Jim Collins spent 20 years trying to understand how a good company became an exceptional company, and sustained an overall high performance. His research began with 1,435 companies that appeared on the fortune 500 from 1965 to 1995. Collins began researching what factors lead to a company being considered great, then narrowed down companies that transitioned from good to great.1
To first understand what a great company is, Collins used data to answer the follow question: “can a good company become a great company, and if so, how?” The data Collins used on the 1,435 companies to see if they became a great company looks at the company’s cumulative stock return for 15 years, security prices, stock splits, and reinvested dividends.1 He then compared the data to the general stock market, omitting all companies who showed patterns similar to industrial average shifts. After narrowing down the data and comparing it to companies who once had short-lived greatness, Collins found 11 companies that showed distinctive patterns that were higher then overall industrial averages. According to his research; a dollar invested into a mutual fund of a good to great company in 1965 would be worth $470 in 2000, while the same amount would only be worth $56 in the general stock market. These exceptional numbers are on of the factors that lead Collins to believe a company went from good to great.1
In his research, Collins begins to correlate leadership to be one of the consistent contrasts between a good and great company. He develops a hierarchy of leadership using data; based on five levels, each level consisting of capabilities a leader possess. Level 5 Leadership, refers to the highest level of executive capabilities in a hierarchy.1 According to...
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... eventually causing the company to go under.2
Collins research, although flaw in various way, sheds light on what an exceptional leader is. A leader must show humility, be humble and non-egocentric, as well as show intellectual intelligence for their company and know how to effectively manager their company. Collins research however does not find the crucial question of exceptional leadership: how are level 5 leaders formed?1 Collins creates hypothesis and theories in the text but cannot find a direct correlation to how each leader on his list became a level 5 leaders. This limits the reader and leads them to guess if emulating the qualities of a level 5 leader would they ever become one themselves. Collins lack of research limits businesses in finding level 5 leaders, since a level 5 leader cannot be fully determined until after they are succeeded by another CEO.
Central Theme: The most important trait of a great leader is humility. By definition to be humble means to be modest and free from vanity. Jim Collins explores the idea of paradoxical characteristics that make a Level 5 leader (Collins, p.116). According to Collins a level 5 leader is a person that combines “humility and professional will” (Collins p.116). What that essentially means is that the best leaders are humble and they care about making their business or work the best it can be even after they leave their position. Collins mentioned various leaders that combined traits like shyness, modesty, and calmness in combination with will, fearlessness, determination, and ambition. He also explains that these types of leaders do not motivate through charisma but through discipline and strategy. Some leaders, like Smith, tend to be seen as out of place but in reality their work and their ideas create a boost in a company’s success.
Kirkpatrick, S. A., & Locke, E. A. (2001). Leadership: Do traits Matter? Academy of Management Executive,5,, 48-60.
After conducting a basic 10 year financial analysis of the company, it has become evident that even with a highly competitive market structure they are able to improve on their performance. Ranging from 2004 to 2013 financial information, the company has shown a significant increase in their sales revenue roughly $3865 million sales in 2004 to almost four time that valuing $12970 million in 2013, which was an “increase of 10.4% over the 53 week prior year” The company’s growth strategy has been to diversify its product market and make them...
Executive A can be described as having a “Level 5” leadership style. Shying away from attention and giving credit to others shows “greatness through a paradoxical combination of personal humility plus professional will.” (Collins, 2005) Accepting responsibility for mistakes and poor results, along with having pride in developing strong leaders, further supports the definition and actions of a “Level 5” leader. The scenario describes the will of Executive A is described as driven, ambitious and focused on the success of the company. With the scenario information this is a full description of the “Level 5” type leader.
A great leader has the ability and capacity on leading other individuals to achieve greatness. What makes this leader stand out is their capacity to lead different types of individuals. In today’s society, leading individuals is not an easy task since individuals have different characteristics when is comes to work. Individuals have different methods of achieving their daily task of work. Individuals are either very work strong and achieve their highest ability to achieve greatness then there are individuals that achieve the very minimum in a work setting. A great leader will have the capacity to lead these individuals by having different methods of achieving the work standard in a workplace. In the article, “Social Organizations,” by Robert Prodanciuc talks about different methods of achieving greatness in a workplace. He examines was makes an astonishing leader within the
In Jim Collins book, Good to Great, Collins discusses the difference between the different stages of leadership. A level 1 leader is a highly capable individual who makes positive contributions and has talent, knowledge, and skills. A level 2 leader builds off of a level 1 leader by bringing these positive traits into a team setting. Next, a level 3 leader is a competent manage that can organize people towards a positive outcome. Fourth, a level 4 leader is a leader that has an insatiable drive and commitment to a vision or goal and strives for professional success. However, in order to be a level 5 leader, one must have all these traits, plus the most important trait of all, personal humility. A level 5 leader is one that blends their professional will for success with an
Leadership at times can be a complex topic to delve into and may appear to be a simple and graspable concept for a certain few. Leadership skills are not simply acquired through position, seniority, pay scale, or the amount of titles an individual holds but is a characteristic acquired or is an innate trait for the fortunate few who possess it. Leadership can be misconstrued with management; a manager “manages” the daily operations of a company’s work while a leader envisions, influences, and empowers the individuals around them.
In 2001, the company had nearly $95 billion in managed assets, employed nearly 14,500 people and serviced 13 million customers. The company was financially sound throughout the 1980’s and 1990’s as annual returns continually increased. The company was hailed as a “great entrepreneurial success story.”
Jim Collins and his research team have done a wonderful job identifying what it takes for a company to go from good to great. I found this book to be extremely interesting and would like to share several of my thoughts.
Author Jim Collins (2005) in his article, Level 5 Leadership: The triumph of humility and fierce resolve (Collins, 2005), presents a compelling evidence for the need to have what he describes as “Level 5 leadership” at the helm, in order for organizations to reach high performance status (Collins, 2005). Collins stated that “Level 5” refers to the highest level in a hierarchy of executive capabilities that were identified during our research (Collins, 2005, p. 138). However, the original intent of Collins research was based on his pursuit to identify if a good company can become a great company (Collins, 2005). How Collins reached the concept of the Level 5 Leader can be linked to his research methods and findings.
Collins states that the most critical factor in the development of the company from being "good" into "great" one is to implement strategy of Level 5 leader. According to the book, such individual needs to be able to skilfully integrate critical factors and create the path for success . Ideal Level 5 leader must be able to unite traditional quiet humility with the deference to the greater well-being of the company in place of the personal benefits. This leader can inspire every single member of the company to achieve own personal level of "greatness."
As a growing debate, the question at hand is whether great leaders are born with specific leadership traits, or if one can be taught certain traits over time. According to (Wikipedia.com) the approach of listing leadership qualities, often termed "trait theory of leadership", assumes certain traits or characteristics will tend to lead to effective leadership. I believe that leadership traits such as honest, competent, initiative, inspiring, hardworking, intelligent, and the ability to lead the masses, are some of the leadership traits one should possess. Within this paper, I will examine the overall concept of leadership traits, while observing the traits that were, or can be associated with successful leaders.
Leadership has been defined in different ways, a definitaion of leadership that would be most commonly accepted would be “the ability of an individual to influence, motivate, and enable others to contribute toward the effectiveness and success of the organization…”(House et al., 1999, p. 184 as cited in Yukl, 2013, p. 19). After a comprehensive review of different leadership literature, Stogdill (1974, p. 259, as cited in Yukl, 2013, p. 18) concluded that “There are almost as many definitions of leadership as there are persons who have attempted to define the concept." Leadership can be viewed from two different angles one is shared influence process and other as a specialized role. Researcher who view leadership as a specialized role consider attributes as a factor in selecting a designated leader. On the contrast, theorist who emphasises on influence process considers “Leadership” as a social process or a pattern of relationship.
Leadership can be defined as “The ability of an individual to influence, motivate, and enable others to contribute toward the effectiveness and success of the organizations of which they are members.”(House & Javidan (2004) ). The effectiveness of leadership is more crucial to the organizational performance. For instance, the quality of executive leadership consistently accounted for between 15-45% of differences in company’s bottom line results.(Barrick, Day, Lord & Alexander, 1991; Day, 2000; Joyce,Nohria, & Robertson, 2003).
Lussier, R.N. & Achua, C.F. (2010). Leadership: Theory, application, skill development (5th ed.). Mason, OH: South-Western.