As one CEO after another comes under attack for hubris, malfeasance or just plain-old greed, the once vibrant cult of the Great Leader has fallen into disrepute. And so too have the reputations of many management gurus who not so long ago called charismatic leadership the sine qua non of any enterprise success story. In 2000, celebrity management consultant Gary Hamel, for example, celebrated the passion and courage of Enron’s leaders in the pages of this magazine, calling theirs “a noble cause.” (See “Revolt or Perish,” available online at www.cio.com/printlinks.)
One business commentator, however, has been distrustful of leaders all along: Jim Collins. In his two best-selling books, Good to Great: Why Some Companies Make the Leap…and Others Don’t (HarperCollins, 2001) and Built to Last: Successful Habits of Visionary Companies (HarperCollins, 1994, coauthored with Jerry Porras), Collins consistently has downplayed the importance of leadership to organizational success.
Bringing hard research to bear on what has heretofore been a moral debate, Collins has concluded that the self-serving, charismatic magazine cover boys who once served as role models for ambitious managers in fact make rather poor leaders. Good leaders, he says, know how to get out of the way of their followers.
Although Collins’s focus is on the CEO, his observations about good leaders, and the paths they take to the executive suite, hold lessons for CIOs. In an interview with CIO, Collins talked about the practice of leadership and how leaders should be identified and chosen.
The Great (Man) Debate
In conducting research for Good to Great, which profiles the differences between merely good companies and a handful of great ones, Collins found that some CEOs excel in setting priorities but are modest about the part they play in achieving those goals. He terms them Level 5 leaders?the highest rung in his hierarchy (see “Which Level Are You On?” Page 106).
Collins, a former professor at Stanford University’s business school, returned to his picturesque hometown of Boulder, Colo., to found his own “management laboratory,” where he employs a staff of researchers to uncover the secrets of great companies. “When we interviewed all of the people who were parts of the management [of companies that made the transition from good to great], they would all be talking about the incredible role that the CEO played,” Collins says. “But when we interviewed those CEOs, you would’ve thought that they weren’t there. The way they talked, it was as if they had just been sitting there while all of this amazing stuff happened around them. They never said things like, ’I did this’ or ’This was my strategy.’ They pointed back at all of these other people.”
This characteristic diffidence found in Level 5 leaders does not mean their leadership is inconsequential. Quite the contrary. “It’s very important to have the right person in that position,” Collins says. “We’ve seen examples recently where, even if you have a great organization, the wrong people in positions of executive power can destroy it.”
Anti-Level 5 leaders use their company as a personal platform. One current exemplar might be Dennis Kozlowski, who gutted Tyco International to satisfy an itch for aggressive deal-making.
Another researcher, Harvard Business School assistant professor Rakesh Khurana, has sounded a similarly cautionary note on the dangers of charismatic leaders. In his recent book, Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs (Princeton University Press, 2002), Khurana makes the case that charismatic CEOs tend to lead their company down a destructive path, either by so dazzling the board of directors that it fails to perform its oversight function diligently, or by setting up their company to crash after they leave?thereby making people wistful for the departed leader.
Not all management gurus are ready to give up on the great-man type of leader. Michael Maccoby, a psychotherapist and author on leadership, characterizes humble-but-excellent Level 5 leaders as suited only for staid companies. And, in fact, the majority of Collins’s list of good-to-great companies is composed of such slow-but-steadies as Gillette, Kimberly-Clark, Kroger, Pitney Bowes and Walgreens. Maccoby thinks uncharismatic CEOs are unlikely to do well at companies that thrive on innovation?companies like Cisco Systems, Intel and Oracle.
Maccoby calls the type of leader most able to lead trailblazing companies?indeed, the type driven to create such companies?the productive narcissist and mentions Jack Welch as an example. Productive narcissists combine inflated self-regard with obsessive attention to process. Those leaders, not Level 5 types, says Maccoby, are singularly able to inspire the troops to stretch themselves in pursuit of their visionary goals.
Collins disputes assertions that Level 5 leaders cannot inspire employees to greatness. The leaders in his study “created an environment of extraordinary motivation,” he says. But they did so quietly. “There is a big difference between motivation and motivating,” Collins says. “It is very insulting to say, ’I’m going to motivate you,’ as if you’re this unmotivated lump of human flesh.” Instead, Level 5 leaders move their followers by setting an example.
“These people were of such extraordinary integrity and of such inspired standards that that became a magnet for others,” Collins says. His paragons are CEOs such as Ken Iverson (formerly of Nucor), Colman Mockler (formerly of Gillette) and Darwin Smith (formerly of Kimberly-Clark). All led their employees to enormous success, yet they weren’t driven to become household names?which is partly why, in Collins’s view, they were successful. (For more on what make great leaders, see “The Alchemy of Leadership,” Page 87.)
As for Welch, his halo has been tarnished somewhat by the reports of his over-the-top retirement package. And GE has floundered while his handpicked successor has struggled under the burden of…not being Jack Welch. The traumatic impact on the enterprise of having to replace a charismatic leader is one of the dangers that Collins and Khurana warn about.
How to Be a Collins Leader
Though none of the CEOs profiled in Good to Great came up through the IT ranks, Collins see no reason why CIOs couldn’t become Level 5 leaders. His exemplars had varied backgrounds?Iverson was a plant manager, for example; Mockler rose through the finance group; and Smith came up through the legal department. (All but one of the 11 Level 5 CEOs in Collins’s study lacked MBA degrees?a lacuna in their rŽsumŽs they share with many CIOs.)
What Level 5 leaders do have in common is a set of character traits that Collins says is predictive of success.
Humility. More than just niceness, humility reveals that the leader understands that no one person can create a great organization. “Do [potential leaders] have the proper relationship to the window and the mirror so that when talking about results, they point out the window [at others], but when asked about screwups and things that went bad, they point to the mirror?” Collins asks.
Aligned values. “The individual must share at a gut level the core values of the institution,” Collins says. He believes it’s very difficult, if not impossible, for leaders to excel if their personal values are incompatible with those espoused by the organization.
Results. Great leaders combine character with competence. “There have to be results,” Collins says. The outstanding companies in Good to Great achieved stock returns that were an average of 6.9 times the results of the general market for at least 15 years. In contrast, General Electric, which has been a benchmark for high-performing companies in America, outperformed the market by 2.8 times from 1985 to 2000. (Although Collins uses equity returns as his yardstick, his metric is anything but short-term. The median of the extraordinary year-over-year results turned in by his 11 companies is 24 years.)
Enduring excellence. Great leaders not only achieve excellent results, they also succeed at a more difficult challenge: The groups they lead continue to flourish after their departure. In other words, these leaders set up their enterprises for long-term success.
That, for Collins, is the leadership litmus test. “If you had to pick one does-this-person-have-it-or-not question, that’s the real test,” he says. It’s also the most difficult test by far, since lasting results depend on the actions of many other people and factors that are beyond the leader’s control. But that’s what Level 5 leaders do: They put people and the organization in a position to succeed.