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Leadership
of the Fifth Dimension
By Michael Alan Hamlin
February 19, 2001
Jim Collins is at it again, arguing
that humility, not ego, makes great leaders and those super-ego
types like Oracle’s Larry Ellison and Microsoft’s Bill
Gates don’t create enduring companies. That’s a tough
argument to make. After all, Microsoft is still one of the largest
companies in the world even after last year’s disastrous tech
tumble and its monopoly conviction. And Oracle has been so successful
that Mr. Ellison’s threat to overtake Mr. Gates as the world’s
richest man can be taken, very legitimately, seriously.
Mr. Collins is co-author with Jerry Porras of Built
to Last: Successful Habits of Visionary Companies. His new book,
Good to Great, is due later this year, but a pre-launch summary
was published in the January 2001 issue of Harvard Business Review.
As in the first book, Collins rejects the notion that charismatic
leaders are a necessary requisite to corporate greatness, at least
top-of-the-hill, sustainable corporate greatness.
Good to Great is based on new research conducted at
Mr. Collins’ management research laboratory intended to answer
the question, "Can a good company become a great company and,
if so, how?" Great companies are defined as those that fit
a specific pattern: "cumulative stock returns at or below the
general stock market for 15 years, punctuated by a transition point,
then cumulative returns at least three time the market over the
next 15 years." He started with 1,435 companies, but in the
end, only 11 "jumped all our hurdles and passed into the study."
Mr. Collins concludes that what he calls Level 5 leadership
accounts most significantly for good companies transitioning into
great companies. Although certain other things are also important,
none is so essential as Level 5 leadership. "Level 5 leaders
are a study in duality," Mr. Collins explains. They are at
once "modest and willful, shy and fearless." To illustrate
these qualities in real-life leaders Mr. Collins cites the examples
of Darwin E. Smith, the former chief executive of Kimberly-Clark,
and Colman M. Mockler, CEO of Gillette from 1975 to 1991.
Over a 20-year period, Mr. Smith managed a "stunning
transformation at Kimberly-Clark, turning it into the leading consumer
paper products company in the world. Under his stewardship, the
company generated cumulative stock returns that were 4.1 times greater
than those of the general market, outperforming venerable companies
such as Hewlett-Packard, 3M, Coca-Cola, and General Electric,"
Mr. Collins writes.
Despite his achievements, Mr. Smith was incredibly
self-effacing. "When a journalist asked him to describe his
management style, Smith just stared back at the scribe from the
other side of his thick, black-rimmed glasses. He was dressed unfashionably,
like a farm boy wearing his first J.C. Penney suit. Finally, after
a long and uncomfortable silence, he said, ‘Eccentric.’
Needless to say, the Wall Street Journal did not publish a splashy
feature on Darwin Smith."
But that didn’t mean he was soft or meek, Mr.
Collins explains. An episode from Mr. Smith’s early years on
an Indiana farm — where he worked his way through college —
illustrates a stoic resolve toward life. Working with a large piece
of farm equipment Mr. Smith one day lost a finger. "The story
goes that he went to class that evening and returned to work the
very next day. Eventually, this poor but determined Indiana farm
boy earned admission to Harvard Law School."
And he showed the same resolve on the job. Just two
months after being named CEO, Mr. Smith was diagnosed with nose
and throat cancer and told that he would be dead in less than a
year. Informing the board, Mr. Smith said that he wanted to continue,
and continue he did — for 20 more years as CEO, and he lived
another five years in retirement.
That steely resolve also enabled Mr. Smith to enact
dramatic changes at Kimberly-Clark, such as moving it out of traditional
product lines like coated paper and into consumer products.
Gillette’s Mr. Mockler demonstrated similar traits,
according to Mr. Collins, including facing down three takeover attempts.
"Despite epic battles with raiders — he took on Ronald
Perelman twice and the former Coniston Partners once — he never
lost his shy, courteous style. At the height of the crisis, he maintained
a calm business-as-usual demeanor, dispensing first with ongoing
business before turning to the takeover."
Yet like Mr. Smith, Mr. Mockler just wouldn’t
give in when faced with seemingly impossible circumstances. Mr.
Collins explains that, "in one proxy battle, Mockler and other
senior executives called thousands of investors, one by one, to
win their votes. He chose to fight for the future greatness of Gillette
even though he could have pocketed millions by flipping his stock."
When Mr. Collins presented the results of his study
to one big-ego CEO, he was asked if Level 5 leadership could be
learned. "I still do not know the answer to that question,"
he responded. "My preliminary hypothesis is that there are
two categories of people: those who don’t have the Level 5
seed within them and those that do. The first category consists
of people who could never in a million years bring themselves to
subjugate their own needs to the greater ambition of something larger
and more lasting than themselves."
And then "the second category consists of people
who could evolve into Level 5: the capability resides within them,
perhaps buried or ignored or simply nascent. Under the right circumstances
— with self-reflection, a mentor, loving parents, a significant
life experience, or other factors — the seed can develop."
Mr. Collins notes that Mr. Smith evolved into a Level 5 leader after
he was diagnosed with cancer, and Mockler became an evangelical
Christian.
Few companies become great companies, Mr. Collins,
argues, because boards keep putting leaders who don’t have
the Level 5 seed in charge. If they did, he believes there would
be more great companies. For most managers, however, the question
is, "Do I have that rare contrasting combination of humility
and will to build a great company?"
(Mr. Hamlin is managing director of the consultancy
TeamAsia and the author of two books on Asian economies and managing
in Asia. His latest book is The New Asian Corporation: Managing
for the Future in Post-Crisis Asia. His e-mail address is mahamlin@teamasia.com.ph.)
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