What makes a good charity a great one?

By Marcia Stepanek

updated 7:22 p.m. ET March 20, 2008

Jim Collins, 49, perhaps the most influential management expert alive today, has served as a teacher to senior executives and CEOs at more than a hundred corporations worldwide. He also has worked with social sector organizations, including the Girl Scouts of America, Johns Hopkins Medical School, and the United States Marine Corps. A self-described entrepreneur, Collins’ 2001 book, “Good to Great: Why Some Companies Make the Leap … and Others Don’t,” attained long-running positions on The New York Times, The Wall Street Journal, and BusinessWeek best-seller lists and has sold 2.5 million hardcover copies since publication. The book, which Collins says also has been popular with nonprofit executives, has been translated into 32 languages. In 2005, Collins, a former Stanford University business school professor, wrote a 36-page monograph to apply his “Good to Great” research and insights about management and leadership excellence to the social sectors. Since then, Collins says, he has been inundated with cards and letters from nonprofit executives and other civic leaders, thanking him for rejecting a commonly held view that “the primary path to greatness in the social sectors is to become ‘more like a business.” CONTRIBUTE Editor-in-Chief Marcia Stepanek, who interviewed Collins when “Good to Great” debuted, caught up with him again to talk about today’s for-profit philanthropy movement, the talent turnover in the nonprofit sector and Collins’ new thinking about the business of making a difference. What follows is an edited transcript of that interview.

All of your work during the past 15 years has focused on one simple dichotomy — the difference between good and great companies. Now you’ve extended your research to the social sector. Why? Isn’t the essence of what it means to be great universal?

Somewhere between 30 and 50 percent of those who read “Good to Great” work in the social sector. I was getting cards and letters from people in education, police chiefs, people who fly squadrons of fighter jets, and people in nonprofits and orchestras, military units, health care centers—and churches, synagogues, and seminaries. I didn’t expect these people would be readers, but these people were asking a lot of questions — how, mainly, did my ideas about what separates a great company from a good one apply to the differing realities of the social sector?

So, for the next two years, I struggled to write 36 pages. That had to be a record for slow. But I was passionate about distinguishing this, as it came from a deep belief of mine that says that to be a truly great nation, we need to have a great social sector. We have to have great companies, of course, but that’s not enough.

What can charities learn about greatness from business?

We have to reject the idea, well intentioned but dead wrong, that the primary path to greatness in the social sectors is simply to become more like a business.

The truth is that most businesses aren’t great, and so we can’t learn about greatness by just looking at what the average business does. Most businesses are just average by definition.

So the really critical difference is not between business and nonbusiness. It’s the difference between great and good: there are great social sector enterprises, there are great companies, and there are mediocre social enterprises and there are mediocre companies. The disciplines of greatness are not the disciplines of business. In fact, truly great nonprofits will share more in common with a great corporation than a great corporation will share in common with an average corporation.

It’s mediocrity you don’t like.

I’m not criticizing business. I’m criticizing average-ness. I’m also criticizing the idea that just because a business does something, that a nonprofit should do it, too.

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