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Good to Great_ Chapter 2 Level 5 Leadership

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Good to Great: Chapter 2Level 5 Leadership
Dana CookBryson BellTylerBuschmanPhilip WinfieldIanWalrovenJordan JonesAustinBastinStephanie Light
Level 5 Leader
“You can accomplish anything in life, provided that you don’t mind who gets the credit.”--Harry S. TrumanAll Good to Great companies common thread was the “Level 5” Leader
Level 5 Leader
Don’t need to be a larger-than-life leader to be successfulThe Level 5 leader goes further into explaining what an effective leader is and does.
Not What We Expected
What is a Level 5 leader?An individual who blends extreme personal humility with intense professional will.HumbleIndividuals that stay in the background, but do whatever needs to be done in order to make the company great.Builds enduring greatness through a paradoxical blend of personal humility and professional will“Their ambition is first and foremost for the institution, not themselves”--Jim CollinsLevel 5 refers to the highest level in the hierarchy of executive capabilitiesFully developed level 5 leaders embody all levels of the hierarchy
Level 5 Hierarchy
Level 5 Executive
Effective Leader
Competent Manager
Contributing Team Member
Highly Capable Individual
Not What We Expected
Research for the BookCollins instructed his research team to downplay the role of top executives when conducting researchWanted to avoid the “credit the leader”/ “blame the leader” mentalityLeadership and God analogy“Leadership is the answer to everything” perspective is the modern equivalent of “God is the answer to everything” perspective of understanding the physical world in the Dark Ages.Level 5 leadership is an empirical finding not an ideological oneResearch found that good-to-great executives were all cut from the same cloth.“It didn’t matter whether the company was consumer or industrial, in crisis or steady state, offered services or products. It didn’t matter when the transition took place or how big the company.”—Jim Collins
Level 5 Duality
Humility + Will = Level 5 LeaderDo not mistake modesty, shy nature, and awkward manner as signs of weakness
CEO of GilletteFought for his company and his passion‘His placid persona hid an inner intensity, a dedication to making anything he touched the best it could possible be – not just because of what he would get but because he simply couldn’t imagine doing it any other way’
Level5 leaders have ambition first and foremost for the success of the company, not for their own riches and glory.Level5 leaders want to see the company become even more successful after theyleave.“Iwant to look out from my porch at one of the great companies in the world someday and be able to say, ‘I used to work there.”
Ambition for the Company:Settingup Successors for Success
David Maxwell, CEO FannieMaeTransformedFannie Mae from losing $1 Million a day to earning $4 Million a day, beating the general stock market 3.8 to1Atretirement declined controversial $20 Million retirement package and only asked for $5.5 Million
Ambition for the Company:Settingup Successors for Success
Leaders of comparison companieswere more concerned with their own reputation and personal greatness than the success of thecompanyIn three-fourthsof good to great comparison companies, executives either chose weak successors or set their successor up for failure.
Ambition for the Company:Settingup Successors for Success
CEOStanleyGaultBecamesynonymous with success in late1980’sLed Rubbermaid to 40 consecutive quarters of earningsgrowthHarddriving, egocentric,tyrantInan article about leading change, the word “I” appears 44 times and “we” only appears16Gaultdid not leave a company that would be greatwithouthim1stsuccessor lasted only a yearHadmany struggleswith management and strategic voids that eventually brought the company downOneof the best Level 4 leaders in the past 50 years but not a level 5 leader which is why Rubbermaid went from good to great for a brief moment and then very quickly went from great to irrelevant
Rubbermaid:Goodto Great and Great to Irrelevant
A Compelling Modesty
Good-to-Great leaders are not “I=centric”Quiet, Shy, Humble, and Mild-manneredGoal is to never become “Larger-than-life”
A Compelling Modesty
Two-thirds of the comparison companies had a “gargantuan personal ego” that led to further mediocrity or the downfall of the companyScott Paper CEO, Al DunlapChrysler CEO, Lee Iacocca
Unwavering Resolve…to Do What Must Be Done
Level 5 Leadership CharacterizationsThedetermination to do whatever needs to be done to make the company greatNeed to see both sides of thecoinLevel 5 leaders are fanatically drivenInfected with an incurable need to produce sustained resultsLevel 5 leaders display a workmanlike diligenceMore plow horse than show horse
Unwavering Resolve…to Do What Must Be Done
Inside vs. OutsideEvidence does not support the idea that you need an outsideleaderHigh-profileoutside change agent isnegatively correlatedwith a sustainedtransformationTen out of eleven good-to-great CEOs came frominsidethecompany.Thecomparison companies turned to outsiders withsix timesgreater frequency – yet they failed to produce sustained great results.
Unwavering Resolve…to Do What Must Be Done
George Cain, CEO of Abbott LaboratoriesInspiredstandardsCould not stand mediocrity in anyformSet out to destroy one of the key causes of Abbott’s mediocrity:nepotismFromtransition date in 1974 to 2000, created shareholder returns that beat the market 4.5 to1Comparison to Upjohn (direct comparison company to Abbott)Upjohn then fell 89 percent behind Abbott
Unwavering Resolve…to Do What Must Be Done
Charles R. “Cork” WalgreenCorksensed that the team had reached a watershed point of clarity and understandingFuturelay within a differentindustryFaced long-standing family traditionSwitched from food service toconvenient drugstore
The Window and the Mirror
Circuit City or GELevel 5 leaders vs. comparison leadersBethlehem Steel to NucorLuck
Cultivating Level 5 Leadership
Do you have to be a level 5 leader to make your company great?Example:A woman who recently became a chief executive knew she wasn’t a level 5 and wanted to know if she could still make her company greatData pointed out that of 1,435 companies that appeared on the Fortune 500 in the initial candidate list, only 11 made the cut into their studyOf those 11, all 5 had level 5 leadership positions
The Two Sides of Level 5 Leadership
Professional WillCreates superb results, a clear catalyst in the transition from good to greatSets the standard of building an enduring great company; will settle for nothing lessPersonal HumilityDemonstrates a compelling modesty, shunning public adulation; never boastfulChannels ambition into the company, not the self; sets up successors for even greater success in the next generation
The Two Categories of People
Those who have the seed of a level 5 leaderFor these people, work will always be first and foremost about what they getThose who are not born to be level 5 leadersThe larger groupThese are people that can evolve to be level 5 leaders
Chapter Summary
A level 5 leader is a key component of what it takes to make a company change from good togreatThis chapter was about what level 5’s are and the rest of the book describes what they doWe should look at the model level 5’s and aspire to be like themWhether or not we make it to level 5, it will always be worth the effort





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Good to Great_ Chapter 2 Level 5 Leadership