Level 5 Leaders - Characteristics and Operating Style

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Jim Collins, level 5 leaders, Kimberly-Clark, Darwin E. Smith, Sam Walton, Wal-Mart, Iacocca, Chrysler, George Cain

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First Who, then What

Level 5 leaders first identify the right people Once this is over then only they turn to the task of setting new direction and strategy for making their organizations great. This approach has some obvious advantages:

1] Once right people are on the team, adapting to changes becomes relatively easy. (Refer Exhibit 9.3 to know how Wells Fargo prepared for the impending change in the industry) If people join the team primarily because they are impressed with direction of the firm or the strategy it is adopting, they are certain to feel dissatisfied when the firm changes its direction or strategy according to situational demands. These dissatisfied people will rarely be enthusiastic participants when the firm is moving in new direction with new strategy.
2] Right people will not have motivational problems. A leader need not motivate them or monitor them closely. They are driven by inner drive to achieve best results and leave their mark.
3] A great company has never been created without right people in place. Wrong people will not be of much use even when the firm is moving in right direction. Similarly, great vision or strategy is hardly meaningful without right people in place.

Exhibit: 9.3 The Secret of Wells Fargo

Wells Fargo showed remarkable performance over a period of 15 years starting from 1983. But according to Jim Collins, the foundation for this exceptional performance was laid way back in early 1970s. It was then when Cooley ventured on a mission to build the best talented management team in the banking industry. Cooley was sure of impending radical change in the banking industry. But he did not have any exact idea as to how the change is going to be. To adjust to this change he along with Ernie Arbuckle, Chairman of Wells Fargo went on talent hunt.

They recruited talented people in the industry whenever and wherever they found them, even when they had no specific job for them. Cooley explains the rationality of his approach:

"That's how you build the future. If I'm not smart enough to see the changes that are coming, they will. And they'll be flexible enough to deal with them." Nobody in the industry succeeded in predicting the change. But no company in the banking industry adapted itself to the change as well as Wells Fargo did. When the sector performed 59% below the general stock market, Wells Fargo performed three times the general stock market.

Adapted from "Good to Great" by Jim Collins, Harper Business, 2001.

Have faith, face brutal facts

Level 5 leaders encourage their people to face brutal facts. They believe that once enough effort is put into knowing the reality of the situation, right decisions will follow. This might not be the case always. There can be situations where enough information on the situation is available and yet decision making is difficult. But one thing is certain. A leader can make right decisions consistently only when he is in touch with the realities of the situation. Level 5 leaders use various techniques to understand the real situation.

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