Kids Company: a classic tale of start-up failure and the problems of the ‘strong leader’?

The sudden collapse of the high-profile (tho rather small) Kids Company charity has been getting lots of headlines.

A quick look at its history and its published accounts suggests this is a pretty classic example of an entrepreneurial and charismatic ‘Leader’ coming up with a good idea – let’s call it ‘the Project’ – which initially works really well on a small scale. (For a critique of the ‘strong leader’ myth see ‘A Mayor for all Seasons‘ and ‘The Myth of the Strong Leader‘)

This seems to be what happened with Kids Co and Camila Batmanghelidjh. A charismatic individual comes up with a new model for helping seriously challenged kids that succeeds where traditional social services and charities have not. It works well on a small scale, but as soon as it starts to grow the problems set in.

As long as the operation remains small the Leader can oversee everything and informal ‘rules’ make things work. But as the operation expands several problems start to emerge.

Firstly, a rapidly expanding organization needs operating capital and reserves especially when income is fluctuating and uncertain. Kids Co. seems to have had neither.

The usual response to the Leader to these problems is to muddle through, duck and dive, wheel and deal, do anything to keep the show on the road. Sometimes it works, but mostly it doesn’t.

Second, it needs basic ‘support services’ – proper finance, HR and other functions to make a larger organization function properly and with due propriety. This isn’t just ‘bureaucracy’ – it is also necessary to make sure ‘the Project’ has some SOPs (standard operating procedures) that make sure it works when the Leader isn’t around to supervise everything – which inevitably they increasingly cannot be.

Often the Leader has little time for this sort of “bureaucratic nonsense”. They just want to get on with ‘the Project’. Sometimes they are sensible enough to appoint someone to run all his stuff and actually listen to them. Again, all too often even if they do appoint someone they over-rule them when it suits them.

Looking at Kids Co. accounts the first set of problems set in early and have gradually escalated over time. Driven by ever-expanding services without the necessary finances the operating model became increasingly unstable and dependent on periodic large dollops of cash from either Government or donors.

Contrary to what some commentators think Kids Co. was not a glorified quango:

Dan Hodges on kids co

Kids Co actually received less than a quarter of its income from Government making it clearly not a ‘quango’ in any conventional sense.

Kids Co. income in 2013

KidsCo 2013 income

 

Source: Annual Accounts

But the Government funding at critical points was essential to plug the gaps caused by its over-expansion and lax financial and other management.

Through out all of this the classic reaction of the Leader is denial of the internal problems and denunciation of evil external forces who are really responsible for trying to derail ‘the Project’, sometimes for nefarious reasons” “we’re too good at what we do and our rivals are out to do us down”; “our success exposes the failures of others”; “we are the only ones who can do what we do and others are jealous of our success”; etc.

Like many such ‘start ups’ before it Kids Co. did not manage to break through the barrier between a seemingly successful small-scale operation into a larger, well controlled, successful organization. They also weren’t the first seemingly successful organization to be led by someone who could mesmerize stakeholders into seeing only success and necessity and ignoring the (growing) problems. On a much larger scale, think of what happened at RBS?

The sudden collapse only a week after the Government handed over another £3 million raises huge questions for those running the charity, the Charity Commission and the Ministers who signed off the payment despite Civil Service objections. Resignations could yet happen in Government.

But there is no great mystery about what went wrong at Kids Co: the usual problems of transitioning from a start-up to something bigger; a charismatic Leader who may have been good at starting something but was not necessarily good at running it; entranced ‘investors’ (in this case Government and donors) who cannot see the problems. All rather tragic and all too foreseeable – if anyone was looking properly, which to be fair it looks like the Civil Service were.

 

3 thoughts on “Kids Company: a classic tale of start-up failure and the problems of the ‘strong leader’?

  1. Yes I agree and as the CEO of a Founder based charity that is growing we gave taken an approach that is firmly based on growing the governance at the same time and in ensuring that systems and processes go with us. The working capital and reserves conundrum is testing but not insurmountable and I often use the phrase ‘walk before you can run.’ I feel the absence of any trustee comment is telling relating to this charity and I also feel the ‘victim behaviour and denials from the founder say a lot. In the end the team and the beneficiaries will lose out albeit this was a geographically targeted charity around a few local authorities and hopefully service provision can be somehow absorbed or resolved in another way but this is a mess that has long been in the making and I fear it may also rebound on other charities as ‘fingers will have been burnt.’

  2. I first of heard Camila Batmanghelidjh and Kids Company at a Triodos Bank UK meeting in Bristol. Knowing how children are being let down by socila service, especially in Manchester: http://reports.ofsted.gov.uk/sites/default/files/documents/local_authority_reports/manchester/051_Single%20inspection%20of%20LA%20children%27s%20services%20and%20review%20of%20the%20LSCB%20as%20pdf.pdf.
    I was hoping, local authorities may learn something from her methods and adopt them for themselves. Instead of children having to depend on charities.
    She did speak last year at the Locality AGM, in Cardiff, last year, which I missed. Locality, is a group which is supposed to help community groups. I wonder, what was their role in this sad outcome?

  3. as \ professional youth worker and youth counsellor ,, i feel that camila b is one of the most effective innovative workers young people are likely to encounter. This article gets the root of the problem with all charismatic leaders if the organisation had remained small with Camilla herself working with and for a small number of needy young people, the analysis is fair.. But once the project started to employ others and to expand its parameters, Camila did not have the practical ability to manage the bureaucracy and like many visionary leaders before would have dismissed and practical/financial issues as irrelevant to her mission. Let non of this colour our acknowledgement that she has developed methods and ideas of reaching the most disenfranchised young people in society. Well done Camilla I admire you

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