January 2001

Level 5 Leadership
(Sidebar: Not by Level 5 Alone)
Harvard Business Review

by Jim Collins

Level 5 leadership is one 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. There is a symbiotic relationship between Level 5 and the rest of our findings: Level 5 enables implementation of the other findings, and practicing the other findings may help you get to Level 5. We’ve already talked about who Level 5 leaders are; the rest of our findings describe what they do. Here is a brief look at some of the other key findings.

First Who: We expected that good-to-great leaders would start with the vision and strategy. Instead, they attended to people first, strategy second. They got the right people on the bus, moved the wrong people off, ushered the right people to the right seats—and then they figured out where to drive it.

Stockdale Paradox: This finding is named after Admiral James Stockdale, winner of the Medal of Honor, who survived seven years in the most brutal Vietcong POW camp by hanging on to two contradictory beliefs: his life couldn’t be worse at the moment, and his life would someday be better than ever. Like Stockdale, people at the good-to-great companies in our research confronted the most brutal facts of their current reality—yet simultaneously maintained absolute faith that they would prevail in the end. And they held both disciplines—faith and facts—at the same time, all the time.

Buildup-Breakthrough Flywheel: Good-to-great transformations do not happen overnight or in one big leap. Rather, the process resembles relentlessly pushing a giant, heavy flywheel in one direction. At first, pushing it gets the flywheel to turn once. With consistent effort, it goes two turns, then five, then ten, building increasing momentum until—bang!—the wheel hits the breakthrough point, and the momentum kicks in its favor. Our comparison companies never sustained the kind of breakthrough momentum that our good-to-great companies did; instead, they lurched back and forth with radical change programs, reactionary moves, and restructurings.

The Hedgehog Concept: In a famous essay, philosopher and scholar Isaiah Berlin described two approaches to thought and life, using a simple parable: The fox knows a little about many things, but the hedgehog knows only one big thing very well. The fox is complex; the hedgehog simple. And the hedgehog wins. Our research shows 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, and what best ignites the passions of its people. Breakthroughs happen when you get the hedgehog concept and become systematic and consistent with it, eliminating virtually anything that does not fit in the three circles.

Technology Accelerators: The good-to-great companies had a paradoxical relationship to technology. On the one hand, they assiduously avoided jumping on new technology bandwagons. On the other hand, they were pioneers in the application of carefully selected technologies, making bold, farsighted investments in those that directly link to their hedgehog concept. Like turbochargers, these technology accelerators create an explosion in flywheel momentum.

A Culture of Discipline: When you look across the good-to-great transformations, they consistently display three forms of discipline: disciplined people, disciplined thought, and disciplined action. When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have 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.