Level 5 Leaders
CHARACTERISTICS AND OPERATING STYLE

continued from Characteristics Of Level 5 Leaders : Fierce will

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.

Compelling Humility

Level 5 leaders are characterized by compelling humility. They shun public attention. They are never boastful. They are always happy to discuss at length about their company and the contribution of their people. But they are generally averse to discussing their role in the success of company. Jim Collins reports one CEO saying “There are lot of people in this company who could do my job better than I do.” All the level 5 leaders Jim Collins came across in his research were responsible for the remarkable successes of their companies but they never admit that. Level 5 leaders are quiet, and show calm determination when a task is to be accomplished. In case of poor results, they do not blame the external environment. (Refer exhibit 9.2 for an example).

Exhibit: 9.2
Ken Iverson

In the 1970s and 1980s American steel firms faced a lot of problems due to cheap imports coming from Japan and other countries. The CEO of Bethlehem steel put the blame on imports for poor performance of the company. In contrast, Ken Iverson (Iverson) the CEO of Nucor saw it as a blessing. He said that domestic steel companies have a huge advantage compared to the imported steel which have to be shipped all the way across the ocean, which involves huge cost. Iverson even spoke against the protection given to domestic steel industry. The root of all the problems facing the domestic steel companies according to Iverson was management’s inability to change. He felt that the domestic companies were not doing well because they failed to adapt the changing technology. This is the difference between Ken Iverson, a level 5 leader according to whom incompetence in management was the reason for the poor performance of steel plants in the USA while according to others cheap imports was to be blamed.

Adapted from “Level 5 leadership,” by Jim Collins, Harvard business review, Jan 2001.

Operating Style Of Level 5 Leaders