The Leadership Paradox
The second essay in the series on the art of ethical leadership looking at the effects of short-term thinking versus long-term thinking.
This week on Sunday Letters, I’m bringing you the second in a series of essays on the art of ethical leadership. Over the course of the series, we’ll cover the paradox of success, Machiavellianism, inauthentic leadership, and new Capitalism, amongst other topics in an effort to show an all too prominent flaw in the human character. These essays previously lived on The Lead, a publication that I started on a whim a few months ago that is now moving here to Sunday Letters. I hope you’ll enjoy these essays and the perspectives they represent. They are, in large part, my personal philosophy on how to live and work successfully with others.
The world of business is filled with shortsighted visionaries obsessed with self-interest and a drive toward maximum gains in the shortest time possible. This is so of the large international corporation as it is for the small local business with twenty people. It seems we are programmed to hunt down the shortest possible route to achieving ends, often at the expense of others. The business world is dog-eat-dog and it demands these kinds of people, for, without them, profits sufficient to keep investors content would hardly be possible. The game is combative and there are winners and there are losers. Often, however, as we have seen in previous essays in the series, ordinary people become the victims while those who make unethical decisions walk away with a bonus cheque.
A CEO is assigned by the board, and over the course of his or her reign, (it’s usually a male, however), they must turn the company profitable or maintain the profitable status quo. But the status quo is rarely enough so they push hard for more. The newly appointed chief needs to stand out, to show everyone concerned how good they are at their job. As such, they make decisions with a short time frame and often take risks that an otherwise less competitive environment would bring about. Buckminster Fuller wrote about this state of being in his 1981 autobiography Critical Path1, highlighting the folly of “the selfish and fearfully contrived wealth games” that humanity plays under a misinformed survival-of-the-fittest ideology.
These selfish and fearfully contrived wealth games are the fundamental basis of unethical decision-making in leadership, and in today’s essay, we explore the nature of this short-term thinking and the personality of leadership that lies behind it. We will examine the apparent paradox of traits that exist in the most successful leaders as determined by Jim Collins’ Level-5 Leadership Model2 and offer a rare example of exemplary leadership from the world of business. We’ll show that business and social leaders must make decisions outside the tight time frame of their own tenure if society as a whole is to avoid disastrous outcomes. It is, perhaps, humanitarian ethics we need to employ rather than the ethics of personal gain.
The Leadership Personality
Jim Collins, author of Good To Great: Why Some Companies Make the Leap... and Others Don't, suggests that the most exceptional performing companies over the long term are led by people with a certain paradoxical mix of personality traits. Rather than seeking the limelight, leaders of Collins’ “good to great” companies possess extreme personal humility alongside an intense professional will to succeed.
In contrast, most of us associate successful leaders with outgoing personality traits and a larger than life ego. In social circles, it’s always the gregarious, larger than life characters that take over the room, that command our attention and entertain. The world of business is dominated by such leaders driven by the prospect of power and personal glory. We assume that these narcissistic personality types can lead us to victory, or if your the shareholder, take you to profitability. But this idea is flawed, and Collins seems to agree.
In his study of the market performance of 1435 companies over a 15 year period, Collins and his team set out to discover if a good company could become a great company and, if so, how? Their initial sample found only 11 companies that outperformed the market and their contemporaries over an extended period of time. And perhaps the most interesting of findings was that of leadership personality that made it possible.
The Mild-Mannared CEO
Collins tells the story of the modest Darwin E. Smith3, chief executive of middle-of-the-road paper company Kimberly-Clark. In 1971 their stock market value had fallen 36% behind their competitors, and as the board’s recently appointed CEO, Smith had the responsibility for finding a new direction and returning the company to profitability. He was an in-house lawyer lacking all the traditional bluster and egotism that is typical of many CEOs. Also, he had never even run a major division before and apparently was filled with self-doubt. Some of his fellow directors had concerns too, and during subsequent major restructuring at the company, Wall Street and the media weren’t so kind either. Nevertheless, as Smith is said to put it himself, "I never stopped trying to become qualified for the job."
Despite his introverted and humble style, Darwin Smith displayed strong resolve and determination to make big decisions, such as entering the consumer paper market. As a result of that move, Kimberly-Clark became the number one paper-based consumer products company globally, beating Procter & Gamble and other major rivals. The company went on to generate cumulative stock returns four times greater than those of the general market, outperforming companies such as Hewlett-Packard, 3M, Coca-Cola, and General Electric.
Jim Collins cites Darwin Smith’s turnaround of Kimberly-Clark as one the best but least known examples of a leader taking a company from ordinary to exceptional4. However, contrary to popular belief on successful leadership, Smith’s success came from leading from the back. He didn’t court fame and notoriety or seek credit or reward. He instead focused on the work and doing the best job he could. But the media don’t celebrate this; they need fireworks. We take notice of fireworks, you see, and the media know it. Therefore those who make a song and dance, whether it’s for good or bad reasons, always make the news. Collins says that this kind of extroverted yet passionately narcissistic leadership style doesn’t bring long-term results.
The Narcissist-Empath Dichotomy
The Level-5 Leadership personality type stands in stark contrast to that of the narcissistic leader. We’ll examine in-depth the Level-5 Leadership Personality later, but first, let’s explore the narcissistic leader, arguably the more dominant personality in the business world.
The narcissistic personality type, according to Maccoby5, reflects society’s collective image of what it believes it takes to be a successful leader. In that view, perhaps our ideals are distorted. Narcissists love fireworks–they are the fireworks. The problems arise for companies (and the rest of us) when we become fooled by it all. The cult of celebrity CEO is real, and it is this fame and fortune to which narcissists are attracted. They are brazen and bold; they take over the room and force milder congregation members to either support them or shut up. They love the fight, and they can’t stand losing. Narcissistic leaders are all about the show. They are charismatic, manipulative, and controlling, possess unyielding determination, ruthlessness, and entrepreneurism. Therefore, we are often fooled by the brightness of their personality. However, narcissistic leaders success is generally short-lived6.
Narcissistic leaders are often self-absorbed to such an extent that their business decisions are weighted by what’s good for them and their image rather than what’s good for the business and those associated with it. Also, they are less concerned with what happens to the company after they are gone than they are while they are in charge. Jim Collins says that narcissistic leaders typically have an “I don’t care what happens after me” attitude. Therefore, the narcissistic personality type has significant flaws.
In a 2004 research paper examining narcissism and risk7, researchers reported that narcissistic leaders possess two major aspects of character;
A positive, inflated, and agentic self-concept.
A self-regulatory strategy designed to maintain and enhance this self-concept.
These self-absorbed leaders strive for fame and notoriety and express little concern or empathy for others. In fact, others serve as a means by which to obtain the status and reward they crave. They do not tolerate dissent or negative feedback, for this serves as an attack on their self-image. Therefore, compliance on the part of subordinates is more important to the narcissistic leader than knowledge or skill.
The Empathic Level-5 Leader
Collins’ Level-5 Leader is the antithesis of the narcissistic leader and is epitomised by Darwin Smith at Kimberly-Clark in the 1970s. It is a classic example of a person in leadership who manages to blend extreme personal humility with an intense will to succeed. According to Collins’ five-year research study, business leaders who possess this paradoxical combination of personality traits are catalysts for what he calls a “statistically rare event” of transforming a company from good to great. Rather than going after a larger market share for the sake of profitability, using overstated rhetoric, and making promises they can't keep, the Level-5 Leader personifies the steady, reliable, and trustworthy aspects of a business. It’s not about the firework display; it’s about the quality of the product or service and the company's success.
“Level-5" Hierarchy of capabilities.
Level 1 of the hierarchy relates to an individual’s technical capability, talent and knowledge contribution to the organisation.
Level 2 relates to their team skills and ability to work with other members toward a collective goal.
Level 3 of the hierarchy relates to an individual’s managerial competence and skills at organising people and resources.
Level 4 relates to the individual’s traditional leadership skills, catalysing collective commitment and developing a clear and compelling vision.
Level 5 leaders possess the skills of levels 1 to 4 but have the extra dimension, an almost paradoxical blend of personal humility and professional will.
Level-5 leaders are largely introverted, shunning the limelight and never boastful. They are quiet and calm yet determined and hold themselves to impeccably high standards. Level-5 leaders possess a stoic resolve to do whatever it takes to make the company great and ensure that those who follow are set up for success. Collins insists that it’s not the case that Level 5 leaders have no self-interest. On the contrary, they are highly ambitious, but their ambition is channelled towards the institution's success, not towards themselves.
"Level 5 leaders look out the window to assign credit—even undue credit. They look in the mirror to assign blame, never citing external factors."
- Jim Collins
Can Level-5 Leadership Be Learned?
Collins believes that there are basically two types of people who enter leadership positions; those with the potential for Level-5 Leadership and those without. The latter could never in a million years subjugate their own needs for gratification to the needs of something broader reaching. Their entire self-concept is structured in such a way to make that impossible. The former possesses the capability perhaps lying dormant within them, and under the right circumstances, the seed can begin to sprout. Some of the Level 5 leaders, such as Darwin Smith, Collins says, had significant life experiences that may have been the catalyst for personal change. Smith survived cancer earlier in his life and this may have been significant for the development of attributes required for Level 5 Leadership. Other CEOs in Collins’ study had similar life-altering experiences.
Collins says that Level 5 is an empirical, powerful and satisfying concept. And for an individual to make the transition from good to great, it is an essential concept. But to provide “ten steps to Level 5 leadership” would be too trivial. Success tends not to be that simple. Instead, Collins suggests, the perfect blend of attributes required for Level-5 Leadership is undefinable.
Most of the world is obsessed with instant gratification. Nothing warrants the time and effort necessary to create something great. In fact, our idea of greatness seems to be an off-shoot of the pursuit of instant gratification–it’s self-reinforcing. We lay praise and adornment at the doorstep of those who shine brightest in the misled belief that theirs is the way, only to be found wanting. As with the self-obsessed narcissistic leader, it seems our entire way of life reflects a personal pursuit of gratification that never lasts. As Abraham Maslow said8, “Man is a perpetually wanting animal.”
As we have seen from Collins’ Level-5 Leadership Model, successful leadership requires a worldview and a sense of reality that extends beyond the physical boundary of the self. That perspective may only come to the fore when the tight narcissistic self-concepts are torn down. As such, I believe that trying to become a Level-5 Leader is really a display of the very narcissistic tendencies we’re trying to overcome. It’s ego-filled. Instead of thinking of the Level-5 Leadership concept as an ideal toward which we must strive, maybe it’s better to trust it to develop organically.
That’s really what Collins found. He examined it after the fact, so to try to coax or coerce it into being is the cart before the horse. Whatever it’s worth, my advice is to cease trying to reach ideals and focus on being as human as possible. But as Collins said, some are just not cut out for it.
Fuller, R. B., & Kuromiya, K. (1981). Critical path. Macmillan.
Collins, J. (2009). Good to Great-(Why some companies make the leap and others don't).
Collins, J. (2001). Jim Collins - Articles - The Misguided Mix-up of Celebrity and Leadership. Retrieved 3 April 2021, from https://www.jimcollins.com/article_topics/articles/the-misguided-mixup.html
Collins, J. (2006). Level 5 leadership: The triumph of humility and fierce resolve. Managing Innovation and Change, 234.
Maccoby, M. (2004). Narcissistic leaders: The incredible pros, the inevitable cons. Harvard Business Review, 82(1), 92-92
Kodish, S. (2006). The paradoxes of leadership: The contribution of Aristotle. Leadership, 2(4), 451-468.
Campbell, W. K., Goodie, A. S., & Foster, J. D. (2004). Narcissism, confidence, and risk attitude. Journal of behavioural decision making, 17(4), 297-311.
Maslow, A. H. (1967). A theory of meta-motivation: The biological rooting of the value-life. Journal of humanistic psychology, 7(2), 93-127.