Good to Great: Chapter 2  Summary & Analysis

Collins opens with an anecdote about Darwin E. Smith, a former CEO of the paper company Kimberly-Clark. Despite being mild-mannered and lacking experience, Smith led the company through a marked transformation to greatness. Collins notes that although Smith was quiet and humble, he was also fiercely focused and ambitious. When he first became CEO, Smith decided to sell off the paper mills that had been Kimberly-Clark’s core business and focus instead on dominating the consumer paper products industry. Even though the business media mocked Smith, his bold move was successful.

Collins characterizes Smith as an example of a Level 5 Leader. Level 5 Leaders “blend extreme personal humility with intense professional will,” and though they may be ambitious, their ambition is channeled toward their companies rather than their own egos. Collins notes that although he and his team were initially wary of ascribing importance to leaders, they eventually had to accept that every one of the eleven good-to-great companies was led by a Level 5 Leader at the time of their remarkable transitions.

Collins notes that Level 5 Leaders are always characterized by not one, but two defining traits: modesty and fearlessness. He gives the example of Colman Mockler, the CEO of Gillette who led the company through several attempted takeovers and into a new era in which the company became a technological leader. In doing so, Mockler prioritized the company’s long-term success over his own short-term gains.

Additionally, Level 5 Leaders are often devoted to ensuring that the company thrives after they are no longer its leader. For example, David Maxwell, the former CEO of Fannie Mae, requested that part of his retirement package be donated to a fund for low-income housing because he worried that public opinion of the large payments would damage the company’s reputation. Leaders of good-to-great companies usually set their successors up for success, while comparison companies usually did the opposite.

Collins notes that in interviews for the book’s study, Level 5 Leaders rarely talked about themselves, instead commending others for their companies’ success. Those who knew these leaders also describe them as modest and self-effacing. In contrast, the research team found that the leaders of the comparison companies were often egotistical and focused on advancing their own reputations over those of their companies.

In conclusion, Collins reiterates that Level 5 Leaders are not just humble. Rather, they balance their humility with a relentless drive to accomplish what needs to be done for their companies’ success. They pursue their goals with rigor and strive for excellence, but they do not look for personal glory. Additionally, they view their good fortune as luck while accepting responsibility for bad fortune; that is, they rarely view bad luck as the cause of failure. Collins notes that although it is not clear how one becomes a Level 5 Leader, he suspects that many seemingly ordinary people have the potential to grow into this role and recommends that readers follow the steps outlined in the rest of the book in order to see if they can become Level 5 Leaders.