Hi, 

Welcome to this week's issue of INFUZED on company-building.

When it comes to company-building, we can all agree that it won‘t build itself, hence someone needs to take the initiative and steer the building activities. While it‘s usually considered the founder‘s or CEO‘s job to „do the leadership“, I argue that a) everyone can lead from any position (and should!) and b) the function "Founder" or "CEO" doesn‘t make someone the leader, people decide who their leader is. A by-product of my first argument is that the size of the company or team doesn‘t matter.

In order to become a great leader it would be wise to know the makings of a great leader. So here is a little quiz for you:

Leadership Quiz:

Question 1: Which of the characteristics below is most important to describe the most effective and successful leaders? 

Question 2: Can you rank them in order of importance for great business success? 

Question 3: Which of these statements would you attribute to yourself? (choose all that apply)

A - „Contributes individual capabilities to the achievement of group objectives and works effectively with others in a group setting“

B - „Serves the company’s objectives through a paradoxical blend of personal humility and professional will“

C - „Organizes people and resources toward the effective and efficient pursuit of predetermined objectives“

D - „Makes productive contributions through talent, knowledge, skills, and good work habits“

E - „Catalyzes commitment to and vigorous pursuit of clear and compelling vision, stimulating higher performance standards“

Make a quick note, so you don't cheat yourself with hindsight bias.

The makings of a great leader

These statements and characteristics are from Jim Collin‘s book „Good to Great“, one of the seminal books on company-building, where he and his research team compared companies that went from being good companies to outperform their close competitors for years to become great companies. In their 5 year long study they found that the differentiation started with the type of leadership that the respective CEO embodied.  

The CEOs of all the companies that went from good to great embodied a so-called Level 5 leadership. This is how Collins describes a Level 5 leader: 

„Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It‘s not that Level 5 Leaders have no egos or self-interest. Indeed, they are incredibly ambitious - but their ambition is first and foremost for the institution, not themselves."

This gives us the „right“ answer to question 1: The most important characteristic to be the most effective and successful leader is statement B. In Collins‘ words: „The Level 5 Executive builds enduring greatness through a paradoxical blend of personal humility and professional will.“

Here is a depiction on how Level 5 Leadership manifests itself in an observable way: „Level 5 leaders look out the window to attribute success to factors other than themselves. When things go poorly, however, they look in the mirror and blame themselves, taking full responsibility. The comparison CEOs often did just the opposite - they looked in the mirror to take credit for success, but out the window to assign blame for disappointing results.“ 

This brings us to answering question 2. The leadership hierarchy is not a latter that you climb continuously. Collins argues that „it might even be possible to fill some of the lower levels later - fully developed Level 5 leaders embody all five layers of the pyramid“.

Here is the correct order of of the leadership pyramid:

Level 5 (B)
Builds enduring greatness through a paradoxical blend of personal humility and professional will

Level 4 (E)
Catalyzes commitment to and vigorous pursuit of clear and compelling vision, stimulating higher performance standards

Level 3 (C)
Organizes people and resources toward the effective and efficient pursuit of predetermined objects 

Level 2 (A)
Contributes individual capabilities to the achievement of group objectives and works effectively with others in a group setting

Level 1 (D)
Makes productive contributions through talent, knowledge, skills, and good work habits

B - E - C - A - D

What in my opinion speaks volumes about the attitude that is required to become a highly effective and successful leader is what Darwin Smith, one of the CEOs in the study and one of the most successful CEOs in the 20th century, said in his retirement on the question why he was so successful: „I never stopped trying to become qualified for the job.“

Now, on to answer 3: Where do you stand today in the leadership pyramid? 

If you‘ve ticked 

D - you‘re a Highly Capable Individual

A - Contributing Team Member

C - Competent Manager

E - Effective Leader

B - Level 5 Executive

I hope this provides you with some clarity on what it takes to be a great leader and where you stand today. Remember, it‘s valuable to know where you are today, but it‘s more important to know what you can become. 

Source: HBR Article "Level 5 Leadership: The Triumph of Humility and Fierce Resolve"

Have a great rest of your week and look for opportunities you can take on ownership and responsibility to make things better.

Best, 

David