Is there any difference between good leaders and great leaders?  Can this difference be seen in the results obtained by the companies they lead?

Jim Collins and his team undertook a five-year research project to answer these questions.  To separate the good from the great, he identified several criteria that would differentiate companies headed by the two types of leaders.  Some of these criteria included:  sustainable growth that was considerably higher than those of competitors, market dominance, cumulative stock returns of at least three times better than the general stock market over 15 years, etc.

Having identified companies that fit the criteria, Collins examined their leaders.  He also studied the leadership attributes of well known competing companies that did not meet the criteria – companies that were good but not great.  Is there a difference? Yes there is.

Collins found several characteristics common to all great leaders that were missing or inconsistent among the good leaders.

My own research, and those of others such as Warren Bennis, Tom Peters, Bernard Bass, Robert Greenleaf and Jay Hall, are supported by Collins’ findings, although conclusions will have been expressed in different words using different labels.

In this article I have chosen to use the categories expressed by Jim Collins in his book “Good to Great”.  However, please bear in mind that the findings expressed are not unique to Collins’ work; they are generic truths that have been repeatedly expressed in different terms by researchers and authorities in the field of leadership.

It has been said that “good is the enemy of great,” that success is often the precursor of failure.  At first these seem to be paradoxical statements.  When, however, we dig deeper we find many examples of their relevance.  Companies that were once giants in their industries are no longer dominant players, and many have gone out of business.

Addressograph Multigraph, Chrysler, Burroughs, Upjohn Pharmaceuticals, Enron, Andersen Consulting and Worldcom are just a few such companies.  In South Africa we have Saambou, Health & Racquet Club, Siltek, Masterbond and many others.  All of these companies were multi-million rand (some of them multi-billion dollar) corporations.  Yet they all failed or were relegated to the minor leagues or, like Chrysler, were swallowed up by larger organisations (Daimler).

However, while good may indeed be the enemy of great, and success may be the precursor of failure, these assertions are not fixed laws.  Companies can continue to dominate their industries; they can become great and stay there.  But to do so requires a special type of leadership.

What then differentiates good leaders from great leaders?  There are six attributes common to those who lead outstanding corporations.

These leaders are:

• humble yet resolute
• people-centred
• honest with facts
• focused on being the best
• disciplined
• technology accelerators

Quality 1:  Humble yet resolute

Good companies, as district from great companies, are often led by charismatic, high-profile leaders with larger than life personalities.  These people become household names.  They appear frequently in the media and are quoted ad nauseum.  Books are written about them and their strategies.  Their successes are broadcast widely, they are put on pedestals and regarded as business role models.

In South Africa examples of such were: Deon Friedlander (Rave and Deon Stores), Jan Marais (Trust Bank), Louis Luyt (Triomph Fertilizers) and Coleman Andrews (South African Airways).

All these Chief Executives were legendary leaders who led business empires that were once the epitome of success.  Yet they all ultimately failed.

In contrast, leaders of truly great companies are very different.  Instead of being charismatic, self-serving, ego-centred and boastful of their achievements, they are modest and humble. They prefer to take a low profile, acknowledging the efforts of all staff rather than boasting in the limelight themselves.  Their rallying call is not “I” but “We”.  Collins calls these level-five leaders because they are at the top of five levels beginning with technically capable managers (Level one) through to Level five where leaders place the interests of the company and its people ahead of their personal interests.

Consider, for example, Colman Mockler, CEO of Gilette from 1975 to 1991.  Gilette faced several major hurdles during this period, including three attempted hostile take-overs.  If Mockler wanted to, he could have sold out the company, pocketing a substantial sum for himself.  Instead he quietly persisted in resisting corporate raiders.  Those who mistook Mockler’s humility and reserved nature for weakness were beaten in the end.  He consistently put the interests of the company ahead of his own – one of the trade marks of a great leader.

Why are quiet, low-profile leaders more likely to take the company to greatness and keep it there, than celebrity leaders?  By nature, flamboyant leaders tend to be ego-driven.  They see themselves at the centre of all achievements and seek outward recognition.  They are also self-serving and attempt to enrich themselves as much as possible.  This is why we find them earning ridiculous salaries, being paid excessive bonuses, and acquiring vast numbers of shares.  The suggestion is that they receive massive remuneration packages because without their expertise the company would be unsuccessful.  Such is the extent of their inflated egos.

It is important not to confuse humility with weakness.  Level-five leaders (as defined by Collins) are strongly resolute.  Nobody walks over them.  Yet, they are also modest, always seeking the well-being of the company and its people ahead of personal gain.

Do you want to find out if managers have the potential for Level five leadership?  Look for situations where outstanding results have been achieved, and where the manager refuses to take personal credit for those achievements, preferring instead to acknowledge the team’s contribution.

A good example of Level five leadership occurred when the head of a corporate division was given a large year-end bonus because the company had done particularly well that year.  Since bonuses were given only to divisional heads, this leader decided to share it amongst all his staff, himself included.  When I asked him why he hadn’t kept the entire bonus, as his colleagues had done, he said simply, “Because I didn’t earn it on my own.  All of us did!”

Quality 2:  People-centred

Most books on leadership advocate that corporations begin their quest for greatness by formulating a compelling vision, followed by developing strategies to achieve that vision.

Research shows that the leaders of really great companies do not begin with strategy formulation.  They do not decide on a destination first and then encourage people to get there.  Rather they concentrate on making sure the right people are employed (and the wrong ones removed).

Only after the right people are on board do they decide where to direct the company.  In other words, people issues precede organisational issues.

Great leaders understand that:

• the company is only as good as its people; having even the best strategy, will not produce optimal results without the right people;

• if you have the wrong people it doesn’t matter how good the vision and strategy are – you won’t have a great company;

• a team of highly competent people will develop a more effective vision and strategy than will a team comprising a combination of both good and moderate performers;

• if you have the right people you don’t have to struggle with commitment and motivation. You may need to train them but you will not struggle with poor attitudes.

Being people-centred does not mean that staff are left to their own devices.  Exacting standards are set and people are made accountable for results.  However, good performers don’t have to worry about their positions.  There is an absence of corporate politics; people can concentrate fully on doing their best work.

An essential aspect of the people-centred approach is that while people come first, a no-tolerance attitude is taken towards sub-standard performance.  Involvement and recognition are cornerstones of people-centredness, and mediocrity is never accepted.

Quality 3:  Honest with facts

Great leaders are able to look at situations realistically, even when the facts are unpalatable.  When a company is prepared to confront unpleasant facts to determine the truth of a situation, the right decision often becomes self-evident.

Some years ago I was given a consulting assignment aimed at making recommendations for improving the effectiveness of an organisation.

It soon became apparent that the problem was the Managing Director.  The solution was evident.  A bigger issue, however, was that the MD was also the owner of the business.

Before tabling my report, I decided to have a personal discussion with the MD. To my surprise he agreed with me.  He then took immediate steps to employ a Chief Executive Officer who would take the company to the next stage of development.  The owner remained in the business as a Non-Executive Chairman.  Today this company dominates its market.

Great leaders are not afraid to be brutal with facts and do whatever it takes to advance and progress.  In contrast, good leaders look at facts but colour them with what they want to see.  They sometimes make excuses and even, on occasion, shift blame.

Poor leaders don’t face facts at all.  Eventually people tell them what they want to hear, and everybody suffers.

Leaders often believe that one must remain optimistic, whatever the situation or the environment.  Optimism certainly has its place, but it must never cloud the truth.  If products aren’t working they must be canned, if people aren’t producing they must be dealt with and if necessary, removed, and so on.

By confronting facts, and doing whatever it takes to be the best, leaders make the company strong and dynamic.

Quality 4:  Focused on being the best

By definition, great companies are the best in the business.  They lead their fields and set industry standards. To do this they focus on a niche market instead of diversifying across a range of markets.  They also simplify heterogeneous and paradoxical complexities, into a simple and unified guiding principle.

In short, great companies know who they are, what their market is and how to meet the needs of that market.  They do a few things outstandingly well and have a single idea or value that drives all behaviours.

Take for example BMW or Mercedes Benz.  They do not try to be everything to everybody.  They are in the luxury car business and focus on addressing the needs of a select group of people

Great leaders:

• know what their companies can excel at. This means being the very best in the industry.  Being the best goes beyond establishing core competencies. Just having a competency doesn’t differentiate a company from others that have the same competencies

• know what the driver of the business should be. Drivers are those forces that provide a company with a strategic advantage or leverage over competitors.  Examples of drivers are cost, distribution methods, quality, and brand loyalty.  The point here is that the drivers chosen must provide the company with a significant advantage over its competitors

• know how to harness the passion, commitment and support of employees. Great companies have staff who are passionate about their business. Passion cannot be manufactured, nor can it be demanded. It is the outcome of having the right people, in the right company, with the right products and services. It is also the result of being proud of working with the company that is the best at what it does.

Quality 5:  Discipline

Being disciplined lies at the core of all achievement.  It matters not whether one is looking at corporate or personal success.  Being great at anything necessitates taking disciplined action.

In business, as in one’s personal life, the best form of discipline is self-discipline.  It is true that discipline can be imposed. How? By introducing bureaucratic procedures and policies that force people to act in ways demanded by the company.

The trouble is that regulations stifle initiative.  They are introduced to manage the activities of people, particularly those who are not fully competent.  In other words they are implemented to compensate for incompetence and lack of discipline.  These, however, come from having employed the wrong people in the first place.

In most companies, therefore, rules and regulations are designed to manage a small percentage of the wrong people, which in turn frustrates the right people, inhibiting their creativity, and even causing them to leave.

The right people will have the right values.  They are committed and take great pride in being an integral part of the company.  They also discipline themselves in a culture that expects a high degree of self-discipline.

To create a culture of discipline, great leaders:

• allow people to express themselves freely within a framework of high standards and accountability;

• eliminate unnecessary bureaucracy; it has been estimated that, in most companies, 80% or more of regulatory procedures can be eliminated or improved;

• take decisive remedial action to correct below-standard performance. If poor performance is the result of repeated negligence or incompetence, the individual is quickly removed from his/her job.  If it is the result of a deficiency of judgement or a specific skill deficiency, coaching and increased exposure are provided in a supportive manner.

Quality 6:  Technology acceleration

Technology is an essential factor in today’s business environment.  Appropriate technology, properly applied, will enable a company to function effectively. Conversely, inappropriate technology, or poor use of it, will put a company at a significant disadvantage.

Great leaders avoid the “flavour of the month” facts.  They know what is needed, and pioneer the application of carefully selected and designed technology to make them the very best at what they do.  In great companies, technology is an accelerator of momentum.  It is a tool that makes the company more efficient.

It is important to bear in mind that great companies do not necessarily spend more money or have more technology than their competitors.  But the technology they have is relevant, cost-effective, and supportive of the drivers of the business.

Conclusion

Great leaders are not charismatic, larger-than-life personalities.  They are people who put their company before themselves, and who consistently and continuously apply the six factors outlined in this paper.  In doing so they leave a legacy:  their companies grow and prosper long after they are gone.

Great leaders are not typically household names, nor do they want to be, yet they profoundly influence the lives of many millions of people.  Employees are directly affected but so are millions of others through the outstanding products and services their companies provide.  The world is a better place because of these leaders.  Such is the mark of greatness.