Jim Collins, ranked #6 in the Thinkers 50 2005 ranking of management gurus, is best known for his highly influential books Built To Last: Successful Habits of Visionary Companies (1994) co-authored with fellow Stanford academic Jerry Porras and recent bestseller Good To Great: Why Some Companies Make the Leap…And Others Don't, (2001).
In his latest book, Good to Great, Jim Collins examines how a good company becomes an exceptional company. The book introduces a new term to the leadership lexicon – Level 5 leadership.
Level 5 refers to the highest level in a hierarchy of executive capabilities. Leaders at the other four levels may be successful, but are unable to elevate companies from mediocrity to sustained excellence.
Level 5 leadership challenges the assumption that transforming companies from good to great requires larger-than-life-leaders. The leaders that came out on top in Collins' five-year study were relatively unknown outside their industries. The findings appear to signal a shift of emphasis away from the hero to the anti-hero.
According to Collins, humility is a key ingredient of Level 5 leadership. His simple formula is Humility + Will = Level 5. "Level 5 leaders are a study in duality", notes Collins, "modest and wilful, shy and fearless."
Jim Collins spoke to Stuart Crainer.
In general I have had a bias against a CEO-centric view of the world. Leadership answers often strike me as over simplistic and in danger of covering up too many variables. If a company does really well we say it was great leadership; if it doesn't do well we say the leadership wasn't as great as we thought.
I see leadership as our version of the dark ages. In the 16th century whenever we didn't understand something – an earthquake or crops failing, or disease – we would ascribe it to God. But then came the Enlightenment and we discovered new areas of Physics, and Chemistry, so we could offer different explanations for earthquakes and crop failures.
In the 20th and 21st Century, when we're looking at the social world, the Man-made world, we are still in the dark ages. This is shown by our predilection for looking for leadership answers. Leadership is to the 20th Century what God was to the 16th Century. If you stop looking for answers that are always either God or leadership you will find other underlying factors.
In our research I've always said let's discount the role of the leader so we can find the other factors. Let's assume there are other things to discover – laws of physics. So going down that path, the Level 5 Leadership finding which came out in Good to Great, was not what I expected to find.
The research team said that the CEOs of these companies had a huge impact on whether they shifted from one level to another, whether they went from the good level to the great level. My reply was that the comparison companies also had leaders, exceptional leadership in many cases, but the companies ended up not performing as well.
But the research team pushed back at me. They suggested that I was looking at this as a digital idea - you are either a great leader or you are not, and that's the critical question. But instead it's much more nuanced.
That eventually led to the idea that leadership is an evolving series of capabilities and levels of maturity. So it's not a leadership or not question, it's a "what stage of leadership" question – and what level of maturity are you.
Yes. This led to the insight that those companies that over time tend to produce the best most sustained results have the characteristics that we put at Level 5, and other companies tend to have leaders who are stuck at Level 4.
So the answer wasn't leadership; the real answer was, are you a Level 4 leader, or a Level 3 leader, or a Level 5 leader? And that then led to the question "what are those characteristics of the Level 5?"
It came down to one essential definition. The central dimension for Level 5 is a leader who is ambitious first and foremost for the cause, for the company, for the work, not for himself or herself; and has an absolutely terrifying iron will to make good on that ambition.
It is that combination, the fact that it is not about them, it's not first and foremost for them, it is for the company and its long-term interests, of which they are just a part. But it is not a meekness; it is not a weakness; it is not a wallflower type. It's the other side of the coin
They are people who will fire their brother or sister to make the company great. They will bet the company. They will put their own lives through the worst of circumstances, if that is what it takes. They will even step away from the CEO role. They will do whatever it takes to make the company great. No matter how painful, no matter how emotionally stressing the decision has to be, they have the will to do it. It is that very unusual combination, which separates out the Level 5 leaders.
Well I don't comment on active CEOs for a variety of reasons. But I can give you some thoughts based on the companies I have researched enough to have a view on, so it doesn't necessarily include all companies in the world. These are ten based on the following criteria: performance; impact; reputation resilience; and ultimately longevity.
The ten that stand out from history are, in reverse order:
David Packard, HP; Katherine Graham, who took the Washington Post to greatness; William McKnight, who invented the idea of managing for innovation at 3M back in the 1940s and 50s; David Maxwell, who got Fannie Mae back on the road; Jim Burke, CEO at Johnson & Johnson during the Tylenol crisis – his great insight was that he had the company prepared for crisis before the crisis came; Darwin Smith, at Kimberly Clark.
Number four would be George Merck of Merck, a supreme example of a great CEO – in terms of understanding what the whole definition of a corporation's role in society should be; then Sam Walton of Wal-Mart; Bill Allen of Boeing, who took over when Boeing had lost 90 percent of its revenue overnight at the end of WWII, and they didn't make a single commercial aircraft. It is an amazing story. Building what, up until the 1990s at least, was the greatest aircraft manufacturer in the world. The track record is extraordinary and he was a classic Level 5.
And at number one: Charles Coffin, GE. I picked Charles Coffin because he stood out. He built the stage on which all the other CEOs played. He created the system. He was the first to invent and put in place systematic management development as a process.
If you stand back and think about it, that's one of the great inventions of the 20th century. He was also the one who instituted the first industrial research and development laboratory. An extraordinary contribution to the organisational field. That's why the number one position goes to Coffin.
