Striving for Level 5 Leadership

Wednesday, May 24, 2017

Don’t confuse leadership with personality, warned best-selling author and leadership expert Jim Collins in an address to delegates at GFOA’s 111th Annual Conference on May 22, 2017. Charisma is a personality trait, and leadership is not about personality – so it’s OK if a leader has what Collins calls a “charisma bypass.” In fact, he suggested that might be for the best, and that organizations need to put aside the notion that charisma necessarily leads to success. Collins’ research found that hiring a charismatic leader for CEO actually had a negative correlation with a company’s overall success, and the best leaders were often introverted types who lead with reason instead of force of personality.

What should an organization look for in a leader, then? Good one-on-one skills, good team skills, an understanding of how to lead, personal humility, and strong will. This, Collins said, is a “Level 5 leader.” Level 5 leaders have a clear grasp of their government and the environment that shapes it, along with a preference for facts. Their collaborative approach helps them make the people around them more effective. They are also devoted to a cause bigger than themselves, and they serve it. All their ambition is channeled outward. “To serve is to live,” Collins summarized. The Level 5 leader just wants to make things work and doesn’t worry about who gets credit.

Taking the Organization from Good to Great. “Do you have the right people on the bus, and in the right seats?” Collins asked. Leaders need to start out by deciding who should be there. The next step: deciding where to go. Then it’s time to get the wrong people off bus, or in different seats. The idea is that the organization should be set up so leaders are asking not “what should we do” but “who should I engage” to solve a problem. This requires leaders who have the ability to make exceptionally good people decisions.

Collins also emphasized the importance of frontline, or unit-level, leadership. We tend to think that what matters is having outstanding leadership at the senior level, but great leadership at the top doesn't amount to much if you don't have exceptional leadership at the unit level, which is where great things get done.

Know the Brutal Facts. To make progress and set the organization up for success in the future, leaders need to be able to examine the current reality and confront the “brutal facts”—pensions, infrastructure, housing, revenues, and, more generally, chronic uncertainty. This also requires honesty and a conscientious effort to make sure the organization’s strategy is the right one. At the same time, a great leader has an unwavering faith in future success and won’t give up until that success is achieved—based on facts, not optimism. One of the conditions necessary for that is creating a culture that shares facts and opinions about how the organization is doing.

Find your Hedgehog. “Hedgehogs” are disciplined people who make disciplined decisions on disciplined thought. They focus deeply on a few areas, as opposed to paying a certain amount of attention to many things (those are “foxes”). They also harness a level of productive paranoia.

The essence of Collins’ “Hedgehog Concept” is to help an organization obtain piercing clarity about how to produce the best long-term results, and then exercise the relentless discipline to turn away opportunities that fail the Hedgehog test. The true mission of a leader, organization, or community is at the intersection of three circles: 1) what we are deeply passionate about, 2) what we can be the best in the world at, and 3) what best drives our economic or resource engines. Leaders can transform an organization from good to great through a series of good decisions made consistently and based on this concept.

Embark on the 20-Mile March. Organizations that make it in times of turbulence self-impose a rigorous performance mark to hit with great consistency—like hiking across the United States by marching at least 20 miles a day, every day, Collins said. The march imposes order amidst disorder, discipline amidst chaos, and consistency amidst uncertainty. The “20-Mile March” works only if you actually hit your march year after year.

Government leaders need to think 20 years out and decide what needs to happen today to make that 20-year goal happen. Consistency is key—the signature of mediocrity is chronic inconsistency, Collins said.

Bet on Creativity. Governments must help guide their communities to place their big bets on empirical creativity. Innovation is the result of empirical validation of what will actually work and then betting to scale that up, Collins said. Start out by firing bullets (that is, low-cost, low-risk, low-distraction experiments) to figure out what will work. Calibrate your line of sight by taking small shots. Then, once you have empirical validation, you fire a cannonball (concentrating resources into a big bet) on the calibrated line of sight. Calibrated cannonballs correlate with outsized results; uncalibrated cannonballs correlate with disaster. The ability to turn small proven ideas (bullets) into huge hits (cannonballs) counts more than the sheer amount of pure innovation.

The three most common problems are: 1) an organization wouldn’t fire bullets to see what would work; 2) the organization figured out what would work but didn't fire big bullets; or 3) the organization sent out one big bullet without calibration.

Work Your Productive Paranoia. The only mistakes you can learn from are the ones you survive, Collins said. Leaders who stave off decline and navigate turbulence assume that conditions can unexpectedly change, violently and fast. They obsessively ask, “What if?” By preparing ahead of time, building reserves, preserving a margin of safety, bounding risk, and honing their disciplines in good times and bad, they handle disruptions from a position of strength and flexibility.

Build It to Last. The key to building a lasting organization is endurance. A leader must have core, basic values that remain the same and provide something to hang onto amid turmoil. At the same time, leaders shouldn’t be brittle in their convictions. Collins cited the U.S. Constitution, which can be amended. Another point: Practices and values are different, and a great leader must know the difference.

Limit Priorities. Leaders need to create a “stop doing” list, Collins said. Don’t have more than three priorities, and if you do, determine what you need to stop doing.

Learn How to Be Useful and Change Lives. Great leaders make contributions to and have an impact on people and communities. They figure out how they can change lives because the best way to honor life is to be useful, Collins said, noting that government finance officers hold great potential for making a difference. “What you do makes things work and makes them work better and makes people's lives better and that is supremely useful,” he said.