Level 5 Leadership an example of data analytics in action

Level 5 Leadership is a management review model proposed by James C. “Jim” Collins based on finding patterns in existing data from multiple success stories.

What sense checks can you take as a manager from this work?

Models help mangers to review their products, services, offerings and their management approaches in an objective and unemotional way.

The model proposed by Jim Collins is an exercise in reviewing “what makes the greatest managers great?”

Through examining historic data, anecdotes and real world case studies the research presents a useful mental checklist for managers against which to compare their own ideals.

  • Making models
  • Level 5 Leadership model
  • Applying the model

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Making models

The joys of conversation

I was out for lunch with a friend of mine Ashling during the week.  She recently completed her masters and excelled in it which was no surprise.

As part of the conversation she delivered a very interesting statement she had picked up as part of her research.

“Get the right people on the bus, move the wrong people off, usher the right people to the right seats and then figure out where to drive to.”

I was intrigued, she shared some of her research and so I read a lot and hence the focus of this article.

 

Data analytics

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In the field of data mining, computers use statistics and algorithms to sift through tons of data to find patterns and correlations.

Before computers there were people who did the exercise by hand.  Not as scientific and mistakes could be made but the general idea is clearly identifiable.

The biggest of questions usually revolves around “how can we make more money?”  Are there patterns to the way people make lots of money?

If we haven’t got lots of money, then how did the people who started with nothing make billions?

This question has been focused on and review for decades and long before computing was available.

There are some notable pattern finders with one of the biggest leaders being Peter Drucker.

 

Finding patterns in the data

So when you find a pattern in the data, write it down.  Yet you need it to be like a set of rules.  Rules you can follow.

Better yet apply those rules to your business.

The Boston Consulting Group (BCG) have introduced numerous models to the world of scientific business management.

You can use these rules for Strategic Information Systems Planning but rules… that’s not the right word.  Why?

For the simple reason that in business if you don’t follow the rule you can still succeed.

 

So a better word is model.  A model is a general pattern.  Do you fit in the model?  If not what would have to do to fit in the model?

So models offer a set of guidelines for you to follow based no research into how others did it and their resultant outcomes.

If I have seen further it’s because I have stood on the shoulders of giants.

 

Building models

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James C. “Jim” Collins is an American author and lecturer on the subject of company sustainability and growth.

Born on January 25, 1958 in Aurora, Colorado, United States he went on to graduate from Stanford Graduate School of Business in 1983.

He conducted a five year research project into “What catapults a company from merely good to truly great?”.

Specifically what did leadership add to truly great companies?

He wrote about Level 5 Leadership in a well-respected 2001 Harvard Business Review article, and published his research in his book, “Good to Great.”

 

A pinch of salt

Critical Thinking

Critical thinking is something you’re taught in school and university.  Applying it to everything you read helps you contextualize the information.

I’m not being a Debbie Downer but if I am to change my management style and potentially my financial approach in line with someone else’s theories, some context is required.

When you use data analytics, the output is based on what’s been done before.  There is no room for “this hasn’t been done before.”

This is one of the draw backs of data analytics in terms of entrepreneurship and innovation.

So, we’re focusing on management not innovation, not to confuse the ideas.

 

Talking points

The research presented is on managers of enormous companies with many hundreds and thousands of employees.

What works in the macro sometimes does not work in the micro.

Principles should be universal but this is a model we’re reviewing.  The Level 5 Leadership model.  A set of guidelines for you to compare against.

The landscape of the research is based on predominantly American companies.

Undeniably huge global brands yet entrepreneurship and and business operate on a different scale and work in an open competitive environment compared to other countries.

Let’s not throw the baby out with the bath water.  This is a model and a very useful checklist for us as managers to compare ourselves to.  I wouldn’t write about it if it didn’t have merit.

Like Crossing the Chasm, Porters 5 Forces and the Boston Consulting Group Critical Success Factors models, as a manager, knowing about them and using them is eminently sensible.

So what’s in the model?

 

Level 5 Leadership model

The synopsis

“Level 5 leadership is an essential factor for taking a company from good to great, but it’s not the only one. Our research uncovered multiple factors that deliver companies to greatness. And it is the combined package – Level 5 plus these other drivers – that takes companies beyond unremarkable.”

You can view the information directly from the Jim Collins website.

 

The level 5 leadership model are actions, whilst the multiple factors are personality traits.

 

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The Level 5 Hierarchy

First Who

The Level 5 Leadership hierarchy discussions opens with this.  This gives us the bus phrase we opened with.  Find the right people and move them to the right positions in the organisation.  “Get the right people on the bus, move the wrong people off, usher the right people to the right seats and then figure out where to drive to.”

Stockdale paradox

After Admiral Jamese Stockdale a POW who’s belief system helped him believe he was going to get out.   People confront the most brutal facts of their current reality – yet simultaneously maintain absolute faith that they would prevail in the end.  Daily reaffirmation of your convictions.

Buildup-Breakthrough flywheel

A flywheel is defined as a heavy revolving wheel in a machine which is used to increase the machine’s momentum and thereby provide greater stability or a reserve of available power.  The desired change comes not in one big leap rather persistence.  Imagine a big heavy flywheel.  Getting it to turn once is the hard part, then two, then ten, etc.  At a certain point momentum kicks in.  Don’t lurch back and forth with radical change, reactions and restructuring, work the flywheel.

Hedgehog concept

The Ancient Greet poet Archilochus wrote a fox knows many things, but a hedgehog one important thing.  The research enforces that breakthroughs require a simple, hedgehog-like understanding of three intersecting circles:

  • what a company can be the best in the world at
  • how its economics work best
  • what best ignites the passions of its people

Technology accelerators

Don’t think of new technology as the next thing to hop on but instead use it as a tool to turbocharge your efforts.  Pick whats going to help your flywheel efforts.

A culture of discipline

When you have disciplined people, you don’t need hierarchy. With disciplined thought, you don’t need bureaucracy. Exercising disciplined action, you don’t need excessive controls. When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance.

 

Multiple factors

A compelling modesty

Throughout the interviews with such executives, the team were struck by the way managers they talked about themselves-or rather, didn’t talk about themselves.

They’d go on and on about the company and the contributions of other executives, but they would instinctively deflect discussion about their own role.

When pressed to talk about themselves, they’d say things like, “I hope I’m not sounding like a big shot,” or “I don’t think I can take much credit for what happened. We were blessed with marvelous people.”

One Level 5 leader even asserted, “There are lot of people in this company who could do my job better than I do.”

When a modest Level 5 leader leaves the business, the business survives.  When a level 4 leader leaves, the business crumbles.

 

An unwaivering resolve and The Window and the Mirror

Belief in oneself and one’s convictions is essential.

Belief in luck and apportioning success or failure to luck was a frequent review point in the research.

The emphasis on luck turned out to be part of a broader pattern that was termed the window and the mirror.

Level 5 Leadership leaders, inherently humble, look out the window to apportion credit – even undue credit – to factors outside themselves.

If they can’t find a specific person or event to give credit to, they credit good luck.

At the same time, they look in the mirror to assign responsibility, never citing bad luck or external factors when things go poorly.

Conversely, other executives frequently looked out the window for factors to blame but preened in the mirror to credit themselves when things went well.

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Born or bred

Directly quoting from Jim Collins

When you combine that irony with the fact that boards of directors frequently operate under the false belief that a larger-than-life, egocentric leader is required to make a company great, you can quickly see why Level 5 leaders rarely appear at the top of our institutions. We keep putting people in positions of power who lack the seed to become a Level 5 leader, and that is one major reason why there are so few companies that make a sustained and verifiable shift from good to great.

We would love to be able to give you a list of steps for getting to Level 5-other than contracting cancer, going through a religious conversion, or getting different parents but we have no solid research data that would support a credible list. Our research exposed Level 5 as a key component inside the black box of what it takes to shift a company from good to great. Yet inside that black box is another the inner development of a person to Level 5 leadership. We could speculate on what that inner box might hold, but it would mostly be just that, speculation.

In short, Level 5 is a very satisfying idea, a truthful idea, a powerful idea, and, to make the move from good to great, very likely an essential idea. But to provide “ten steps to Level 5 leadership” would trivialise the concept. My best advice, based on the research, is to practice the other good-to-great disciplines that we discovered.

 

Applying the model

So from the data research there are action points to follow and personality traits to aspire to.

The Level 5 Leadership model is a useful and research based delivery of observations.

Finding and working towards these goals is important for every manager.

Thank you Ashling for sharing and it demonstrates why it’s good to talk and continue learning and exploring new ideas and approaches.

I hope you found this research useful, I know I did.

If there’s anything in this article you’d like to chat to me about you can contact me here or on social media.

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