Level 5 Leadership

Level 5 Leadership

The key differentiator between good and great companies is Level 5 leadership. This is the premise of Jim Collins' best-selling book Good to Great: Why Some Companies Make the Leap … and Others Don't.

The following criteria are used to identify the sustained excellence of Level 5 leadership: companies needed to exhibit a 15-year cumulative stock return at least three times above the market average. Out of the Fortune 500, only 11 companies qualified.

Level 5 leaders have some surprising characteristics in common. Instead of being high-profile, big-ego leaders, they are self-effacing and reserved. All are humble and clearly see their own limitations in what is an increasingly complex and ever-changing marketplace.

Consequently, their role as leader is less about promoting their own vision and more about surrounding themselves with the best talent available, then grilling that talent with penetrating questions to devise ongoing strategies to accommodate the ever-changing marketplace.

This is described as "first who … then what." Because no single person has all the answers, the emphasis is on first "who" is onboard and then "what" to do is decided. In the book, an analogy is made to a bus. The Level 5 leaders first make sure to get the right people on the bus and the wrong people off the bus. Then, collectively, they decide where to drive the bus.

Level 5 leaders also exhibit an unwavering resolve to do whatever must be done to produce the best long-term results for the company, show a relentless ability to confront brutal facts and never lose faith. And, most importantly, they avoid the pitfall of being good. It turns out the biggest impediment to being great is the complacency that comes with being good.