Leadership is the ability of an individual or a group of individuals to influence and guide followers or other members of an organization.
Every leader has his or her own style and strategy. Further, their leadership styles and methods will vary because they are influenced by multiple factors — the modern challenges all business leaders face today (digitalization, changing regulatory and financial markets, recruiting and retaining talent) coupled with predicaments specific to their company, company size and the industry in which the business is based.
- Establishing a clear vision,
- Sharing that vision with others so that they will follow willingly,
- Providing the information, knowledge and methods to realize that vision, and
- Coordinating and balancing the conflicting interests of all members and stakeholders.
A leader steps up in times of crisis, and is able to think and act creatively in difficult situations.
Collins describes his five-level leadership hierarchy in the following way:
Level 1 relates to individual capability;
Level 2 to team skills;
Level 3 to managerial competence;
Level 4 to leadership as traditionally conceived.
Level 5 leaders
Leaders possess the skills of levels 1 to 4 but also have an “extra dimension”: a paradoxical blend of personal humility. They are somewhat self-effacing individuals who deflect adulation, yet have an almost stoic resolve to do absolutely whatever it takes to make the company great, channeling their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious—but their ambition is first and foremost for the institution and its greatness, not for themselves.
The Level 5 leader is not a celebrity CEO.
We’ve turned into a culture of targeting short-term results and profits, of making an impact and taking credit. A leader who takes a company from good to great never sacrifices long-term effectiveness for short-term gain. Darwin Smith of Kimberly-Clark and David Maxwell of Fannie Mae are examples of Level 5 leaders. They built greatness step-by-step, without fanfare, creating results that are extraordinary by any standard.
In contrast, AL Dunlap of Scott Paper and Lee Iacocca of Chrysler attracted much more attention for themselves than they did good for their companies. According to Collins’ research, a gargantuan personal ego at the top contributed to the demise or continued mediocrity of two-thirds of the companies he studied that failed to move from good to great.
To identify a Level 5 leader, find exceptional results in an area where no one is taking credit. Chances are no one is taking credit because the leader is a Level 5. As Collins said, “Preferring to be clock-builders rather than time-tellers, Level 5 leaders are comfortable with the idea that their companies will tick on without them, reaching even greater heights due to the foundations they laid down. The fact that most people will not know that the roots of that success trace back to them is not an overriding concern.” Great leaders, rather than being a genius with a thousand helpers, want to build a clock that will tell the time even if they weren’t there.
People always come before vision and strategy. The Level 5 leader gets the right people in the right roles before choosing a destination. The people drive the bus; the bus does not drive the people.
Once the people are in place, the Level 5 leader embraces a principle that defines the company and preserves the core. The core is values that define why you exist beyond making money. The core is what you are built around even while progress is being made. It is worth cost and pain to you. Progress is made to enable the core and tracked by consistent, clear, self-imposed performance markers.