Run Your School More Like a Business? Not So Fast

Fall 2016

By Keith Evans

A routine trip to buy a new pair of running shoes ended in disappointment. I wear a common size in a well-known brand, so I was surprised when the sales associate told me it was out of stock. “That is quite a popular shoe, and that size is a big seller,” the associate explained. “We’re sold out.”

This exchange came on the heels of a discussion at school about thinking and operating “more like a business.” I wondered: Like a business that runs out of its most popular item? How would such an easily solved inventory problem look back on campus?

“Sorry but ninth-grade English is very popular this year. We will not be able to accommodate your request for that class.”

But let’s not pick on the shoe store. What about the newspaper publisher who needed six weeks to get my address right and deliver a paper after I moved? Or the cable company that needed six confusing visits to hook up the televisions? Or the “clean diesel” Volkswagen that my son took to college that will soon be part of the most expensive recall in history?

The mythology about the “business world” is something independent school leaders are exposed to almost daily. In that imagined world, mediocre employees are never retained year to year, decisions are uniformly hard-nosed and courageous, work teams operate with flawless efficiency, and change is embraced for the wonderful possibilities it offers. We know this is make-believe because all of us encounter for-profit organizations that cannot seem to get it together, yet they still survive. Some become running jokes (cable TV companies are a staple of many comedians’ routines), while others flounder because of poor leadership choices, misguided strategy, or a culture that has integrity issues.

The running-a-school-more-like-a-business refrain has been on my mind recently. Like many of my colleagues, I have watched and listened as the independent school community has tried to come to terms with thinning enrollments, new competitors, and a whole new vocabulary of change management, strategic partnership, and marketing that was considered “too corporate” when I started teaching in the mid-1980s. Now, if you are not “pivoting your brand” to become a more “nimble” “silo buster” ready to “re-engineer” for the 21st century, well, you might just be part of the problem.

The same debate is even more intense in higher education, where one-fourth of college presidents now have business backgrounds but no experience in academia. When these converts to the idiosyncratic culture of the university misstep, an inevitable round of recrimination by faculty and others follows. The New York Times gave this topic a good workout in The Opinion Pages of March 1, 2016. The takeaway: Even when a business leader in charge of an academic institution does not flame out, mistrust and doubt seem to prevail. Higher education is, perhaps, a good test case should independent schools begin to explore the prospect of business leaders as school heads.

Neither the pioneering example of higher education nor our mastery of business buzzwords hides the reality that the run-your-school-more-like-a-business conversation is the wrong conversation using the wrong frame of reference and often employing the wrong vocabulary. The business world does, in fact, have something to offer independent schools. We are market-driven entities and share many characteristics with for-profit businesses. The problem is with the assumption that the business sector is uniformly more effective and efficient than any other. That assertion does not pass the sniff test and never has. Our daily lives tell the story of a range of effectiveness across the businesses we patronize both personally and professionally.

Author Jim Collins introduced a more on-point and helpful idea to many independent school leaders in his 2001 book, Good to Great, and then reinforced it in the 2005 monograph that followed, Good to Great and the Social Sectors. Collins persuasively argued that excellent organizations across sectors have more in common with one another than they do with mediocre organizations within their own sector. So your school or mine might find more kindred spirits in a highly personal local bank or an entrepreneurial soup kitchen than in that sleepy independent school across town. I recently attended a local church that modeled many practices that my school should enthusiastically emulate. We should also be more like ­ Amazon in some ways, CarMax in ­ others. But I don’t want to be more like that cable company.

Prior to Collins’s insightful texts, a body of research had already begun to develop around the shared qualities of high-performing organizations  commonly referred to as HIPOs. HIPOs are sometimes called “leading organizations,” but the same concept applies: Great organizations share distinctive qualities regardless of their respective missions or motives. Thinkers in this field do not agree on a precise list of commonalities, but all gravitate toward a recognizable organizational character. As far back as 1999, scholars from the Center for Creative Leadership (CCL) fashioned this definition of a HIPO from a comprehensive literature review:

A high-performing organization is characterized by an organizational system that continually aligns its strategy, goals, objectives, and internal operations with the demands of its external environment to maximize the organization’s performance.1

The CCL authors noted that these organizations use five components to dynamically adjust to their respective environments: self-managing work teams; employee involvement, participation, and empowerment; total quality management (TQM)2; integrated production technologies; and being a learning organization. HIPOs do not consist of these components but use them as needed with varying emphasis and priority.

In a 2011 report, the Boston Consulting Group took a more descriptive approach identifying five qualities of HIPOs3 

  • Leadership is aligned and effective deep within the organization.
  • The organization’s structure is lean and reflects its strategic focus.
  • The organization effectively translates business strategy into an effective people strategy, attracting and retaining the most capable people.
  • The organization can drive and sustain large-scale change and anticipate and adapt.
  • The culture is shaped to achieve strategic goals, and employees pursue corporate goals.

These constructs are just two samples from a large and still-growing body of thinking that suggests that the run-your-school-more-like-a-business focus is too narrow and limiting. Run-your-school-like-a-high-performing-organization is the goal. Don’t run it like a business, run it like a great business. Every good quality of a great business that applies to an independent school is captured in the idea of a high-performing organization. The HIPO concept, however, is not stuck with the baggage of the differences in a for-profit environment that do not apply. The HIPO model expands our institutional role models to include organizations that excel regardless of sector.

Why is this important? Independent schools are under increasing pressure to respond proactively to unsettled demographics, rapidly increasing tuitions, skeptical customers, and more. All of these challenges are typically understood as inhabiting the business side of the institution. In less tenuous times, schools could fend off run-it-like-a-business thinking by earnestly — and sometimes indignantly — describing the unique culture of academia. That rationale sounds far less persuasive in the face of current and projected existential threats. Yet independent school leaders need a response that resonates and rallies the troops. Anyone who has ever stood up in front of a faculty group and suggested that the school should run more like a business knows the inspiration deficit that results. Talk to your employees about being a high-performing organization, however, and you will likely get a different reaction. Better yet, make it into a field trip.

At The Westminster Schools (Georgia) in the summer of 2015, we identified 13 organizations in our city that we thought were making important and forward-thinking strategic moves. From the outside, each appeared to be a HIPO. They ranged from a tech incubator to a homeless shelter to a local professional sports team to a large federal government agency. We called a friendly executive at each and asked if he or she would host a group of 25 faculty and staff for a few hours one morning. The request was to talk to us about how they think about their future and what leadership means in their organization. No one turned us down. Instead, we were greeted with open, collegial arms and presentations that exceeded our expectations.

After our faculty and staff returned later that morning, we sat in mixed groups at lunch and focused on one question: “What did all of the organizations we visited have in common?” Not too surprisingly, the answers painted a portrait much like the HIPOs described in the research. The obvious next question was, “Does our vision, culture, and story align us with this group of leading organizations? How do they challenge and expand our aspirations?”

We mined the insights of that day throughout the next academic year. Reframing the run-the-school-more-like-a-business conversation freed us to have discussions that were previously limited by both vocabulary and imagination — or off-limits altogether. The power of thinking like a HIPO, however, does not end with just shaking off the limitations of the business construct. It can be a game changer across many different dimensions of an independent school. I’ll offer two examples of ways that HIPO thinking can reframe the challenges we face.

First example: Independent schools have been searching with little success for a new business model for at least a decade. Examination of the business model usually fast-forwards to budgets and operating statements and discouraging conversations about making more money from summer school. A business model is not, however, synonymous with a financial model. Business models begin with the same questions that are answered in the HIPO literature. Financial considerations are an expression of how those questions are answered. Would our business-model conversations reach a different conclusion if they began with questions about achieving high performance and got around to the money at the end? Probably.

Second example: Independent school culture often reinforces the externalization of the source of problems. That is, when things do not go well, blame is often assigned to helicopter parents, meddling trustees, change-averse faculty, or too fragile students, to name a few. The HIPO construct fundamentally changes the way we perceive problems, reframing them as leadership challenges. If our focus is on how we are evolving as an organization, then the activity we often label as misbehavior becomes evidence of the need for a different leadership strategy. Imagine a school in which miscommunication, conflict, intransigence, foot-dragging, boundary crossing, and myriad other pathologies of institutional life were all understood as revealing areas for leadership development. Yikes.

Those of us in charge would have a continually refreshing agenda for expanding our leadership capacity and would likely become very skilled in doing the same for our colleagues. We might even demand that our independent school associations provide the kind of intensive leadership development opportunities available to HIPO leaders across sectors. HIPO leaders think this way because their focus is on the performance of the organization — the place where they can have the most profound influence.

Einstein famously observed that we cannot solve our problems with the same thinking that created them. As independent schools face dilemmas different in both number and severity than any time in recent history, some new thinking is needed. The school/business dichotomy sets up a false choice and one that is increasingly discredited by research. By one estimate, HIPOs represent 13 percent of all organizations in the United States. These companies, hospitals, colleges, and human service agencies are thriving while adapting to change and meeting important human needs. Can we count our independent schools among them? If not, what would it take to be included in that 13 percent?

Give it some thought next time you are waiting for the cable technician to show up.

Notes

1. Kirkman, Bradley, Kevin Lowe, and Dianne Young. High Performance Work Organizations: Definitions, Practices, and An Annotated Bibliography. Rep. Greensboro, NC: Center for Creative Leadership, 1999. Print.

2. The essential goal of total quality management (referred to mostly by its acronym, TQM) is that all members of an organization participate in improving processes, products, services, and the culture in which they work. In other words, everyone is committed to maintaining high standards in every aspect of a company or organization.

3. Bhalla, Vikram, Jean Michel Caye, Andrew Dyer, Lisa Dymond, Yves Morieux, and Paul Orlander. High Performing Organizations: The Secrets of Their Success. Rep. Boston, MA: Boston Consulting Group, 2011.

Author
Keith Evans

Keith Evans is president of The Westminster Schools (Georgia).