Notes #44 Jim Collin’s Level 5 Leadership

Jim Collins is a business consultant and researcher who has written (or co-written) several successful works on business, all based on extensive research.  His works include Built to Last (1994 with Jarry Porras) which looked at what caused some companies to be enduring successes; Good to Great (2001) looked at what enabled some companies to go from just a “good” company to a “great” one; How the Mighty Fall (2009) focused on what caused formerly great companies to fail; and most recently Great by Choice (2011 with Morten Hansen).

Ok.  At this point, most would be asking “so what?”  This blog isn't about business books per say.  And you’re right.  We are actually only going to look at one of these books: Good to Great.  And we are doing so for a couple of reasons.  One is that the author’s research indicated that it was the leadership of companies is what was helped these companies make the leap from good to great.  Secondly, many organizations, including non-profit groups, have been using Good to Great as a model for how they can enable their group to make the same leap.  So much so that Collins’ wrote a monograph for Good to Great on its usage in non-profits called Good to Great and the Social Sectors (2005).  (“social sector” being the author’s term for non-profit groups). 

I should point out that I debated whether or not to cover this concept in this series.  The concepts here are more applicable (I think) to large organizations, not small groups like local clubs and organizations (which is more the focus of this blog).  But I think that this would be a good intro to these concept that local leaders may be exposed to elsewhere, and the concepts could be applied to organizations at various levels.

Now, at this point I think it’s VERY important to note that when it comes to applying business practices to non-profit groups, that it’s not always a good idea.   Some concepts can be applied.  Some cannot.  The mistake some make is applying what shouldn't be, and not applying what can be.  Some concepts (like leadership) can be used by both companies and non-profit groups (concepts such as Situational Leadership).  But we need to keep in mind that often non-profit groups are made up of paid employees and unpaid members and volunteers, so even then, leadership must be applied differently for these groups, as their reasons for being there and what motivates them can be very different.   Some concepts can NOT be applied. For a business, profits are a measurement of its success.  This is not so with non-profits.  Many time, non-profits can’t speak in terms of serving customers or customer satisfaction when they don't have customers they serve, but their membership.  You need other means to measure success.  Other make the mistake of being on the extreme of this, thinking that everything can be applied or that nothing can be.  Neither are correct.

Hence, it’s so important that those who want to make use of the concepts of Good to Great make use of the separate monograph on the Social Sector, as it does a good job of showing how the concepts can be used.

So what then are the concepts of the book/monograph?

First up is to define that an organization is Great.  It’s important that the right outputs are used as a measurement.  Again, with companies, profits are the method.  But for non-profits, this does not work.  So instead, use “superior performance”, “distinctive impact”, and “lasting endurance” at the output.  For social sector, performance is the results and efficiency in delivering on the mission of the group; impact is how the organization makes a unique contribution to the community and does its work with such excellence that should it disappear, its absence could not easily be filled; and endurance is that the organization can deliver results over a long period of time.

To get to that, you do so by applying the “Good-to-Great” framework, which is 4 steps:

Step 1: Level 5 Leadership and “First Who, Then What” (Disciplined People)

Step 2: Confront the Brutal Facts and the Hedgehog Concept (Disciplined Thought)

Step 3: Culture of Discipline and the Flywheel (Disciplined Action)

Step 4: Clock Building, not Time Telling and Preserve the Core/Stimulate Progress (Building Greatness to Last)

These concepts are what are covered in the book and monograph.  Let’s take them in these 4 steps.

The concept of Level 5 Leadership is built up of these 5 levels:

Now, these are interesting levels.  And the goal is to have leaders at the top who are at Level 5.  What is not covered is how do you get people from Level 1 to Level 5?  And I find Level 5 very interesting.  Because the description of the Level 5 Executive matches the Stage 5 Tribal Leader concept covered in a previous Note AND the concept of the servant leader/humble leader as well.

Now, going back to the 4 steps.  First Who is what is referred to as Get the right people on the bus.  In other words, get the right people and leaders in charge of the whole thing.  And let’s be honest, in many organizations that can be hard (sometimes harder than in a company), as the process of defining who is the leader can be very politicized.   Doesn't matter if the leadership is elected or appointed, too often the wrong people will try to control things.

Confront the Brutal Facts is pretty much what it sounds like.  If there are problems within an organization, these need to be brought forth and addressed.  Too often they are not, with the consequences of such.

The Hedgehog Concept is another unique idea of the work.  It’s about addressing what will produce long term results.  It’s built on 3 overlapping circles: Passion, Best at, and Resource Engine.  Passion is what your organization stands for (core values) and why it exists (mission).  Best at is what the organization is uniquely able to do or deliver.  And the Resource Engine is what drives the engine of the organization: time, money, brand.  And what is important in the Hedgehog Concept is that these 3 circles must connect and reinforce each other.  They are not separated.

In a non-profit, you still need to be mindful of where the money comes from.  In the monograph is an interesting quadrant chart showing various non-profits in 4 areas, based on where the money comes from: government, private donations, charity with business revenue, and business revenue. 

Culture of Discipline is about making disciplined decisions.  Sometime groups for various reasons (wanting to “do good” or pressure from donors) get into areas they shouldn't, to the determent of the organization.  Make bad decisions.  Grow for the wrong reasons.  Get involved with certain areas or events they shouldn't.   So it’s important to be disciplined and sometimes say “no”.

Turning the Flywheel is another unique idea of this work.  It’s about building momentum in the organization, which attracts more momentum.  Success breeds success as it also attracts people to it.  It’s shown in this way: Attract Believers (time, money) -> Build Strength (First Who, Clock Building) -> Demonstrate Results (Mission Success, Trend Lines) -> Build Brand (reputation, emotion) and so on.  We see this in many growing groups.  It’s successful and things grow.  But something goes wrong and things go into decline.

Clock Building, not Time Telling is a kind of warning that some organizations get complacent.  They should be building a sustainable organization (clock building) not focusing on certain projects or coming under the control of a particular leader (and their wants/desires) (time telling).  With that the organization needs to Preserve the Core/Stimulate Progress.  Again, sometimes organizations get away from their core reason for existing and they need to avoid falling into a rut.

Now, there are criticisms of the book.  Nothing this popular can avoid it.  Good to Great was built on research with several companies.  However, soon after the book came out, a few of those companies went under or had major crises.  Some feel that invalided the research.  And there is a general concern that the data could have shown different conclusions.  It’s not clear what non-profits were used for the monograph on the Social Sectors, but the Girl Scouts of the USA were cited several times.  Regardless, check into this further.