Discover the fifth level leader

Today's companies desperately need leaders who are focused on what reality demands of the company and who truly understand how the company can be great. As management consultant Jim Collins asserts, these kinds of leaders can easily be found and grown in any company.

Collins is best known for his book Built to Last. He believes that ambitious people who put the company's interests first rather than their own can make the company great. This is the theme of his new book, Good to Great. The book is the culmination of five years of work with 20 researchers. Their findings, particularly on leadership, could have a major impact on how companies select leaders. Corporate decision makers may be more comfortable looking for leaders within their own companies than for the brightest stars in the sky.

Collins established a management lab in Colorado, USA, to conduct research and work with company managers. In an interview, he explained how to develop the right leaders.

All companies that make the leap to greatness have what you describe as a "fifth-level" leader. How do you define fifth-level leadership?

The fifth-level leader embodies a seemingly paradoxical mixture of humility and professional will. They were reticent, taciturn, and even a little shy, more like Lincoln and Socrates than Barton or Caesar.

It is important to note that we are not looking for fifth-level leaders. In fact, I tell researchers to ignore the role of top managers and avoid the prevailing "leadership is everything" way of thinking, which is either "superstitious leadership" or "blaming leadership."

Modesty and humility do not mean that fifth-level leaders are not motivated to achieve greatness. Instead, they will do everything possible to achieve superior performance.

A fifth-level leader is not the same as a fourth-level leader, let alone a first, second, or third level. So what exactly is their difference?

Fifth-level leaders are ambitious, but they put the company's interests first, not their own; they are also willing to pave the way for their successors to succeed and make the company even better. In contrast, fourth-level leaders are not interested in the longevity of the company after their departure; Stanley Gault. He knew what he was supposed to do when he took the helm of Robamates, and as a result he had excellent, if not excellent, results. But after he left, the success of his successor performance plummeted. why? If you have a position filled by a genius with thousands of assistants, when he leaves you are left with only a few thousand assistants. This is what happens when a leader calls himself "I am the savior, come with me."

Or take Scott Paper's Al Dunlap, the self-proclaimed "Rambo in a striped suit" who takes every opportunity to trumpet him important role. He sold the company, but only to enrich himself. In our comparative study of the cases, we found that more than two-thirds of companies that were either destroyed or mediocre were the result of egoistic inflation.

Another example is Lee lacocca. Yes, he saved Chrysler, but he was too keen to make himself one of the most famous CEOs in the world. He wrote an autobiography that has sold millions of copies; he appears on various talk shows; he starred in his company's commercials. Halfway through his tenure, Chrysler's stock price rose to 2.9 times the market's composite price, and fell to 31% below the market price in the second half of his term.

Sam Walton is a charismatic, quintessential fifth-level leader. He has a distinct personality and is an outstanding figure, known as a national hero. When Walton died of bone cancer in 1992, Walmart's biggest question was where to go. Concerned about the company's success, not his own fame, Walton chose the uncharismatic David Glass to lead the company to show that it wasn't his charisma that made Walmart special. Glass quietly ran the company, and now Walmart is a $191 billion company.

Where can I find Level 5 leaders?

Let me tell a story to answer this question. Years ago, a company representative came to my lab and said, "Collins, we've been on the fence about whether we need to find a great CEO for ourselves to make the company great." So we Start discussing questions like who will replace the founder of the company, and whether the company will be in crisis when this person leaves. It's interesting that the company is starting to look at this differently, saying, "Our problem is that we're constantly looking outside the company for people who can lead us to our dream land, not looking inside our company, not thinking about us. The question of who and what resources we have to get us to greatness."

The company ultimately concluded that it did not have a leadership crisis, but an understanding crisis. They say, "We don't really understand what makes us great, but if we do, many people in the company might make us great." So instead of blindly looking for mythical heroes, they dig inside the company .

They did find a legendary figure—Orin Smith, CEO of Starbucks. He's quiet, low-key, truly humble, and has been with the company. But why look elsewhere for Howard Schultz (the founder of Starbucks) when there is a brilliant Orin Smith number one?

What are the characteristics of companies that look outside rather than inside for the most capable leaders with the best solutions?

Their approach is a very serious failure. For example, in our study of the fact that some companies went from good to great, we found that 90% of the CEOs of the companies that made the leap were promoted from within. The only Airborne was Fannie Mae's David Maxwell, who was almost a household name as an excellent fifth tier leader.

Take a look at the counterparts of these great companies that tried unsuccessfully to go from good to great, such as Robamate and Chrysler. Two-thirds of these companies employ outsiders. So, if we think we have to get airborne troops into the company and hold positions of power, we're obviously committing suicide.

How do you explain that some companies are not genuinely committed when looking for leaders from the outside?

This is a very interesting question, as we have found that some boards don't think that way. I'm not an expert on boards, but we do see such boards, and their distinguishing feature is that they know the difference between a stock's value and a stock's price. Boards of companies that go from good to great know that they are trying to build stock value; their counterparts are trying to increase stock prices. I can influence the stock price in multiple ways over 2 years without the underlying stock value growing. If you don't plan long-term stock prices for more than 5 years, you confuse the concepts of price and value. We've found that the boards of good-to-great companies always stand behind and say, "We have a great opportunity to create shareholder value."

This was exactly the problem Gillette faced in the early 1980s. Colman Mockler was a longtime CEO at Gillette and has historically proven to be one of the most remarkable CEOs of the past 50 years. He worked in finance at Gillette before becoming CEO. He is a humble fifth-level leader. Gillette has faced takeovers three times. Two of them were from Revlon, led by Ronald Perelman, who was known for sniping the company before taking it down. The third came from Coniston, an investment group that bought a 5.9% stake in Gillette and launched a proxy battle to try to take control of the company and sell it to the highest bidder. If Perelman's bid sold Gillette, shareholders would immediately gain 44% on the stock. Mockler and the board successfully blocked all three acquisitions.

If Gillette's board didn't know the difference between price and value, you and I wouldn't be able to shave with a Mach 3 razor today, and Gillette's shareholders wouldn't be able to get such a good return.

But most companies always say they understand the difference between price and value, but still look outside for well-known corporate managers?

A lot of companies do, and I think it's fundamentally a reflection of ignorance -- I mean ignorance in the most precise sense. We were also ignorant before doing research, but after research we can objectively point out that it is impossible to go from good to great if we insist on choosing leaders from the outside.

Keep in mind that there is only one outside leader who is extraordinary. When David Maxwell became CEO of Van Nistelrooy May, the company was losing $1 million per business day. When he arrived, the board asked him, "David, how do you save the company?" His answer, the answer of a great fifth-level leader: "I don't know." Imagine hiring a great hero, and he says "I have no idea". Maxwell explained that he would ask questions and find the right people to assist him. In the end they responded brilliantly in time to the challenge facing Ruud van Nistelrooy.

Should companies be overwhelmed when leadership candidates say "I don't know"?

"I don't know." -- an interesting answer, isn't it? If you think about it, the people who say this are actually very smart, not only are they smart enough to know that they don't, but they're smart enough to ask the right questions, which is their gift. We found it interesting that among the CEOs we studied, the most were law majors, such as Bill Allen of Boeing, Darwin Smith of Kimberly-Clark ( Darwin Smith), etc.

This was counterintuitive to me, so I asked them how their legal background played a role in making them an effective CEO. They say that legal education teaches you to ask the right questions, not necessarily the right answers, but to move forward with the right questions until you find the right answer. One CEO once told me, “They always call me a prosecutor because I always ask why, why, why, until I get it.”

There are many leaders, but not necessarily Fifth level leadership. Can you learn to become a fifth-level leader?

In many cases, the answer is "yes"; in some cases, "no". Not all of the fifth-level leaders we studied were consistently fifth-level leaders. Some events in their lives prompted them to grow into fifth-level leaders. In World War II, Philip Morris' Joe Cullman escaped a shipwreck in the North Atlantic at the last minute due to a change of order, but good luck surviving. He has matured. Darwin Smith's battle with cancer may be the reason for his maturity. A change of religion can also make a person fully mature, and Coleman Mockler has gained a huge spiritual support because of his change of religion. For another CEO, a child who committed suicide was a turning point in his life.

I believe in people's ability to grow. I am not a 5th level leader but have been greatly inspired by these 5th level leaders. The standards they set didn't intimidate me, they pushed me forward. If I don't believe in people's ability to grow, we might as well put things on hold and achieve nothing. However, I will not accept this idea.

Original text from Across the Board Magazine September-October 2001 with permission of The Conference Board Ltd. Translated by Huang Xi.