By: Duane Donner
We’re emphasizing leadership in our firm right now and in that effort our team is revisiting several great sources on the subject, including Jim Collins’ book, Good To Great, and specifically the chapter of Level 5 leadership. If you’re not familiar with the book, Mr. Collins and his team set out to identify companies that went from good to great, and then set out to understand what those companies shared in common and what distinguished them from the comparison companies, i.e., those in their industry that did not achieve greatness.
As we all know, great achievements and failures are usually attributed to the leader, coach, CEO, etc. Mr. Collins thought that answer was too simplistic and easy, so he instructed his research team to “downplay the role of the top executives so that we [can] avoid the simplistic ‘credit the leader’ or ‘blame the leader’ thinking common today.” Jim Collins told his team to “ignore the executives” when doing their research. However, as the study progressed the team pushed back and said they could not “ignore” the data. The data demonstrated that all the good-to-great executives were cut from the same cloth. Mr. Collins and his team found that, “All the good-to-great companies had Level 5 leadership at the time of transition. Furthermore, the absence of Level 5 leadership showed up as a consistent pattern in the comparison companies.”
You’ll have to read the book to get a better understanding of what makes a Level 5 leader, but Collins says they are a “study in the duality; modest and willful, humble and fearless.” They are self-effacing, quiet and reserved, but they have uncompromising professional will. When things go right they credit others or even good luck, and when things go wrong they take the blame. Yet, despite their humility, they have ferocious resolve to do what it takes to make the company great. As I write this, I cannot help but think how our world is starving for Level 5 leaders. From the halls of our schools, our companies and our government buildings. What a difference this type of leadership can make.
A friend of mine, Mabry Smith, recently forwarded me an article from the April 2015 edition of the Harvard Business Review. The article was entitled, “Measuring the Return on Character,” and it cited a recent study done by KRW International which found that “CEOs whose employees gave them high marks for character had an average return on assets of 9.35% over a two-year period, nearly five times as much as what those with low character ratings had.” Interesting.
Conventional wisdom says that great leadership requires being gregarious and commanding. That you inspire through passionate communication and sheer force of personality. Think Donald Trump. These attributes certainly do not preclude you from being a great leader, but they’re also not required. In fact, a recent Wall Street Journal article “Why Introverts Make Great Entrepreneurs” addressed this head on. Leadership requires different skills and those skills are practiced by different personalities in different ways, and that’s okay. But no matter your style of leadership or the points of your DISC profile, the data seems to say your character counts most.
Founders Investment Banking (Founders) is a merger, acquisition & strategic advisory firm serving middle-market companies. Founders’ focus is on oil and gas, industrials, software, internet, digital media and healthcare companies located nationwide, as well as companies based in the Southeast across a variety of industries. Founders’ skilled professionals, proven expertise and process-based solutions help companies access growth capital, make acquisitions, and/or prepare for and execute liquidity events to achieve specific financial goals. In order to assist Founders Investment Banking with securities related transactions certain Principals are registered investment banking agents of M&A Securities Group, Inc., member FINRA/SiPC. M&A Securities Group and Founders are not affiliated entities. For more information, visit www.foundersib.com.