Good to Great Chapter 2: Level 5 Leadership

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Good to GreatChapter 2 Level 5 Leadership

• Jason Bullard
• Grant Gerhardt
• Patrick Kirkland
• Laura Moore
• Jeffri Vaughn

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Key Points of Chapter 2

• What is Level 5 leadership?
• What are the Characteristics of Level 5 leaders?

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LEVEL 5 HIERACHY
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• Darwin E. Smith former CEO of Kimberly Clark
• CEO for 20 years
• His Story (pg. 17-21 C book)
• Level 5 refers to the highest level in the
  hierarchy of executive capabilities in Good to
  Greats research
• Level 5 leaders channel their ego needs away from
  themselves and into the larger goal of building a
  great company

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Level 5 Leaders

• Build an enduring greatness into their companies
  through a blend of personal humility and
  professional will
• Are not larger than life saviors
• Are self-effacing individuals who have the
  resolve to do whatever it takes to make their
  company great

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• Level 5 leaders have ambition but their ambition
  is first and foremost for the institution
• Ex. Juan T. Trippe, Founder Pan American World
  Airways
• Pioneered commercial flights to Hawaii, China the
  far east, and around the Pacific Rim in the 1920s
  and 30s with Pan Ams flying boats
• Took great risks in the late 50s and again in the
  70s when he partnered with Boeing to launch the
  707 and 747 jetliners

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Good to Great companies had one thing in common

• They all had or have Level 5 leadership!
• Pan American with Juan T. Trippe
• Kimberly Clark with Darwin E. Smith

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A Compelling Modesty

• Good-to-great leaders did not talk about
  themselves
• Talked about the company and the contributions of
  other executives
• Most are very modest and humble
• Most extraordinary executives are not widely known

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A Compelling Modesty

• Was not just false modesty
• Quiet
• Humble
• Modest
• Reserved
• Shy
• Gracious
• Mild-mannered
• Self-effacing
• Understated

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A Compelling Modesty

• Good-to-great leaders never wanted to become
  larger-than-life heroes
• Ordinary people quietly producing extra-ordinary
  results
• Presence of a gargantuan personal ego contributed
  to the demise or continued mediocrity of the
  company

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A Compelling Modesty

• Scott Paper CEO Al Dunlap
• Told anyone who would listen about his success
• Personally accrued 100 million for 603 days of
  work
• 165,000 per day
• By slashing the workforce, cutting RD budget in
  half, and putting the company on growth steroids
  in preparation for sale
• Sold off Scott Paper and pocketed the quick
  millions
• Wrote a book about himself
• Rambo in Pinstripes

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A Compelling Modesty

• William McComb CEO of Liz Claiborne
• According to The Wall Street Journal, McComb
  flies commercially, almost always in coach
• Many CEOs of major companies travel on corporate
  jets

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Unwavering Resolveto Do What Must Be Done

• Level 5 leadership is not just about humility and
  modesty
• Ferocious resolve
• Determination to do whatever needs to be done to
  make the company great
• Call them Level 5 leaders so that they do not
  sound weak by being described as selfless
  executives or servant leaders

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Unwavering Resolveto Do What Must Be Done

• Level 5 leaders are fanatically driven
• Incurable need to produce results
• Will even drop a business, sell the mills, or
  fire family, if that is what it takes to make the
  company great

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Unwavering Resolveto Do What Must Be Done

• Evidence does not support the idea that you need
  an outside leader to come in and shake up the
  place to go from good to great
• Going for a high-profile outside change agent is
  negatively correlated with a sustained
  transformation from good to great

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Unwavering Resolveto Do What Must Be Done

• Ten out of 11 good-to-great CEOs came from inside
  the company, three of them by family inheritance
• The comparison companies turned to outsiders with
  six times greater frequency, yet they failed to
  produce sustained great results

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Walgreens

• Large part of the company had been in
  food-service for many years
• CEO Cork Walgreen
• Felt that company should switch to convenient
  drugstores
• chose to eliminate food-service operations
  despite the companys close ties with
  food-service

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Circuit City

• Plow horse vs. show horse
• Investment in Circuit City six times better than
  General Electric
• Level 5 CEO Alan Wurtzel attributed number one
  factor for Circuit Citys success to luck

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Windows and Mirrors

• Several Level 5 leaders attribute success to luck
• Level 5 leaders look out the window at others to
  attribute success, and look in the mirror at
  themselves to attribute failure
• Comparison company leaders look out the window at
  others to attribute failure, and look in the
  mirror at themselves to attribute success

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Level 5 Leadership

• Professional will
• Unwavering resolve to do what it takes to produce
  the best long-term results
• Looks in the mirror to attribute failure
• Settles for nothing less than the best

• Personal Humility
• Modest, never boastful, shuns public adulation
• Quiet, calm determinism
• Relies on inspired standards, not inspiring
  charisma
• Channels ambition to company, not to self
• Looks out the window to attribute success

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Becoming a Level 5 Leader

• Some Level 5 leaders experience a significant
  turning point in their lives, while others have a
  relatively normal life
• It is possible that potential Level 5 leaders are
  common it is only a matter of finding them
• Some people will never be able to tame their egos
  and therefore will never reach Level 5
• Work will always be about what they get (fame,
  fortune, power) rather than what they build,
  create, and contribute

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What Makes a Level 5 Leader?

• Humility
• Modesty
• Willful
• Humble
• Fearless

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Not Always About the Money

• A level 5 leader isnt concerned about money
  only. This leader is much more concerned with the
  overall success of the company in the present as
  well as in the future when they are gone.
• They will do everything they can to make sure the
  company will succeed later by appointing a
  successor with their same characteristics.

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When it is About the Money

• When it is about the money youre probably
  talking about a Level 4 Leader. This is somebody
  who is not concerned with the future of the
  company after theyre gone, but who just wants to
  get paid.
• They are all about the I and not about the
  We.
• This leader will not set their successor up for
  success. In fact, they will most likely choose a
  person who isnt ready, or doesnt have any idea
  what it takes to be a leader of that magnitude.

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Leaders

• Level 5

• Level 4

• Stanley Gault (CEO Rubbermaid)
• Bob Nardelli (CEO The Home Depot)

• Abraham Lincoln (former President)
• Colman Mockler (CEO Gillette)
• David Maxwell (CEO Fannie Mae)
• Frank Blake (CEO The Home Depot)

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Personal Experience

• Level 4-Bob Nardelli
• Was getting large sums of money though stock was
  dropping
• Company flourished, but was concerned about his
  money, and not the future of the co
• Company and Nardelli agreed on resignation

• Level 5-Frank Blake
• Blake is already more involved with associates
  than Nardelli ever was
• Sincere and concerned with the success of the
  company and the benefits it brings to the
  community

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Takeaways

• Level 5 Leaders are humble, fearless, and willful
• They are concerned with the company, its
  employees, and the benefits the company brings to
  the community in the present and future

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Citations

• http//money.cnn.com/2007/01/03/news/companies/hom
  e_depot/index.htm
• http//money.cnn.com/2006/05/25/news/companies/hom
  e_depot/index.htm