Good to Great CHAPTER 2 LEVEL 5 LEADERSHIP

Good to Great CHAPTER 2 – LEVEL 5 LEADERSHIP

Darwin Smith • “Best example of taking a good company and making it great” • CEO of Kimberly-Clark 20 Years • Stock Returns 4. 1 times higher during his time • Not a typical leader but used Level 5 Leadership

Level 5 Leadership “Level 5” Refers to a five-level hierarchy of executive capabilities with Level 5 at the top. Humility + Will = Level 5 “Level 5 Leaders are ambitious… first and foremost for the company, not themselves”

Research “Leadership is the answer to everything” is like saying “God is the answer to everything” - Where did Level 5 Come From? - Collins ignored executives - Team Disagreed - Found that Level 5 Leadership was consistent in all great companies - Comparison companies lacked Level 5 Leadership

Ambition for the Company: Setting Up Successors for Success • Key part in making business sustainable and ultimately making the business great. • Ambition first and foremost for the company and concern for its success rather than one’s own riches and personal renown. • In over 3 quarters of the comparison companies successors were setup for failure, or chose weak successors, or both.

A Compelling Modesty • Not to be confused with false modesty • Great leaders tended to place more emphasis on others and the company, rather than themselves. • Did not take credit for themselves, even where it was due. • “Seemingly ordinary people producing extraordinary results. ”

Unwavering Resolve… to Do What Must Be Done • Level 5 leaders are driven to produce results • You must be willing to do whatever it takes • Promoting from within = stronger resolve

The Window in the Mirror • Level 5 leaders look out the window to apportion credit to factors outside themselves when things go well • At the same time, they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly • Simplified, they accept blame for bad, and give credit to others for good.

Level 5 Summarized • Modesty & Humility – Someone who does not care about the credit – Accepts blame for failures – but does not give up • Will – Direct ambitions towards companies’ goals first and foremost – Strong Resolve

Atypical Leadership Characteristics • Tend to be introverts • Less charismatic • Highly motivated (not really atypical) • Motivated more by success of company than themselves