May 30, 2008

-Level 5 Leadership (brief)

What will catapult your company from merely good to truly great? Believe it or not, a leader who's almost painfully humble—as well as iron willed.

Out of 1,435 Fortune 500 companies that renowned management researcher Jim Collins studied, only 11 achieved and sustained greatness—garnering stock returns at least three times the market’s—for 15 years after a major transition period.

What did these 11 companies have in common? Each had a “Level 5” leader at the helm.


Level 5 leaders blend the paradoxical combination of deep personal humility with intense professional will. This rare combination also defies our assumptions about what makes a great leader.

Celebrities like Lee Iacocca may make headlines. But mild-mannered, steely leaders like Darwin Smith of Kimberly-Clark boost their companies to greatness—and keep them there.

Example:
Darwin Smith—CEO at paper-products maker Kimberly-Clark from 1971 to 1991—epitomizes Level 5 leadership. Shy, awkward, shunning attention, he also showed iron will, determinedly redefining the firm’s core business despite Wall Street’s skepticism. The formerly lackluster Kimberly-Clark became the worldwide leader in its industry, generating stock returns 4.1 times greater than the general market’s.


The Idea in Practice

Humility + Will = Level 5
How do Level 5 leaders manifest humility? They routinely credit others, external factors, and good luck for their companies’ success. But when results are poor, they blame themselves. They also act quietly, calmly, and determinedly—relying on inspired standards, not inspiring charisma, to motivate.

Inspired standards demonstrate Level 5 leaders’ unwavering will. Utterly intolerant of mediocrity, they are stoic in their resolve to do whatever it takes to produce great results—terminating everything else. And they select superb successors, wanting their companies to become even more successful in the future.

Can You Develop Level 5 Leadership?
Level 5 leaders sit atop a hierarchy of four more common leadership levels—and possess the skills of all four. For example, Level 4 leaders catalyze commitment to and vigorous pursuit of a clear, compelling vision. Can you move from Level 4 to Level 5? Perhaps, if you have the Level 5 “seed” within you.

Leaders without the seed tend to have monumental egos they can’t subjugate to something larger and more sustaining than themselves, i.e., their companies. But for leaders with the seed, the right conditions—such as self-reflection or a profoundly transformative event, such as a life-threatening illness—can stimulate the seed to sprout.

Growing to Level 5
Grow Level 5 seeds by practicing these good-to-great disciplines of Level 5 leaders:

First who.
Attend to people first, strategy second. Get the right people on the bus and the wrong people off—then figure out where to drive it.

Stockdale paradox.
Deal with the brutal facts of your current reality—while maintaining absolute faith that you’ll prevail.

Buildup-breakthrough flywheel.
Keep pushing your organizational “flywheel.” With consistent effort, momentum increases until—bang!—the wheel hits the breakthrough point.

The hedgehog concept.
Think of your company as three intersecting circles: what it can be best at, how its economics work best, and what ignites its people’s passions. Eliminate everything else.

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