Level 5 Leaders - Characteristics and Operating Style

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Jim Collins, level 5 leaders, Kimberly-Clark, Darwin E. Smith, Sam Walton, Wal-Mart, Iacocca, Chrysler, George Cain

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Level 5 Executive Contd...

Iacocca was instrumental in the successful turnaround of Chrysler. Undoubtedly, he saved the company. But later seemed to be more interested in build his brand. He wrote an autobiography and toured all over the world promoting his book. He was a regular participant in talk shows such as Today show and Larry King Live. He starred in 80 commercials. Fancied running for US presidency. As a result of these digressions, the company's stock which performed at 2.9 times the general market in the first half of his tenure, was 51% behind the general market in the second half of his tenure.

After getting used to the power of CEO and Chairman posts, he was hardly willing to let go of the reigns. So unwilling was he to retire and so often he postponed his retirement that his name IACOCCA was mocked as "I Am Chairman Of Chrysler Corporation Always." When he decided to retire he demanded the board for private jet and stock options. Even after leaving Chrysler, he ganged up with Kirk Kerkorian in a hostile bid for Chrysler (the bid was unsuccessful).

Characteristics of Level 5 Leaders

Level 5 leaders are a paradoxial blend of fierce will and personal humility. They are stubborn and ruthless, yet they are humble. They are highly ambitious for their company, and rarely allow their ego to come in the way of organization's success. Though they accomplish great things for their organizations they never take credit. They attribute their remarkable accomplishments to their people, external factors, and sheer luck. They are inspired only by the greatness for their organizations. They expect their organizations to be even better after they leave.

Level 5 leaders demonstrate their fierce will in ensuring superb results for their companies. They play most important role in transforming their companies that are merely good, to great. Once they are decided about what to do to ensure best long-term results, they will go through the process with unwavering resolve. Level 5 leaders inspire standards, build enduring and great companies against odds. (Refer exhibit 9.1)

Exhibit: 9.1
Cain as a Level 5 Leader

George Cain (Cain), the CEO of Abbott laboratories was a level 5 leader. When he became the CEO, Abbott laboratories was a family run mediocre organization. It was among the bottom one-fourth of Pharmaceutical industry. The company had only one good product: erythromycin. After taking charge, the first thing Cain did was to raise the performance bar. He inspired higher standards of performance, while showing intolerance for complacency. He never accepted the premise that "good is good enough." In the 14 years he was at the helm, he drove the company with relentless ambition and professional will. Cain identified immediately after taking up the job that the reason for Abbott's mediocrity was nepotism.

Then he started systematic rebuilding of the executive team and board. He made sure that family relation is no more a shortcut to higher position in the company. He made it very clear that any executive in the company must be the best in the whole industry, within a span of responsibility. He fired every executive who was not upto the standard. This sort of ruthlessness can be expected only from an outsider who joined as the CEO. But Cain was an insider for 18 years. He was a member of family that previously ran Abbott laboratories. In the end, even the family was happy as the company performed 4.5 times the general market between 1974 and 2000. Blue chip companies like Merck and Pfizer performed only twice the general market in this period.

Adapted from "Onward and Inward", Across the board, Sep/ Oct 2001, Vol. 38, Issue 5.

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