Becoming more like a business?

Why “Becoming More Like a Business” Is NOT the Solution for Nonprofits

By Steven E. Mayer, Ph.D

It doesn’t really matter whether you can quantify your results.  What matters is that you rigorously assemble evidence – quantitative or qualitative – to track your progress.” – Jim Collins, in Good to Great in the Social Sectors.

“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.’” 

This is Jim Collins’ opening statement in Good to Great And the Social Sectors, a monograph to accompany his classic 2001 management book, Good to Great.

It is also one of the first assigned readings in my class, “Nonprofit Program Development and Evaluation,” offered by Johns Hopkins University in its Master Degree Program in Nonprofit Management.  

I needed something to help students appreciate that the business sector doesn’t hold a monopoly on the concept of effectiveness.  Would we say instead that businesses should operate more like a nonprofit?  Some might.  The fact is, and Collins says it clearly, that a great many organizations from both the business and nonprofit sectors are simply mediocre.  Why are they mediocre? It’s because their practices are mediocre.  

For the social sectors, Collins puts forth five principles, the first one — the necessity of defining “great” without business metrics – sets the stage nicely.  “To throw our hands up and say we cannot measure performance in the social sectors the way you can in a business is simply a lack of discipline. … It doesn’t really matter whether you can quantify your results.  What matters is that you rigorously assemble evidence – quantitative or qualitative – to track your progress.  If the evidence is primarily qualitative, think like a trial lawyer assembling the combined body of evidence.  If the evidence is primarily quantitative, then think of yourself as a laboratory scientist assembling and assessing the data.”

I’ve espoused this principle for years, first in a 1983 project that mimicked a courtroom presentation of evidence on the merits of a school-based drug prevention program conducted in mostly rural Monticello, MN.  Using an evaluation model advanced by the National Science Foundation, I asked, “Pretend you’ve been accused of running a trivial or ineffective program – what evidence can you marshal in your defense?”

What ensued was an evening–long program, presented in a packed high school gym.  You can read about it here.

Asking that “Pretend you’ve been accused…” question is a good exercise for any nonprofit program director, or any foundation grants officer.  At the least, it gets your attention.  Then, it gets you to think about what basket of evidence could you pull together to convince a group of your peers that your program’s effective.  Bonus: unless you’re operating in a field with accepted standard metrics, you get to define what’s effective, and what data taken as a whole should suggest effectiveness in relation to your overall mission.

And you readers with one foot in the business world but who can’t really see the results of your work directly in your enterprise’s bottom line ought to relate to the same question – what evidence suggests your unit is performing well, well enough to connect logically to your bottom line?  Can you imagine assembling what different kinds of data could support your opinion, analyzing them critically, and coming to a credible conclusion?  It’s the very same challenge in both the private and the nonprofit sector, and the public sector as well.


This blogpost was published in an earlier form to this website on April 18, 2012. 

How to cite this blogpost: Mayer, Steven E., Why “Becoming More Like a Business” is NOT the solution for Nonprofits. Minneapolis: Effective Communities Project. Downloaded from [month, date, year]