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Good to Great Chapter 2: Level 5 LeadershipJason Bullard Grant Gerhardt Patrick Kirkland Laura Moore Jeffri Vaughn

Key Points of Chapter 2

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

LEVEL 5 HIERACHYL5 EXECUTIVE

EFFECTIVE LEADER

COMPETENT MANAGER

CONTRIUTING TEAM MEMEBER

HIGHLY CAPABLE INVIDIDUAL

Darwin E. Smith former CEO of Kimberly Clarko

o

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

Level 5 Leaderso

Build an enduring greatness into their companies through a blend of personal humility and professional will

o

Are not larger than life saviorsAre self-effacing individuals who have the resolve to do whatever it takes to make their company great

o

Level 5 leaders have ambition but their ambition

is first and foremost for the institution

o

Ex. Juan T. Trippe, Founder: Pan American World Airwayso

o

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

Good to Great companies had one thing in commonThey all had or have Level 5 leadership!

Pan American with Juan T. Trippe Kimberly Clark with Darwin E. Smith

A Compelling Modesty

Good-to-great leaders did not talk about themselveso

o

Talked about the company and the contributions of other executives Most are very modest and humble

Most extraordinary executives are not widely known

A Compelling Modesty

Was not just false modestyoo o o o o o o o

Quiet Humble Modest Reserved Shy Gracious Mild-mannered Self-effacing Understated

A Compelling Modesty

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

A Compelling Modesty

Scott Paper CEO Al Dunlapoo

Told anyone who would listen about his success Personally accrued $100 million for 603 days of worko

o

$165,000 per day By slashing the workforce, cutting R&D budget in half, and putting the company on growth steroids in preparation for sale

o o

Sold off Scott Paper and pocketed the quick millions Wrote a book about himselfo

Rambo in Pinstripes

A Compelling Modesty

William McComb CEO of Liz Claiborneo

o

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

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

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

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

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

Walgreens

Large part of the company had been in foodservice for many years CEO Cork Walgreeno

o

Felt that company should switch to convenient drugstores chose to eliminate food-service operations despite the companys close ties with food-service

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

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

Level 5 Leadership

Professional willo

Personal Humilityo

o

o

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

o

o

o

o

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

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 5o

Work will always be about what they get (fame, fortune, power) rather than what they build, create, and contribute

What Makes a Level 5 Leader?

Humility Modesty Willful Humble Fearless

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.

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.

LeadersLevel 5

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

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

Level 4

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

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

Citations

http://money.cnn.com/2007/01/03/news/co mpanies/home_depot/index.htm http://money.cnn.com/2006/05/25/news/co mpanies/home_depot/index.htm