6. Role of Corporate Leaders in Building Organisations- Who are Level 5 Leaders ?

Updated: Oct 18

Circa Jan 2017


Background


I have been to my Alma Mater, DNR.College ( Andhra University ), Bhimavaram (AP ) , India recently, Where, I have done my MBA and met some of my old Faculty Members and shared some of the nostalgia.


On this occasion, I have delivered a guest lecture on " Role of Corporate Leaders in Building Organisations ", mainly highlighting on Akio Morita of Sony Japan, Sam Walton of Wal Mart of USA , Steve Jobs of Apple USA and Ratan Tata of TATA Group India etc ".


It was well received by my 20 years old junior students...


This is really Amazing Experience. Aim to share our Knowledge and Experience with Budding Corporate Leaders as much as possible whenever opportunity arises.


This message was posted on 23rd Jan 2017 in Facebook.


Executive Summary :


Fundamentally , Level 5 Leaders ( CEOs / Chairmans ) make the inroads into the Landscapes, where no one ever traveled earlier and leave permanent trail behind and build ordinary company into a " Built to Last " Institutions with work focus to Organisation rather than Self and remain as a legendary Coprporate Leaders.


Their characteristic hallmarks are Humility and Extreme Professionalism and herewith giving below diagnosis of their DNA.


I ) Genome Code of Level 5 Leaders by Jim Collins :


  • Studied 1435 Good Companies.

  • Examined their performance over 40 years.


  • Companies that outpaced the rest of the industry (exceeded the stock market by at least 3X over 15 years!) (independent of industry!).

  • 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.

Pic : Jim Collins

  • Indeed, they are incredibly ambitious—but their ambition is first and foremost for the institution, not for themselves.

  • Level 5 leaders attribute success to Team , when things go well (and if they cannot find a specific person or event to give credit to, they credit good luck).

  • At the same time, they took responsibility, never blaming bad luck when things go poorly.


Level 5 Leaders Model


Collins learned that factors such as CEO compensation, technology, mergers and acquisitions, and change management initiatives played relatively minor roles in moving from Good to Great. Instead, Collins found that successes resulted from three main factors:

  • disciplined people

  • disciplined thought

  • disciplined action


Pic : The Level 5 Hierarchy


1. Disciplined People


Get the right people on the bus:


People assume that new business leaders immediately begin by announcing where they’re going—by setting a new direction or by articulating a fresh corporate vision. In fact, the leaders of companies that went from good to great started not with “where” but with “who.” Start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats. Then review the core values and establish a vision.


“First Who, then What?”



2. Disciplined Thought

Confront the Brutal Facts:


Companies transitioning from Good to Great must be willing to identify and assess defining facts in the company and in the larger business environment. Collins outlines a four-step process to promote awareness of emerging trends and potential problems:


1) Lead with questions, not answers.

2) Engage in dialogue and debate, not coercion.

3) Conduct autopsies without blame.

4) Build red flag mechanisms that turn information into information that cannot be ignored.

“Become aware of emerging market trends and potential problems”

The Hedgehog Concept:


Simplicity leads to greatness. When confronted by predators, the hedgehog’s instinct is to curl up into a protective ball. This single response is simple and works as a response to any attack. To transition from Good to Great, companies should focus on doing one thing better than anyone else in the world. This single-function will become the organization’s “Hedgehog Concept.”


Collins suggests the following steps to help expedite this process:

  • Determine what you can be best in the world at and what you cannot be best in the world at

  • Determine what drives your economic engine

  • Determine what you are deeply passionate about


“Do one thing better than anyone else”


3. Disciplined Action

A Culture of Discipline:


Sustained great results depend upon an overarching organizational culture of discipline. The single most important discipline is fanatical adherence to the Hedgehog Concept by shunning opportunities that do not meet your singular “better than anyone else” criteria.


Disciplined thought followed by disciplined action is required. Do not assume this requires a tyrant leader who disciplines – this leads to highly dysfunctional organizations. Every team member is rather afforded the degree of personal empowerment and latitude that is necessary to bring the firm’s envisioned objectives into existence.

“Focus all your resources toward that area of strength”


A Typical Level 5 Leader - A Case Story


In 1971, a seemingly ordinary man named Darwin E. Smith was named chief executive of Kimberly-Clark, a stodgy old paper company whose stock had fallen 36% behind the general market during the previous 20 years. Smith, the company’s mild-mannered in-house lawyer, wasn’t so sure the board had made the right choice—a feeling that was reinforced when a Kimberly-Clark director pulled him aside and reminded him that he lacked some of the qualifications for the position. But CEO he was, and CEO he remained for 20 years.


What a 20 years it was. In that period, Smith created a stunning transformation at Kimberly-Clark, turning it into the leading consumer paper products company in the world. Under his stewardship, the company beat its rivals Scott Paper and Procter & Gamble. And in doing so, Kimberly-Clark generated cumulative stock returns that were 4.1 times greater than those of the general market, outperforming venerable companies such as Hewlett-Packard, 3M, Coca-Cola, and General Electric.



Smith’s turnaround of Kimberly-Clark is one the best examples in the twentieth century of a leader taking a company from merely good to truly great. And yet few people—even ardent students of business history—have heard of Darwin Smith. He probably would have liked it that way. Smith is a classic example of a Level 5 leader—an individual who blends extreme personal humility with intense professional will. According to five-year research study, executives who possess this paradoxical combination of traits are catalysts for the statistically rare event of transforming a good company into a great one.


II ) What Makes a Leader by Daniel Goleman :


Goleman popularised the Emotional Intelliegence ( EQ ) in the corporate world and the decoded

the same as given below :


Self - Awareness-Self-confidence, Realistic self-assessment .


Self-Regulation-Trustworthiness and integrity, openness to change.


Motivation – Strong drive to achieve, optimism, even in the face of failure.

Pic : Daniel Goleman

Empathy – Expertise in building and retaining talent, Service to Clients and Customers.


Social Skills – Expertise in building and leading Teams, Persuasiveness.


IQ and Technical Skills are important, but Emotional

Intelligence Is the sine qua non of Leadership….


Emotional Intelligence has become a Essential Component of Success in Modern Day Corporate World.


3) The 10 Greatest CEOs of All Time - Level 5 Leaders by Jim Collins :


The eleven good-to-great CEOs are some of the most remarkable CEOs of the century, given that only eleven companies from the Fortune 500 met the exacting standards for entry into this study. Yet, despite their remarkable results, almost no one ever remarked about them! … The good-to-great leaders never wanted to become larger-than-life heroes. They never aspired to be put on a pedestal or become unreachable icons. They were seemingly ordinary people quietly producing extraordinary results. …It is very important to grasp that Level 5 leadership is not just about humility and modesty. It is equally about ferocious resolve, an almost stoic determination to do whatever needs to be done to make the company great.


No. 10: David Packard , HP - Rejected the CEO club

No. 9: Katharine Graham , Washington Post.-Wasn't afraid of fear

No. 8: William McKnight , 3M- Disciplined creativity.

No. 7: David Maxwell , Fannie Mae -Turned a turnaround into art

No. 6: James Burke , Johnson & Johnson - Acted before crisis hit.

No. 5: Darwin Smith , Kimberly-Clark - Asked questions and moved rocks.

No. 4: George Merck , The Merck & Co - Put profit second.

No. 3: Sam Walton , Walmart -Overcame his charisma.

No . 2 : Bill Allen , Boeing - Thought bigger.

No. 1: Charles Coffin , GE - Built the stage on which they all played




Summary


Specifically, Collins defined “Level 5 Leadership” as a key to moving from good to great.


Level 5 leaders achieve better results than the “strategic and effective” Level 4 leaders.


Level 5 leaders also have intense determination and profound humility. They remain humble learners while having a steadfast resolve. Level 5 leaders establish a set of core values focused on a higher purpose than mere profit generation. Collins found these leaders were committed to the long-term success of their organizations, and many rose to a leadership role from within the company.



MM Rao

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Sources :

https://www.google.com/search?q=level+5+leaders+model&rlz=1C1PRFI_enIN874IN874&source

https://www.leaneast.com/good-to-great

https://hbr.org/2001/01/level-5-leadership-the-triumph-of-humility-and-fierce-resolve-2

https://www.google.com/search?q=Famous+Quotes+of+Jim+Collins&rlz

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