I once asked the very effective CEO of a Fortune 500 corporation how his extensive experience working in the social sectors applied to business. “The experience prepared me better for leading a company than my Harvard MBA,”he replied.
“I don’t see how working in the social sectors can prepare you better for running a company,”I pressed. “They seem like very different worlds.”
“I didn’t say running a company,”he responded. “I said leading a company.”
We should not be surprised by the findings of the Survey of Leadership Practices (see “Peak Performance: Nonprofit Leaders Rate Highest in 360-Degree Reviews”on page 12). Business leaders face a very different power structure than do social-sector leaders. Imagine you could create a “power map”for your organization, with circles sized proportionally to the amount of power garnered by any individual or group. Given 100 points of power in your system, how would you map the distribution of power? If we drew a power map for Wal-Mart under founder Sam Walton, for example, we would find a giant circle with more than 90 points of power under the name Sam. He had enough concentrated power to impose his will: if he wanted Wal-Mart to turn right, it would turn right. Most business executives enjoy a higher proportion of concentrated power than leaders in the social sectors. Rarely do social-sector leaders have enough concentrated power to single-handedly make a decision happen, whereas individuals or subgroups frequently have enough negative power to stop a decision.
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When we examined the differences between the business and social sectors through the lens of the good-to-great framework, this difference in power structure led us to advance the theory of “legislative” versus “executive”leadership. In executive leadership, the individual leader has enough concentrated power simply to make the right decisions happen. Legislative leadership, on the other hand, relies more on persuasion, political currency, and shared interests to create the conditions for the right decisions to happen. In the discussion of the Survey of Leadership Practices by Jean R. Lobell and Paul M. Connolly, we see legislative leadership in action, with high nonprofit scores on dimensions like persuasiveness, encouraging participation, sharing credit, teaming, and organizational sensitivity. With the legislative versus executive distinction in mind, these relatively high scores for nonprofit executives make perfect sense.
That said, we should be mindful not to confuse the behaviors and practices of leaders (whether they are participative or whether they make people feel empowered, for example) with the performance of leaders. The output—and the ultimate measuring stick of a leader—must be results. The critical question is not whether we like or dislike the methods of an individual leader—or whether we think those methods are “good” or “bad”—but whether the leader brings about superior and lasting results consistent with the values and mission of the organization. Legislative leadership is not “better” than executive leadership; whether you need to employ primarily executive or primarily legislative leadership depends on the power map.
Business executives can learn much from great nonprofit leaders, as they increasingly need to become skilled at both executive and legislative leadership in the face of declining concentrated power. Key employees find entrepreneurship an increasingly viable option, recruiters swarm after the best people in a war for talent, young people reject the idea of long-term employment at a single enterprise, boards and shareholders demand more executive accountability, the media exposes and amplifies flawed decisions and poor performance, and so on. If true leadership exists only when people follow even though they have the freedom not to follow—and I believe it does—then perhaps our next generation of great business executives will increasingly come from the social sectors, not just the other way around.
JIM COLLINS is the author of Good to Great and the Social Sectors.