The importance in developing greatness and achieving success lies within the ability to carry out Level 5 leadership. It is evident that companies who are Level 5 leaders have prospered greatly and attained “stock returns at least 3 times the market’s” (Collins, 2005). Taking this into consideration those companies who did not possess level 5 leaders were able to achieve success only for a period of time but failed to sustain it any longer than that. Humility and will are behaviours that make up the qualities of a level 5 leader and their importance lies in the fact that having this quality either can make or break a company.
Over many years, out of a large number of companies that were researched, only a small number of them truly sustained their growth and this came down to whether or not the leaders of these Fortune 500 companies sat atop the hierarchy or whether they lacked the level 5 trait. There are also implications for today’s management and the issue of whether executives need to plan for the future and weigh the costs against the benefits of certain projects. Workplace branding is also an important factor that needs to be taken into consideration by Level 5 leaders as they have huge potential to influence their organization’s brand.
Furthermore, level 5 leadership is an attribute that can be developed but is not for everyone. Analysis Leadership is a significant element in any business as without it, a business is doomed to fail right from the start. Having a strong leader can eliminate disputes and internal problems. A company must have internal strength before it can be strong enough to outperform the general market. Humility in a Level 5 Leader We can characterize a level 5 leader by many unique traits however, the two most important according to Jim Collins is humility and will.
Collins depicts these leaders as “modest and willful, shy and fearless” (Collins, 2005). Jim Collins defines a level 5 leader as “an executive in whom genuine personal humility blends with intense professional will” (Collins, 2005). He describes a hierarchy where level 5 leaders sit on the top and exhibit these tendencies while working in professional frameworks supported by effective teamwork. Since a level 5 leader is said to have both humility and will, level 5 leaders exhibit a twofold quality, therefore, humility is positively acknowledged as a quality of successful leaders.
Humility is a key aspect to level 5 leadership and those that emboss this quality often “credit others, external factors, and good luck for their companies’ success” (Collins, 2005). These types of leaders, when commenting on their company success will praise the employees for contributing their skills and efforts to its triumph and shy away from giving themselves attention. According to a report, “a leader who has humility is unlikely to impose their own personal vision on others and is more likely to admit any flaw in their own vision” (Lawrence, 2006).
Instead of crediting themselves and their own efforts they exhibit a type of nature that allows them to recognize others. Leaders with humility “don’t seek success for their own glory–and they’re first to accept blame for mistakes” (Mind Tools Ltd. , 2013). Level 5 leaders possess “the seed” (Collins, 2005) which is a quality that allows them to “subjugate to something larger than themselves” (Collins, 2005). This is a powerful virtue and one that sets those company’s who succeed apart from those that fail.
Those leaders that possess humility managed to transition their companies from good to great. We have seen in comparison companies that failed to do this, their downfall was their lack in humility. As a result, we can make the connection that humility is necessary to a company’s success. A company is a network of people who work as a team and leaders that display humbleness towards their employees, by taking responsibility when things go wrong and recognizing the team for their hard work, will reach eminent success.
Companies that exhibited this kind of behaviour included Kroger Co, Kimberly-Clark, and Gillette to name a few, while others such as A&P, Scott Paper, and Bank of America were comprised of leaders that were self centered. It is evident that these types of leaders led their company to destruction especially during the 2007 to 2008 crisis. In this case and every other, “humility matters [because] chaos could have been averted if appointment committees had recruited Level 5 leaders” (Mind Tools Ltd. , 2013).
Collins was able to change the worlds view about what makes a great leader which many thought was charisma and personality. The mistake most of these comparison companies made was believing that level 5 leaders’ gentle and shy nature would bring them down when in reality, those characteristics are what brought them to the top. Comparison company leaders felt that charisma and forwardness was the way to the top of the hierarchy however, they soon found out this was not the key to success. Other important characteristics that mold a level 5 leader is discipline, determination, and integrity.
While most people believe that having an extreme personality is necessary, they fail to recognize that these traits are what makes up some peoples personalities, which is what makes them great leaders. Jim Collins emphasized Darwin Smith in this respect; a man with “iron will” (Collins, 2005) and one that never stopped having faith in the success of his company. There arises a compelling need for leadership in a business and this need stems from the “desire to grow and achieve higher goals [which] never develops,” (Martin, 1999) if there is no potent leader in place.
Corporate Changes in Leadership As only 11 Fortune 500 companies flourished to greatness, the attributes each company possessed in similarities was Level 5 leadership. These 11 companies that made Collins list “averaged returns 6. 9 times greater than the market’s,” (Collins, 2001) doubling the returns of their rivals. There have been many attempts to change a corporate vision by changing leadership however, setting a new direction has not shown anticipated results nor has “articulating a fresh corporate vision” (Collins, 2001).
The mistake most companies have made is focusing more on the direction of the business rather than the people implementing the strategy. World leaders have sought to take advantage of this unique approach by having the right people on the management team and then divulging into the “what” question many have asked. Having a company comprised of the right people is the most important step because these types of people can adapt to changing circumstances rather than having to adapt the company’s direction to match the teams vision.
What leaders such as Darwin Smith did, was develop a hedgehog concept where they can “simplify a complex world into a single, organizing idea” (Collins, 2001) and take their company to new lengths. Kimberly-Clark Kimberly Clark, a paper company, was one of these that had remained successful after experiencing a change in leadership. With Darwin E. Smith in position to act as CEO, the company was transformed into the giant success that it is today. Initially, Kimberly-Clark was just like any other old paper company that was considered good but not great. All that changed when Darwin Smith became CEO in 1971.
This man was credited with turning Kimberly-Clark into “an innovative consumer products powerhouse” (Anshuman, 2005). The first step to its transformation was the elimination of the Kimberly-Clark mills. Many people were skeptical about the move but Darwin’s determination allowed the company to overcome its rivals and beat the market. It was his strength and leadership that paved the way for its transformation. Anshuman mentions in his blog that Smith made sure his leadership team consisted of those people that met his standards and separated them from those who did not (2005, October 22).
By building strength within the company first, Darwin was able to create strength externally as well, which gave the company an advantage and allowed it to expand geographically. Furthermore, Darwin pushed his efforts towards strengthening “the company’s position in the tissue segment of the paper industry” (Anshuman, 2005). It was evident that these newly implemented strategies were thriving since “stockholders experienced returns of 19. 6% annually” (Anshuman, 2005) and it was his qualities of crediting others for the company’s success that truly brought it to greatness.
Before Darwin, Kimberly-Clark’s CEO was headed in the wrong direction as its “stock had fallen 36% behind the general market,” (Collins, 2005) and this was no small number. The reason for this fall was because the company’s leadership team was not focused on its main operations and the areas that would bring the company to greatness which in turn caused Kimberly-Clark to fall short. This downfall was brought by Kimberly-Clark’s failure “to keep up with early disposable diaper improvements and market innovations” (Funding Universe, n. d. ).
Clearly Smith had the right idea when he took the initiative to merge with Scott Paper. After its transformation, Kimberly Clark was “generating stock returns 4. 1 times greater than the general markets” (Collins, 2005). Kimberly-Clark became “the leading consumer paper products company in the world,” (Collins, 2005) outperforming not only the market but even other giant, well known, companies such as Hewlett-Packard, General Electric, and Coca-Cola. Kimberly-Clark was on Collins’ list because the company was able to sustain greatness after they had attained it for the first time.
Smith succeeded in making Kimberly-Clark a great company and this was possible because he had the qualities of a level 5 leader. It is duly noted that transforming a company from good to great is not an easy task but those leaders holding “this paradoxical combination of traits,” (Collins, 2005) those of humility and professional will, have the ability to achieve this prominence. What Kimberly-Clark’s team and other great companies did was not starting something new but essentially taking the action to stop doing something they have done for many years.
To discontinue a main part of their business is what led them to become great. For Kimberly-Clark, “that meant it would have to stop doing paper mills,” (Collins, 2001) for other companies it may mean eliminating unnecessary or time consuming strategies. This company did not achieve success over night or by some miracle but through “simplicity and diligence” (Collins, 2001). Kroger Co Kroger Co, a grocery store chain, was normally seen as an ‘average’ company or nothing out of the ordinary until it dramatically transformed and started racking up large returns.
When it “broke free of its mediocrity to beat the stock market by 4. 16 times,” (Collins, 2001) it continued its rally and in a 15 year period “Kroger outperformed the market by 10 times” (Collins, 2001). Before this occurred however, Kroger was run by leaders that were less likely to succeed and turn the company around to sustainability. From the early years, Kroger was a successful company because its strategy emphasized customer wants and needs rather than the organizations’ itself, although for the first 80 years it was nothing more than average.
However, a main reason for Kroger’s experienced growth lay in its acquisitions such as the one with Dillon Companies Inc. in 1983 which smoothed Kroger’s transition into “[becoming] a coast-to-coast operator of food, drug and convenience stores” (The Kroger Company, 2013). During the time of this acquisition, Lyle Everingham was CEO of Kroger and his leadership skills led the company “to utilize extensive consumer research to focus on meeting customer needs first, rather than on what suited Kroger best,” (Zwiebach, 2008) which is the vision Kroger initially set out in the beginning and proved to be successful.
The acquisition with Dillon was not the most significant either but it was Kroger’s merger with Fred Meyer that developed the company’s geographic culture as well as created the “widest variety of formats in the foot retailing industry” (The Kroger Company, 2013). This merger under the direction of the next CEO, Joseph A. Pichler, created a major buzz and resulted from his outward looking perspective. All of these leaders possessed the skills that allowed them to sustain the growth in the business which was seen in the many years Kroger beat the stock market.
Following the years of average performance, the leaders from there on in all had something in common; they were all level 5 leaders who contributed their own efforts to continuing Kroger’s growth and “from 1973 to 1998, Kroger outperform the market by 10 times” (Collins, 2001). 1973 was Kroger’s turning point and leaders realized that the current model was going to continue demonstrating average performance so they took the initiative and “began eliminating, changing or replacing every single one of its stores” (Thill, 2003) to fit new certainties.
The common link between these companies was their approach: “a down-to-earth, pragmatic, committed-to-excellence process” (Collins, 2001). In other words, this framework kept successful companies on the right path and molded them into their strong counterparts that were able to uphold their greatness. The changes in leadership that these companies experienced resulted in momentum change where this increase in energy encouraged them to keep going and carrying it on with greater velocity until exceptional results were produced.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 25 November 2016
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