REACTION PAPER NO.5: “LEVEL FIVE LEADERSHIP”
I. SUMMARY
Why is it that a few companies develop from an organization with good results as measured on the stock market to a great one? Jim Collins and his team selected 11 companies from more than 1400 that had been listed in the Fortune 500 from 1965 to 1995. Each of the selected companies had mediocre results for 15 years and then went through a transition point. From that point they out- performed the market by at least 3 to 1 and sustained that performance for at least 15 years. Each of these was compared with companies in the same industry and about the same size. Using hundreds of interviews, they identified the key factors that enable a company to move from mediocre institutions to great institutions. The comparison companies lacked these factors and failed to become great. Perhaps the most important component of the transition from good-to-great is what they called "Level 5 Leadership", from leadership hierarchy so identified:
Level 1 is a Highly Capable Individual who "makes productive contributions through talent, knowledge, skills and good work habits."
Level 2 is a Contributing Team Member who "contributes individual capabilities to the achievement of group objectives and works effectively with others in a group setting."
Level 3 is the Competent Manager who "organizes people and resources toward the effective and efficient pursuit of predetermined objectives."
Level 4 is an Effective Leader who "catalyzes commitment to and vigorous pursuit of a clear and compelling vision, stimulating higher performance standards."
Level 5 is the Executive who "builds enduring greatness through a paradoxical blend of personal humility and professional will." Every one of the good-to-great companies has level 5 leaders in the critical transition phase. None of the comparison companies did. These leaders are described as being timid and ferocious, shy and fearless and modest with a fierce, unwavering commitment to high standards.
Level 5 leaders rely on instilling inspired standards and not inspiring charisma to motivate. They build a culture of discipline. It is not a tyrannical disciplinarian one but one that enables freedom and responsibility: "… but leadership is equally about creating a climate where the truth is heard and the brutal facts confronted. There's a huge difference between the opportunity to 'have your say' and the opportunity to be heard. The good-to-great leaders understood the distinction, creating a culture wherein people had a tremendous opportunity to be heard and, ultimately, for the truth to be heard.
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.
A level 5 leader is able to blend personal humility (selfless and never boastful) with an intense professional will to achieve superb results by bringing people together to work towards a common goal. Level 5 leaders although may appear calm or quiet, demonstrate an unwavering attitude to do whatever must be done ethically to achieve sustainable outcomes do not matter how difficult. “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious-but their ambition is first and foremost for the institution, not themselves” Jim Collins (2001). Mulally never spoke about himself and his ideas
Clawson, J.G. (2009). Level Three Leadership: Getting Below the Surface, Upper Saddle River, NJ: Prentice Hall. (p.85)
... that system 4 management has the greatest long-range potential for contributing to organizational effectiveness. System 4 characterized by high degree of trust and interaction between superiors and subordinates. It involves extensive participation by subordinates in goal settings and control process.
II. Level 2: Efficiency - Doing things right – After mastering the way things are done on the job (level 1/effectiveness), you are able to move into level 2, which comprise of rules, guidelines, standard operating procedures and time. At this phase efficiency is the foundational thinking; “thinking that produces ideas with a minimum of waste, expenses, energy and unnecessary effort. Time management plays a major role in efficiency. Suggested tools such as a “to do list, a day-timer/planner, e-mail, phone logs, and e-mail, can help manage your time and build and enhance efficiency. Another form of level 2 is delegation, this helps to save time and open mental windows for creativity.
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Chan, K. W. & Maubourgne, R. A. 1992, Parables of leadership, Harvard Business Review, July-August.
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