Jim Collins

Jim Collins Talks to Chinese CEOs About Leadership
An exclusive interview of management guru Jim Collins by FORTUNE China Editor-in-Chief Thomas D. Gorman

Is Good the Enemy of Great, in China?

    Q: The first sentence of "Good to Great" is "Good is the enemy of great." Do you think that applies to companies in China as much as it does to the U.S. companies you studied when researching the book?

    A: There seems to be no doubt about the number of business leaders in China today who want to build a great company. There's a big difference between having a good company which is successful, or just being a successful person, and building a great institution, a great company. A really great company is one which delivers such exceptional results, and makes such a distinctive impact on the world it touches; and one -- whether it's a big world or a small world -- which, if you took that company away, would leave an unfillable hole, one which couldn't be filled by any other institution.

    You can't do that by simply saying it's enough to be good. In order to be really indispensable, to reach that point where something would be lost if we went away, that requires a dedication to building something far more than just "successful", which is what a great company is.

Level 5 Leaders Discovered and Defined

    Q: You've written that every "good to great" company had a Level 5 leader, as you've called them, at the pivotal point of transition from good to great. What are the key attributes of a Level 5 leader?

    A: Let me begin by talking about where that idea came from. First, about how we looked at the world, and then, how that led us to see this thing that I wasn't looking for. It's very important, to begin with, to say this wasn't something I wanted to find, expected to find, or anticipated finding. It was a surprise, which came out of the very empirical approach that we take in our work.

    Essentially what we have done for the past 20 years, going back to the work I did in "Built to Last" with Jerry Porras, where I learned the research methods employed in "Good to Great" and "How the Mighty Fall", and other ongoing work, is that we looked at those companies which achieved a sustained period of greatness, in contrast to others who were in the same situation -- same opportunities, same resources, etc. -- which could also have obtained a sustained period of greatness, but didn't. And we're always asking "What was the difference?" In "Good to Great" it was those companies which made the shift in contrast to those which didn't; so what was the difference, given that their circumstances were very similar to begin with?

    We always look at errors in history. It's as if we were looking back at a great sports team with a sustained record of winning, a great sports dynasty. You look back at a given moment in time at that sports team which had a winning record for "x" number of years, and ask "How did that happen? How was it different from the others?" It may or may not still be a great sports team today, but at one point it was, and we're studying that era. So in the same vein, we looked at "Good to Great" companies during that era when they rose to greatness, in contrast to the others at that time.

    We started the study with me saying to the research team "We're not going to look at leadership." The reason I said that is I've always been skeptical of "the leader is everything" answer. The world is too complex to be explained that way. It might make us feel good to think there is one overall answer, which is that it's all about the leader; but I don't think the world is that simple. And secondly, I think that perspective would cover up our ability to see other factors. If we always just say "It's a great leader", then we're going to keep going around in circles.

    So I said to the research team "I'm skeptical of this whole ‘leader' thing, so we're not going to look at leaders."

    We have a very data-driven research team. I don't win any arguments with them unless the data is on my side, and they came back to me and said they thought I was really missing something very important. Their reason was that when they looked at leaders like Coleman Mockler of Gillette, Darwin Smith of Kimberly Clark, Bill Allen of Boeing, they saw that these leaders played a critical role in their companies becoming great, and that you can't take that out of the equation.

    The research team insisted there was something very different about the leaders of the great companies as compared with the other companies, and this eventually lead us to the concept of the Level 5 leader, which is a cut above the others.

    If you think of it as a sort of layering, with Level 1 as individual skills, Level 2 as team skills, Level 3 as managerial skills, and Level 4 as leadership, then at Level 4 you're a good leader, manager, team person, and have good individual skills. Then there's this extra level, of leaders with a very interesting blend of humility and ambition, an absolute, almost compulsive, intense, off-the-chart level of ambition, but it's not for themselves. That's Level 5.

    That's really the special thing. They want to build a great company. They want to drive down Moore's Law, transform society, build theme parks that will affect millions of kids -- stuff that is much, much bigger than them.

    Yes, if you looked at them, you would say these are really ambitious people; but that ambition is focused outward, towards getting things done, building great companies, leaving a footprint. It's not about them.

    Because they are so ambitious about something that is bigger than them, they have this voracity that allows them to make the most painful decisions, like shutting things down, selling off parts of the business, moving lots of people around -- whatever it happens to be. Because it's not about them. That's where the will power comes from. It is much bigger than them.

    That's what Level 5 is all about. It comes down to one simple question: "What are you in it for?"

    Q: Does that mean you found that Level 5 leaders generally had the personal attribute of humility, or was it more a case of overwhelming, intense institutional ambition?

    A: They had a form of humility, but not necessarily as part of an external package you could see. We found a lot of different types, but one point I want to make clear is that it's not about external demeanor. In fact most of the Level 5 leaders we studied were more plow horses than show horses. Often, they were shy individuals, not particularly magnetic personalities, and even socially awkward types.

    I mean, for example, Darwin Smith of Kimberly Clark was just kind of strange. His idea of a good social event was to sit by himself on a tractor and move rocks from one end of the property to another. That was his idea of a good time, right? To move rocks about; and when asked about his style, he simply said "eccentric." He's not your sort of smooth personality, and yet, he was one of these great leaders.

    Then, on the other hand, you have someone like Anne Mulcahy of Xerox, who is someone I greatly admire, and who was dealt a very difficult set of cards. The company was in very difficult straits, might even be going away, a company with a great history; and she really brought Xerox back. She is magnetic and very sociable. I've seen her in front of hundreds and thousands of people, and she gets them weeping, and stomping, and cheering, almost giving you a sense of goose bumps.

    And you ask yourself, what does this awkward Darwin Smith, riding around on his tractor, and Anne Mulcahy -- this magnetic personality who just makes you feel good when you walk into the room -- what do they share in common, that makes them different?

    It's not about them, and that is really the difference.

    Both of them cared deeply about doing whatever it took to build or to rebuild something into a great stature that would endure beyond them, and that in the end, really stood for something.

    Their personalities were really different, but that inner drive and steely determination were the same.

    You meet Anne Mulcahy and she's a really nice person, but whatever difficult decisions needed to be made to save Xerox, she would make them; and they were very painful. She said "I don't ever want these decisions to become easy." It's not that they were easy, it's just that they had to be done.

    When Darwin Smith sold Kimberly Clark's paper mills, letting go hundreds of years of company history in the process, it's not that it was easy. As he said, "If you have cancer in your arm, you have to have the guts to cut off your arm."

    So Level 5 leaders are not necessarily self-effacing, shy, nor do they necessarily have a total lack of charisma; but they have the relentlessness to make very painful decisions. Finally, the humility comes from never feeling that they have all the answers worked out, and always feeling that they're on the edge of potential catastrophe. That helps them keep their edge. They are very aware of the brutal facts, all the time.