A CEO Leadership Model: Kimberly-Clark's Darwin Smith

 

According to an article published this past week in The Press Gazette, Green Bay, Wis., USA, written by contributor Nicole Kozlovsky, a senior accounting and economics double major at St. Norbert College in De Pere and research analyst for the Center of Business and Economic Analysis at the college, found that eleven good-to-great Fortune 500 companies all had one thing in common: a leader with a unique combination of professional will and personal humility.

This assessment comes from a 2001 study by Jim Collins, an expert in company sustainability. He called these executives "Level 5 leaders". While professionalism might seem obvious, personal humility tends to be harder to come by.

Collins’ study looked at companies with average industry stock returns for fifteen years, followed by 15 years of returns at least three times the market average. Only 11 companies met these terms, one of which was Kimberly-Clark (K-C), based in Irving, Tex., as the world’s largest tissue manufacturer and now a highly successful pulp and paper company existing in the digital age.

Shortly after becoming CEO of K-C and being diagnosed with cancer, Darwin Smith made a difficult strategic decision to shift out of paper products and into consumer products, selling some K-C mills and investing the proceeds in brands such as Huggies and Kleenex. Twenty-five years later, K-C was at the top of its industry and remains a vibrant leader as of 2015.

Smith and each of the other Level 5 leaders examined in Collins’ study displayed similar characteristics and traits that contributed to the successes of their companies according to Kozlovsky's follow up analysis of his study 15 years later. They exhibited a fiery work ethic and willingness to make risky decisions to further benefit their respective companies. When their decisions led to success, Level 5 leaders tended to cite the work of their colleagues or good fortune. When the company fell under hard times, they accepted blame and looked for the next breakthrough idea.

On the other hand, Collins' Level 4 leaders had a tendency to lack an ability to deflect praise and accept blame. Level 4 leaders can lead very successful Fortune 500 companies, but not quite to the extent that Level 5 leaders can. Collins said that Level 5 leaders put their company’s success above all else. When selecting their own successors, they choose a replacement that will continue their success with a new chapter of their own. Unfortunately, the humble, reserved nature of Level 5 leaders does not always win over a board of directors like a larger-than-life, outgoing opposition. Kozlovsky believes more than 11 Level 5 leaders exist, but many of them are still probably in non-leadership positions within their organization.

Consider Collins' study the next time multiple candidates are running for the same position says Kozlovsky, who added that Smith is a nearly perfect and model Level 5 CEO, one who surrounded himself with the right people to make a world-class organization that has stood the test of time and changing market dynamics.