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Moving from good to great

January 1, 2008
by Dennis R. Jacobs, PhD
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How a nonprofit behavioral healthcare organization began its transformation process

How do you impose discipline on a rapidly growing organization? Where do you start? What are the right questions to ask? And where do you go for answers? These were questions our Leadership Team asked itself two years ago.

For the past 20 years, New Passages Behavioral Health & Rehabilitation Services in Pontiac, Michigan, has been providing community-based support and treatment to adults with serious mental illness and children with severe emotional disturbances. Over these 20 years, New Passages experienced significant and continued growth. Today New Passages provides services in 13 Michigan counties, with more than 60 sites serving approximately 7,000 people. As a result of pressures produced by growth and a rapidly changing healthcare environment, New Passages’ Leadership Team decided to embark on a journey of transformation that ultimately would lead the organization to greatness.

In an effort to address the most fundamental of these challenges, New Passages’ Leadership Team began to think about a transformational process that would take the organization from good to great. During this process, a Leadership Team member recommended Jim Collins’ book Good to Great: Why Some Companies Make the Leap…and Others Don't.1 The entire team began reading and discussing Good to Great during weekly meetings. The most important thing we concluded was that we did not want to emulate a for-profit business, but rather we wanted to use the basic tenants of Good to Great to transform New Passages while maintaining our fundamental values and our mission as a nonprofit behavioral healthcare organization. We chose four of Collins’ basic tenants in Good to Great to drive our transformation process.

Focusing on Our Core Business

Based on Collins’ book, the first question we asked ourselves was, “What is New Passages’ core business?” The Leadership Team concluded that our core business is, and always has been, the provision of community-based services to adults with serious mental illness and children with severe emotional disturbances. The point here is that while many business opportunities appear attractive on the surface, they could dramatically distract our organization from its focus on our core business and ultimately result in what Collins calls mission drift.

New Passages experienced mission drift when attempting to develop a small transportation subsidiary. Consumers in a day program clearly needed transportation. We secured a grant for the service's initial funding, but we had not considered the hidden costs in running what turned out to be a small business. We had not thought through such issues as establishing routes, training drivers, and maintaining vehicles. In theory, a small transportation business seemed to make sense, but it took far more time to manage and was far more costly than we predicted. We learned over time that these kinds of ventures distracted us from our core business and drained already limited resources.

Once the Leadership Team agreed that New Passages’ core business is behavioral healthcare, we turned our attention to building the New Passages brand. Using Collins’ Hedgehog Concept, we focused our resources on our current business and rejected resources inconsistent with what we are deeply passionate about, what we do best, and what drives our resource engine.

Collins defines the Hedgehog Concept as the ability “to attain piercing clarity about how to produce the best long-term results and then exercise the relentless discipline to say ‘no thank-you’ to opportunities that fail the Hedgehog test.” New Passages has failed the Hedgehog test several times over the years. In the past two years, however, we have become much more disciplined.

A good example of this discipline was when a New Passages supporter offered to donate an apartment building. Initially, this seemed to fit nicely with New Passages’ mission. Yet after a detailed analysis it became clear that housing was not what we are passionate about. In the long run, it would have been a distraction from our core mission. Declining the donation was a difficult decision, but it was the right one, given that we would have had to raise tens of thousands of dollars to bring the apartment building up to our standards.

The Leadership Team chose The Road to Recovery as our theme and tied it to our brand. A key link to the community for nonprofits is brand recognition and reputation. We were determined to build upon our core business and measure tangible results. Our goal was to ensure that potential supporters would believe in our mission and in our capacity to deliver on that mission.

Getting the Right People on the Bus

The second tenant we found useful in Good to Great was the idea that great businesses have the right people “on the bus.” In his research Collins found that great companies do not spend a lot of time restructuring but rather put energy into finding the right person for every position. This resonated with us because of our rapid growth. We took to heart Collins’ idea that it is best to “hire slow and fire fast.” The sooner we got the right people “on the bus” and aligned with the right positions, the faster we could begin to move the organization toward greatness.