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Jim Collins revolutionized the world of management thinking with his and Jerry Porras’ influential 1994 book Built to Last—on the success factors of enduring, visionary companies. His newest book, Good to Great: Why Some Companies Make the Leap... And Others Don’t (Harper Collins, 2001) was a five year effort to respond to a challenge from one of my former McKinsey colleagues who asked, “If you’re not an enduring, visionary company, but want to become one, how do you do it?”

In Good to Great, Collins and his research team describe a pattern of market winners who “made the leap,” reflecting a special combination of discipline and focus in people, thought, and action. The analysis and discussion are elegant and very compelling, and the book is certain to become another business bestseller. Its framework also includes a particular perspective on a determinate form of leadership, which Collins labels as the fifth level above the normal progression that successful leaders pass through. Called Level 5 leadership, it characterizes the handful of companies that have truly gone from good to great, at least as measured by extraordinary and sustained return to shareholders. According to Collins, Level 5 leadership goes beyond the normal “cover of Fortune magazine” paragon of vision and performance management. It represents a further, almost spiritual achievement of “building greatness through a paradoxical blend of personal humility plus professional will.” Think Abraham Lincoln more than George Patton.

We are honored to have had a conversation with Jim Collins for this issue of Learning in the New Economy Magazine, given our theme of leader learning and the important—if somewhat counterintuitive—advance of his newest research. We believe people will be talking about Level 5 leadership for a long time. Anyone thinking about learning and leadership development must factor Jim Collin’s research into their own plans and programs.

In this discussion, which all-too-poignantly occurred in Jim Collins’ new office—situated in a rehabilitated building, once his own elementary school in Boulder, Colorado, we delved into multiple points and follow-on ideas emerging from Good to Great. Some of our most exciting exchanges were about Level 5 leadership and the fundamental question of whether and how it can be taught. The excerpt that follows revisits a key segment of the conversation, which occurred on a sunny afternoon on Sept. 10, 2001.

Manville: Before we get into leadership per se, let’s talk a little about the kind of people one generally needs in an organization, and the implication for learning versus intrinsic qualities. One strong implication of your work is that when you’re hiring, you need to think more about character than knowledge. By your view, knowledge can be taught, character can’t. Am I right?

Collins: It’s a little more complicated than that. Since I’ve finished the book, my thinking on this has evolved. I’ve been reflecting a lot on, fundamentally, what it means to be the right person. The more I think about it, the more I see a direct link between two key concepts in our research: “The right people on the bus” and “The culture of discipline.” Let me explain.

I have this absolutely wonderful assistant named Vicky. She’s like my air traffic controller; she’s much more than just an administrative assistant. Air traffic control carries big responsibility; planes crash, people die. It’s very different than putting in hours on tasks to do a job. It implies taking on the fundamental responsibility to keep the planes flying. What that means for Vicky is that her job is not to follow the system; her job is to rebuild the systems as needed so that planes don’t crash. I think that is an absolute cornerstone element of what it really means to be “a right person on the bus.”

Let’s take two people applying for a job, both who have comparable knowledge of how to do the job. One brings knowledge, and only knowledge, and uses it to do his or her job. The second, however, fundamentally sees that they also have the burden of responsibility, and, all of a sudden, makes the relationship to knowledge fully dynamic. The second person is hired for the responsibility and the burden in fulfilling responsibility, which requires constant dynamic development of knowledge and systems. You build systems so that things work. That gets to the issue of character.

We know from Built to Last that character means a fit with the basic values of the institution. That’s very important. But the values vary from company to company. So are there any universal dimensions of character? In this work, we found that a universal dimension of character—or what it means to be the right person—is this very deep distinction between having a job and holding a responsibility. That has vast implications for everything that one might do in an organization.

Manville: So in terms of making the leap from good to great, or indeed growing from Level 4 to Level 5, can leadership capability be built?

Collins: Not for everybody. I believe some people absolutely cannot become Level 5 leaders. Some can. Bill Gates may be an example of someone who has grown through learning. As his sense of responsibility and his role have grown with the power and stature of the company, his own position in that hierarchy has also grown—to a bigger burden of responsibility (versus just the vision of leadership).

I see two things more clearly about Level 5 since finishing the book. First, there are a lot of Level 5s out there. You begin to realize how many really effective and successful organizations have Level 5s as a cornerstone. I think that one of the reasons our society works as well as it does is that we’ve have Level 5s throughout the infrastructure and all over the place.

And the second thing is similar to Aristotle’s notion of excellence being something that you grow into through an active disciplined habit. The way you grow into Level 5 is with a series of very concrete practical decisions you make at important juncture points along your professional journey.

My wife is a cross-country running coach, and I watch her wrestle with Level 5 decisions. A case in point—a student might have done something embarrassing to the team, but happens also to be one of the top varsity runners. As the coach, she is always concerned about how well the kids run and what their scores are going to be. But ambition and responsibility to the overall program and its stature mean that she may have to throw that kid off the team. That decision is one of those juncture points.

Manville: So it’s on-the-job learning, and being aware of the junctures—and also learning from what might be the mistakes? Being self-aware and self-reflective. What are some of the main stumbling blocks that prevent people from becoming Level 5?

Collins: That’s an interesting question. Most people fixate on the humility implied in this leadership model because it’s so unusual relative to our current culture. But the “will” dimension of the Level 5 is equally astounding. These people display such a strong will on behalf of their institutions, saying, “I will fire my brother if that’s what it takes for the company” or “I will sell the mills my grandfather built if that will make us successful.” They have an almost stoic resolve—a very special trait. So I believe that what holds a lot of people back from Level 5, ironically enough, is not the “humility” piece, but the “will.”

At the core is the central question of whether your ambition first and foremost is for yourself and your ego, or whether your ambition is for the work or company (or whatever you happen to have responsibility for). On the way to Level 5, you face many junctures. At one fork is a decision that reflects more ambition for self and ego, and at the other, there may be a decision that is more ambition for the company or the work. Level 5 is reaching those junctures and knowing the right decision on behalf of the institution and having the will to execute without blinking.

I think Level 5 people get a lot of practice in those decisions. When they confront that fork in the road the first ten times, they make the wrong choice. But maybe the next ten times, they make the right choice—say four out of ten times. After that, it’s maybe five out of ten. These are hard choices. Experience helps.

Manville: If your data is right and Level 5 produces more “built to last” companies than not, then the leadership imperative is for everyone to try to get to the top of the pyramid [Level 5 in the leadership model]. Do you believe that the best organizations in the world would have all Level 5s? And, is this a leadership model for everybody in an organization, not just the executive suite? Does the Level 5 imperative go up and down the hierarchy and belong in every person’s professional development plan?

Collins: I don’t mean to oversell the Level 5 idea—I really want to teach it. Given what I understand, I can’t imagine that an organization would not produce better results if you had more Level 5s throughout all standard responsibilities.

That doesn’t mean that Level 1s, 2s, 3s and 4s can’t produce results—of course they can. But Level 5s produce the best and longest lasting results. At almost any span of responsibility, there’s the potential to become more Level 5-like in ways that produce better results. In any span of responsibility, you do have a fundamental question of required results. So, would you produce better for any leadership role with a Level 5? I think yes.

Manville: If you want to build an army of Level 5 people across your organization, how would you do that?

Collins: I’ll have to answer that from the standpoint of who’s the “who” we’re talking about. The answers for a CEO would be different than for the head of HR or the head of, say, executive development. I would answer differently depending on the position in question.

If I were a CEO or general manager of a division with top executive responsibilities, I would systematically purge out of the system people around me who could not be Level 5 and operate in a Level 5 way.

Manville: Get the “wrong ones off the bus”?

Collins: Absolutely. What happens then is Level 5s tend to attract other Level 5s. In good to great companies we’ve noticed that executive teams headed by a Level 5 tend to become self-reinforcing. Being conscious about the right people on the bus was like a magnet to attract others. As teams acquired more level 5 capability, a kind of cascading effect encouraged other teams below them to also attract more level 5 leadership.

Manville: Should companies use psychological testing to identify Level 5s?

Collins: No, I would do it more on observation of managers on the job—how they handled their “forks in the road” decision points. I think it’s more like what the Supreme Court Justice [Potter Stewart] said about pornography: “I can’t define it, but I know it when I see it.” I think that’s especially true when you see what is decidedly not Level 5. You have to be very careful about having people around who are decidedly not capable of being Level 5. They are ultimately destructive to creating a Level 5 environment.

Manville: But you have to make the distinction between, “Not there yet, but could be” versus “Never going to get there.” You also suggest that part of the virtue of Level 5 leaders is that they tend to cut people enough slack to really understand them. They don’t just rush in and fire half the people when they take on a new assignment.

Collins: That’s right. There’s no evidence that Level 5s rush to judgment in determining members of teams around them. But there is evidence that once they have made a judgment, they are swift in their decisions and their actions. That may sound obvious, but it’s really quite rare.

The other thing that’s needed to build this kind of leadership is to educate people, even the CEO, about what is Level 5. I would mainly try to accomplish that through role modeling by the right people on the executive team; but I also think there’s value in educating members of the team on what the model is and why it matters.

Manville: So simply educating leaders in the model can add value?

Collins: I think it really does. We learn by stories and role models, and we need models to operate with. If all that the regular business press gives us is Lee Iacocca and Jack Welch, we have to combat that with a different model. So I think it’s important to give people the stories of Darwin Smith [CEO, Kimberly-Clark] and David Maxwell [CEO, Fannie Mae]—these heroes who would not make themselves heroes.

I listened to a course recently on ancient Greek civilization and the role of the Iliad and the Odyssey. The story of the mythic hero was the culturally shaping force that defined the essence of their civilization for ancient Greeks. We need to do the same thing with our modern business leaders. We need to give people a different Iliad, a different Odyssey, where leaders like Smith and Maxwell become the emblems of success.

Manville: Okay, but say I’m a Vice President of Human Resources or Vice President of Executive Development. I read Good to Great, and so did my CEO; and suddenly she’s clamoring for more of these Level 5 people. I can imagine the CEO saying, “We’ve got 6,000 people who need to be Level 5 by Thursday.” How do you handle the demand?

Collins: It’s not going to be done instantly, of course, but here’s how to get started. I would follow a two-pronged strategy.

First, teach people, both up and down the organization, what is Level 5. When people understand things, it’s enormously helpful.

Second, focus on the company’s selection process, particularly on who gets what kinds of seats on the bus. That’s really more important that any training process. I wouldn’t look at it as, “I have a set of managers and I’m going to turn them into Level 5 leaders.” I’d turn it around and say, “We have positions of responsibility. Who are the people who have the greatest capacity to potentially be Level 5s? And, who are the people who don’t have the capacity for Level 5?” I would make my job helping to determine who gets to hold what seats on the bus, rather than trying to transform every bus member and seat holder into a Level 5.

Manville: So, at the end of the day, is it much more about getting the right people and then giving them the right positions of responsibility? In the same spirit, would you want to keep moving people around in the organization, giving them different responsibilities—help to find the right fit, and also expose them, as you say, to lots of critical decision junctures?

Collins: That’s right. I think putting people in the right managerial seats is a function of 1) do they have the capacity to be Level 5s or should they hold any seat at all? And 2) does it align with their own personal objectives—fit the three circles of competence, passion, and economic requirements?

Manville: This means getting very clear about results and linking them directly to self-awareness.

Collins: Absolutely. In building Level 5 leadership, another thing I would do is to push hard not to evaluate managerial success until the results are in. Fundamentally, the question for a leader ought not to be, “Did you simply deliver results when you were there?” but also, “Did results continue to improve after you left, and did you succeed at correctly determining and building the successors in the key areas of responsibility?”

Manville: Or, to use language from your model, did you bring in leaders to help make the flywheel go even faster?

Collins: Right.

Manville: Level 5 leadership is a seductive concept. Do you think it may be abused?

Collins: Oh yes. That worries me a lot. Ever since Built to Last came out, I am constantly asked about how to get values into an organization: “We want to be ‘Built to Last’, but we need some values.”

You know what? I can’t give you values. If you don’t have values then I’m sorry, we don’t have anything to talk about. These kinds of questions just make it programmatic. It becomes worse than not knowing the model at all. In the same way, I would resist coming up with training programs and diagnoses for Level 5. There may be a lot of interest coming in for these kinds of things, more than we can probably handle—from people who want access to this material as if reading it would be like taking some simple pill. I fear that people may actually damage it through oversimplification.

Manville: So it’s not going to be a simple training program in your view. It’s more that the organization itself has to become the learning program. In other words, you have to think about the whole organization and it has to do with the people at the top, the culture, the values, and the discipline that you’re talking about. Those are not easily grafted on through a training program.

Collins: Correct.

Manville: I suppose some of it also comes from communicating important cultural signals, such as changing the metrics for success in your reward systems and the symbols of who gets promoted and why. But that still will not be satisfying for those managers always looking for the quick fix.

Collins: The number one thing is to make great people decisions about who gets responsibility. I really think that is THE cornerstone of Level 5.

Manville: I could argue that almost every innovation can be supported by good tools. The tools challenge seems to me to be “How do we make it better, easier, faster” to do what you just said? How do we empower or enable managers and leaders to find the right people and make the right people decisions?

Collins: How do we identify people who have Level 5 capacity within our own organizations—those that are not Level 5 yet, but have Level 5 capacity? How do we help them grow in their specific responsibilities and evolve toward Level 5 once they are in those responsibilities? The key first question involves identification and selection. The second involves development and training. What I see as the inverse problem is, fundamentally, when you try to train the wrong people into the right people.

Manville: That’s a disaster. If you want to actually help an organization, people need to be enabled to better judge and see, coach, and develop the Level 5 potentials. I would also suggest that it’s about empowering individuals and enabling coaching, or giving the tools to individuals to be more self-aware. Helping people get to that kind of awareness should actually become part of leadership development.

Collins: My perhaps nave, but very genuine hope for what will happen with these ideas is that there will be a whole bunch of people who basically say, “I’m just going to become Level 5 as best I can in my responsibilities.” They may be the supplies manager at the Army Depot in Lexington, Kentucky, or in any other basic role, but they’re going to do everything they can to grow and develop the people in their organization. Maybe they have some wrong people on the bus that they’re going to get off, and they’re going to confront the brutal fact that they need to make changes. They’re going to find a way for their supply depot to prevail. They’re going to find the simple things that they do really well, better than any other supply depot, and compete on those capabilities. They’re going to build and nurture their culture in line with our model. Good to Great is a book that someone can take at any span of responsibility and do something with—frankly, much more than with Built to Last.

Manville: Any final piece of practical advice for would-be Level 5 leaders?

Collins: Yes. Never take a managerial responsibility where you do not have the power to decide the “who’s.” If you can decide the “who’s on the bus,” then you can create a pocket of greatness in your organization or your part of the organization. And if the rest of your organization doesn’t become great, so be it. You’re making the best contribution you can—and learning every day from it.

Manville: Jim, clearly there’s a lot of your own soul in this book, which is one thing that makes it great. In closing, what about your own laboratory? Do you feel you are trying to run it and your research in a Level 5 way?

Collins: Yes, but without being Level 5 yet. Maybe someday I will be. It’s very interesting that as these findings started to emerge, the way we ran all the research teams began to change, to coincide with what we were finding. We unconsciously evolved to fit our own model.

For example, as the study went on, I dwelled much more on the “who” rather than the “what” when I was making a hire. That was a big change for me, and was totally driven by the research that I was learning from in real time. And the way we run our research council now is very much a “brutal facts prevail” model, just as you’ll find in the book.

We also apply the three circles test [passion, unique competence, financial fit] constantly to the way we make our decisions. For example, if somebody asked me to do a teaching engagement, we would run it through the three circle questions: 1) Would I be passionate about doing it in a month? 2) Is there someone in the world who could do a better job, or am I uniquely suited? 3) How does it fit with our economic denominator, which is cash flow per day versus the opportunity cost of being away from research and writing? Any invitation that fundamentally fails the three circles test (except perhaps for scholarships and non-profit work) we decline. We’re constantly refining our own discipline… but believe me, it is not always easy.

* * *

From there, Collins and I shook hands and went our separate ways, not knowing the next day would truly set the world on a course that demanded a new level of responsibility like never before. If you haven’t done so already, get yourself a copy of Good to Great. In these turbulent days, it will be well worth your time.

Jim Collins has invested over a decade of research into learning and teaching about enduring great companies. He has co-authored four books, including the classic Built to Last, and the recently released Good to Great. His work has been featured in Fortune, The Economist, USA Today, Industry Week, Inc., and Harvard Business Review. Visit him on the Internet at http://www.jimcollins.com.

Brook Manville is Publisher of LiNE Zine and Chief Learning Officer at Saba. Contact him at brook@linezine.com.

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