Why you need to be a ‘Level 5 Leader’

Dominic Monkhouse

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Humility.  Determination. Passion.  These are three characteristics of Level 5 Leaders. And it’s these qualities that set the leaders of great companies apart from good ones.

If you’re looking to scale up your business in 2021, read Jim Collins’ books.  With over four million copies sold, ‘Good To Great’ is one of the best-selling management books of all time. It’s breathtaking in its meticulous detail. A longitudinal study examining matched pairs of companies in the same industries over a long period of time. Collins was looking for the things that were different about great companies and realised they centred on leadership. The term ‘Level 5 Leadership’ was born. 

What makes companies great?

The research team scoured 6000 articles in a five-year project.  Their definition of a great company was one that beat the stock market seven times in 15 years – twice as good as the results of the composite index of the world’s greatest companies.  And out of 1435 companies, they found only 11 that were truly great.   

These companies all shared seven fundamental characteristics.  They all had vision, level 5 leadership, the right people in the right roles, a culture of discipline, realism about the facts balanced with unwavering faith, technology accelerators and a self-fulfilling flywheel of execution, acting like compound interest in their business.   

The different levels of leadership

Collins defined Level 5 as the pinnacle of leadership. But to reach it, you need to rise up through the first four levels.  So where are you at? 

At Level 1, you’re highly capable. People can rely on you to make productive contributions.  You’re talented, knowledgeable and skilled.

Level 2 requires you to be a contributing team member.  Rather than simply being an effective individual, you work well with others and are great at helping your team hit objectives.

Once you reach Level 3, you’re a competent manager.  You can oversee both people and resources to achieve predetermined goals.

If you’re at Level 4, you’re an effective leader who can steer your company towards well-defined and compelling goals.  And you can keep your organisation functioning at high levels of performance.  This is where the vast majority of leaders sit. 

Finally, if you reach Level 5, you have something different, unique and rare.  You’re able to develop your company’s greatness through what Collins identifies as ‘a paradoxical combination of personal humility plus professional will.’

Coaching around Level 4 to 5 is intriguing to me. That’s because Level 4 defines most of the people running an organisation or in senior positions.  Level 5 requires you to develop a humility that’s almost at odds with Level 4, where you’ve needed a strident self-belief to get you there.  It intrigues me that the most successful CEOs that I work with are the ones that have well-developed humility.

The qualities and characteristics of a level 5 leader

This also intrigued Jim Collins. The results of his research were counter-intuitive to what he’d expected.  Conventional wisdom holds that transformational companies should be led by larger than life individuals. So it was a big surprise to find them led by disciplined, humble people with passion.  People who didn’t aspire to be put on a pedestal or become unreachable icons.  But ones who did possess an indomitable, cast iron will.  It’s an odd mix of characteristics but one that really appeals to me in my coaching practice. ‘Humble CEOs with great ambition’ is how I describe my ideal clients. 

These Level 5 characteristics make a coachable CEO – one that is happy to ask for help and act on advice with conviction.  And also one that I know I can deliver success for.  When new clients ask me, ‘What do you think of me and my team?’ I’ll often reference Jim Collins’ leadership model.

Humility breeds respect

Most crucially, Level 5 leaders are humble enough to ask for help.  When they win, they say they were lucky.  When they lose, they take the blame.  They’re more motivated by the success of others than their own success.  The innate irony is that Level 5 Leaders would not recognise themselves to be at the pinnacle of leadership.  Their humility wouldn’t allow this. It’s something others would say about them.  And it’s this mentality that earns them a deep level of respect from their peers.

It always amuses me when I meet people who claim to be Level 5 leaders. Just the fact they’ve said this betrays that they’re far from it.  They tell me how humble they are but moments later, start boasting and bragging about their company’s latest figures or a recent successful project.  And I’m left thinking, ‘You are one of the least humble, most deluded and arrogant individuals that I’ve met!’

Often, the very fact that CEOs have come to me for help shows their humility. They’re willing to admit they don’t know everything and see the benefit in additional support. And they’re ready to tackle the difficult conversations that are needed to enact real and lasting change.  Some of my clients say I should come with a health warning!  It’s certain that, at times, our relationship will be challenging in order to address the problems and debt that’s built up.

Discipline gets results

The discipline of a Level 5 Leader will show up both in and out of work.  A ferocious resolve to keep moving forward, no matter what life throws at you.  In my experience, these leaders are dedicated to keeping fit and healthy and are often good with their hands. They have an insatiable curiosity about the world and how to do things better.

This disciplined resolve extends not only to themselves but to others. They’re expert at finding the right people and fitting them to the right roles.  They know that this is critical to success.  Their passion for their cause makes them ruthless (in a good way).  I’ve noticed over my years of coaching that when I part company with a client, it’s often because they don’t have this ruthless determination.  They may have a weak link on their leadership team and make excuses for not fixing the problem.  Or they don’t have the self-discipline to do the work – scaling up is not for the faint-hearted!

Leading with passion

Passion is infectious.  People with conviction inspire followers – the essence of true leadership.  Level 5 Leaders ooze this quality, finding it easy to get people to join their mission. Again, it’s that quality of humility and fierce resolve – it’s clear that they care far more about the cause than their own success.   And they want success for others.  This is an intoxicating blend.    

For many of them, it would be easy to measure their success in a monetary way.  But it’s clear from the Level 5 Leaders that I’ve worked with that financial rewards are unimportant.  Instead, there’s a drive to always improve – always do better. Their passion extends to the workplaces they build. Creating a great place to work and being recognised for this is important.  That’s because they know that to get the right people, you have to create the right environment. But these aren’t soft places to work.  They’re disciplined organisations where, if you don’t step up and deliver, there are real consequences.  

A growth mindset

Because Level 5 leadership is about discipline, thought and action, even if you’ve reached this level, you’ll always see room for improvement and growth.  With this in mind, I include personal development goals in my coaching practice.  When I’m cascading quarterly priorities with an Executive team, I ask them, ‘What are you going to do, in the next quarter, that will make you better at what you do?’’  I force them to be specific and raise the bar.  

And crucially, I don’t let them off, as I might have done in the past.  Because they need to see that the world is full of opportunity and they’re on a never-ending journey.  There’s no room for complacency. That’s the antithesis of Level 5 leadership.

Can you learn to be a Level 5 Leader?

Now, this is an interesting question.  Can you learn Level 5 Leadership or is it innate?  My view is that some people are wired for it and others aren’t. Some are innately curious, with an insatiable appetite for knowledge whereas others are happy jogging along.  I think about this in relation to organisations’ reactions to COVID.  Some retreated to their bunker and tried to let it blow over.  Others mobilised and took the offensive.

A podcast I listened to recently suggested a meditation exercise.  As it unfolded, it occurred to me that this might be a great way of illustrating the concept of servant leadership.  You sit for a few moments and think about two people in the room and the positive things you wish for them.  They do the same.  Then afterwards, you talk about how you, and they, feel.  It’s a great way to show how thinking of others can improve your own happiness.  If you’re wired that way, you’ll understand the essence of Level 5 leadership – that it’s not about winning or losing but more about helping others.   

That’s not to say that you can’t improve your leadership skills. I think it’s possible to work on humility.  This is an easy thing to say but is much harder to do. Asking for help could involve setting up an advisory board or employing a coach or mentor.  When it comes to discipline and accountability, there are ways to put in systems that will hold people accountable, including you.  And good communication rhythms can help you reaffirm your vision and values over and over to your staff. 

Finally, when it comes to getting the right people on the bus, there’s the first Rockefeller Habit – making sure the Executive Team is healthy and aligned.  Start by making sure that you’re surrounded by a team of A-Players who are able to have productive conflict.  This is a big point of reflection and is vital to disciplined execution.

You can find more lessons from the works of Jim Collins in the post 7 important lessons from Jim Collins’ ‘Good to Great’.

And me personally?

A final word on how I think I stack up against Level 5 qualities.  I used to think about this a lot, reflecting on the times when I led companies through periods of transformation.  If I’m honest, where I failed was not getting rid of the wrong people quickly enough.  I always tried to do this with dignity (and the Christmas cards and wedding invites I’ve received since show that, most of the time, I was successful).  But I could have been quicker. 

And yes, sometimes I wasn’t very humble – I admit it! But when I was surrounded by a great team, this became much easier.  If you’ve got amazingly talented people around you, you can’t help but be humble.  People don’t bow and scrape to you.  They know you’re not infallible.  They keep you grounded in the knowledge that your success is down to the team, not you.  

This piece has more fantastic learnings – 7 important lessons from Jim Collins Good to Great.

Written by business growth coach Dominic Monkhouse. Find out more about his work here. Read his new book, ‘F**k Plan B’ here