Power and Politics

REACTION PAPER NO.5: “LEVEL FIVE LEADERSHIP”

DONABELLE B. SUVA

11 AUGUST 2004

I. SUMMARY

Why is it that a few companies develop from an organization with good results as measured on the stock market to a great one? Jim Collins and his team selected 11 companies from more than 1400 that had been listed in the Fortune 500 from 1965 to 1995. Each of the selected companies had mediocre results for 15 years and then went through a transition point. From that point they out- performed the market by at least 3 to 1 and sustained that performance for at least 15 years. Each of these was compared with companies in the same industry and about the same size. Using hundreds of interviews, they identified the key factors that enable a company to move from mediocre institutions to great institutions. The comparison companies lacked these factors and failed to become great. Perhaps the most important component of the transition from good-to-great is what they called "Level 5 Leadership", from leadership hierarchy so identified:

Level 1 is a Highly Capable Individual who "makes productive contributions through talent, knowledge, skills and good work habits."

Level 2 is a Contributing Team Member who "contributes individual capabilities to the achievement of group objectives and works effectively with others in a group setting."

Level 3 is the Competent Manager who "organizes people and resources toward the effective and efficient pursuit of predetermined objectives."

Level 4 is an Effective Leader who "catalyzes commitment to and vigorous pursuit of a clear and compelling vision, stimulating higher performance standards."

Level 5 is the Executive who "builds enduring greatness through a paradoxical blend of personal humility and professional will." Every one of the good-to-great companies has level 5 leaders in the critical transition phase. None of the comparison companies did. These leaders are described as being timid and ferocious, shy and fearless and modest with a fierce, unwavering