In Jim Collins’ seminal work, Good to Great, he and his team applied a rigorous, follow-the-evidence research method in order to answer a single question: what separated the good (and even very good) companies from the select few that became truly great over the long haul? While Collins and his team identified several factors, the answer starts at the top … this despite Collins’ explicit attempt to look elsewhere:
Our original question was, Can a good company become a great one and, if so, how? In fact, I gave the research teams explicit instructions to downplay the role of top executives in their analyses of this question so we wouldn’t slip into the simplistic “credit the leader” or “blame the leader” thinking that is so common today.
Of course, none of this is new to anyone remotely interested in organizational leadership over the last decade or so. What continues to be fascinating is watching Collins’ theory play out in real time.
Consider consumer goods giant Proctor & Gamble and their successful CEO, A.G. Lafley. From 2000-2009, Lafley oversaw an impressive turnaround of P&G, which had been losing its luster as it lost its focus. During that time, Lafley implemented a new strategic focus centered around focusing on core products, innovation, and deeper understanding of what the consumer wants. Lafley’s tenure also included the mega-acquisition of Gillette ($57M). Lafley’s success became the basis of his best-selling book on corporate strategy, Playing to Win.
But was Lafley a “Level 5” leader, and did he make P&G “great”? The cold calculus of Collins’ study framework watches what has happened since Lafley left P&G in 2009 and renders its verdict accordingly: No, and No.
One of the key characteristics of the Level 5 leader is the drive to build something bigger than themselves that lasts after they leave, and — as important — to identify a successor positioned to perform even better than they did themselves.
One final, yet compelling, note on our findings about Level 5: Because Level 5 leaders have ambition not for themselves but for their companies, they routinely select superb successors. Level 5 leaders want to see their companies become even more successful in the next generation and are comfortable with the idea that most people won’t even know that the roots of that success trace back to them. As one Level 5 CEO said, “I want to look from my porch, see the company as one of the great companies in the world someday, and be able to say, ‘I used to work there.’ ” By contrast, Level 4 leaders often fail to set up the company for enduring success. After all, what better testament to your own personal greatness than that the place falls apart after you leave?
In 2013, after only four years away, P&G had lost its mojo and brought Lafley back as CEO. Now, after two years back at the helm, Lafley will be stepping aside this fall, apparently having successfully righting the Good Ship P&G. What did he do during that time?
Upon his return, Lafley unveiled an agenda of sweeping cost cuts, and re-organization of the the company’s stable of consumer brands, including a plan to shed over half of P&G’s brands. At the time of Lafley’s return, P&G’s brands ranged from batteries to pet food, detergent, electric razors, deodorants, toothbrushes and toilet-paper. However, he made quick strides to pare down P&G’s portfolio.
“We have strengthened our brand and product innovation pipeline, while streamlining our cost structure. With our plans for portfolio realignment essentially complete, P&G is positioned to deliver improved results,” Lafley said in a statement Tuesday.
What makes that an indictment instead of an achievement from the Collins’ Level 5 point of view is this: that’s what Lafley had done during his near decade at the helm the first time. His best-selling strategy book is all about the success of strategically focusing on core products, competencies, and consumers. After a decade of driving that strategic focus into P&G, why did it unravel so quickly in four short years after his departure? And does anyone really think Lafley’s work over the last two years will keep P&G heading in the right direction after he leaves in the fall? If nearly ten years of leadership didn’t have a lasting effect on keeping P&G great, why would a short stint of two more?