayed plates, cups and saucers on a table, connecting them by forks, knives and spoons. She saw herself as one cup in a network of dishware, not as the person on top of an organizational chart. She couldn't just order people to do things, she had to persuade them.

Collins has thus come up with the idea that there are two types of leadership skill: executive and legislative. While most business leaders can rely primarily on executive skill (ordering people to act), government and not-for-profit leaders must rely more on legislative skill to achieve greatness for their organizations. "Legislative leadership relies more upon persuasion, political currency and shared interests to create the conditions for the right decisions to happen," Collins writes. He theorizes that both types are important for all leaders, but executive leadership alone won't work in the social sectors.

In fact, Collins further speculates that in an increasingly complex world-with a highly mobile workforce, more and more environmental and consumer group interest in corporate operations, and other changes-it might be that business leaders can learn a lot from their not-for-profit counterparts, rather than the other way around.

Collins is impressed by the caliber of leaders in the government and not-for-profit worlds. "There's this idea that somehow there are better leaders in the business sector and they need to come in and show folks in government or education how to lead or how to run an organization," he says. "I am now very skeptical of that idea." In fact, given the choice between a successful Fortune 500 corporate CEO and the successful budget director for a large state, Collins says he would probably choose the budget director to lead a project. "We ought to be open-minded to the idea that maybe our best business leaders may have been trained in non-business environments," he says.