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Is Steve Jobs a Level 5 Leader?

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In our sleep, pain which cannot forget falls drop by drop upon the heart until, in our own despair, against our will, comes wisdom through the awful grace of God.
-- Aeschylus

I was an English teacher for five years before coming to the Fool. In that time, my students came to appreciate this quote more than any other (impressive considering they originally found it, not me!). As part of their final, they had to translate the quote into their own words. The most popular answer read something like this:

"Life's greatest tragedies often teach us our most important lessons."

What in the world does this have to do with Steve Jobs?
I'll get to that in the moment, but there's a back story that needs to be tackled first.

About five months ago, just after the Apple (Nasdaq: AAPL  ) CEO announced yet another medical leave of absence, I wrote a piece on what makes a Level 5 leader.

While you can go back and read the story to get a more complete picture, the shorter version goes like this: Author Jim Collins, in his managerial best-seller Good to Great, investigated characteristics of great companies and their CEOs. He spent a great deal of time differentiating between what he called "Level 4" and "Level 5" leaders.

The basic difference between these two is that while both have overwhelming success when at the helm of their companies, Level 4 leaders do not set their organizations up for success after they leave, while Level 5 leaders do.

In my previous piece, I pointed to Berkshire Hathaway's (NYSE: BRK-B  ) Warren Buffett and Nucor's (NYSE: NUE  ) Dan DiMicco as textbook examples of Level 5 leaders. They give autonomy and praise to those around them, and are focused on building institutional greatness that will last years beyond their time at the helm.

I ended my article by sitting on the fence when it came to Jobs, essentially saying that he was a "Level 4.5" leader.

An interesting twist
In a fascinating piece hot off of the presses from Fortune magazine, Adam Lashinsky takes an interesting look at the inner-world of Apple. Though the piece covered Apple as a whole, it was a tiny section at the end of the article that really caught my eye.

In it, Lashinsky states that for a long time, Jobs couldn't have cared less about the HR department at Apple. But after his second medical leave three years ago, it suddenly became a top priority.

Unbeknownst to many, Jobs hired Joel Podolny, dean of the Yale School of Management, to start what was dubbed Apple University. The goal of the university: to institutionalize the DNA that has led to Apple's greatness. Courses are taught based on case studies from how key decisions have been made during Jobs' tenure.

Life after Steve
Now, some may argue that this move is wildly selfish -- simply indicating that Jobs wants to continue micromanaging long after his time at Apple has passed. Those critics may be right, but then again, what's so wrong with that? Jobs has done one heckuva job.

And the company is going to need to fend off competition from the likes of Hewlett-Packard (NYSE: HPQ  ) , Research In Motion (Nasdaq: RIMM  ) , Google (Nasdaq: GOOG  ) , Microsoft (Nasdaq: MSFT  ) , and a host of others after he's left the scene.

Personally, I don't take the cynical view that Apple University is simply an exercise in vanity. Instead, I think that it's an indication of something bigger. Apple University, and the heavy-hitter Jobs hired to run it, is evidence of a transformation from Level 4 to Level 5 leader for Jobs.

Which brings me back to that quote ...
Though I've never met the man, it seems rather unanimous that Steve Jobs is a pain in the butt to work for. The fact that he wasn't too concerned with talent development until three years ago shows that the company would have been in dire straits had he been hit by a bus back then.

And while it's absolutely tragic that a man at Jobs' age is faced so directly with his own mortality, the situation appears to be changing his approach.

Jobs' realization of his own mortality has spurred him to ensure that the greatness he helped create at Apple will outlive him. For his employees, customers, shareholders -- and even his legacy -- that holds the promise for even brighter tomorrows.

Whether Apple University ends up tipping the scales in Apple's favor moving forward is yet to be seen. In the mean time (as a shareholder), I'm glad it's there.

Jobs and Apple are a hot topic at The Motley Fool. Have an opinion? Share your thoughts below, as this is a community built by investors, writing for other investors.

Motley Fool newsletter services have recommended Google, Berkshire Hathaway, Nucor, Microsoft, and Apple. The Motley Fool owns shares of Apple, Microsoft, Nucor, and Berkshire Hathaway. Motley Fool newsletter services have recommended creating a bull call spread position in Apple, and a diagonal call position in Microsoft.

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Read/Post Comments (11) | Recommend This Article (24)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 17, 2011, at 8:28 PM, TMFCheesehead wrote:

    For some reason it was not mentioned in the disclaimer, so I'm mentioning it here. I own shares of Apple, Google, Berkshire Hathaway and Nucor.

    I apologize for that being left out.

    Brian Stoffel

  • Report this Comment On May 17, 2011, at 10:17 PM, cbglobal wrote:

    A micromanaging leader is an oxymoron.

  • Report this Comment On May 18, 2011, at 1:29 AM, noxgear wrote:

    I have owned Apple stock over the past 20 years off and on. There have been many times, when I, as a shareholder and a user, was mystified by how Apple's stock price was able to maintain itself.

    Then about 15 years ago, Apple became a real company, with real, stable and sustainable earnings, and the hit parade of wildly popular products began. I have been a shareholder for the last 10 years, with mostly great year to year results.

    If there was ever a time to own this stock, it is now. Their PE is more indicative of a slow growing stock, but their growth is still outpacing almost any other kind of manufacturer.

    I think Steve Jobs is a Level 5 manager and even if he dies in the next couple of years, his management choices and technical decisions will carry the company for another 3 years. I wish him well, and hope he can regain his health and live for another 30 years.

  • Report this Comment On May 18, 2011, at 5:25 PM, RobertC314 wrote:

    "I think Steve Jobs is a Level 5 manager and even if he dies in the next couple of years, his management choices and technical decisions will carry the company for another 3 years."

    This statement, if true, indicates that Jobs is indeed a solid level 4 leader. The idea of a level 5 leader is that when they are gone the company continues to operate at the same (high) level of performance for the next 30+ years. If a leader's "management choices and technical decisions" have to "carry" the company then that indicates that they were not able to instill the institutional culture necessary to carry on their legacy after their departure.

    That being said, I unfortunately have no more insight into whether or not Apple has that institutional greatness. However, it does seem to be priced as if it does.

  • Report this Comment On June 13, 2011, at 8:47 AM, JS8721 wrote:

    The truth is that no one knows whether Steve Jobs is a Level 5 leader or not.

    As a shareholder I certainly applaud Apple's efforts to educate their employees. But the future of Apple depends upon so much more than just one leader and one internal "university."

    The actions of the Apple Board (who will replace Jobs? what environment will they create through incentives? etc?) and Job's successor will be two of the keys that will determine the future of Apple. Also, will the next gen of Apple leaders be able to maintain a laser focus on making just a few products great? Or will they be sucked into the impossible abyss of trying to do all things well?

    Jobs is an extraordinary leader. It will be very, very difficult to find someone who even comes close to him in terms of leadership, vision and determination. The future of Apple will depend upon the wisdom, skills, insights, courage, and hard work of it's future leaders. We'll just have to wait and see how the future Apple competes in an increasingly challenging global market.

  • Report this Comment On June 13, 2011, at 1:02 PM, andrewm3773 wrote:

    Long ago in school, when we read “The Leadership Moments”, we debated long about what creates “leaders”. Is it DNA, training, context, life experience or an unknown combination of any/all of these?

    Found out that it depends on what level of “leadership” we are interested in. Running a firm successfully indeed takes leadership, but transformational leaders such as Jobs, Gates, Page or Buffet are too complex to analyze with a finite set of factors and categories.

    First, how do we know that 5 levels form the MECE set (mutually exclusive and cumulatively exhaustive)? If so, what level should Lincoln be in? Are we considering all the factors or slipping into various behavioral biases of analyses (such as data mining, spurious correlations, false similarity etc.)?

    At the core of transformative leadership are extremely complex human evolution and stochastic extraneous factors (right time, right place etc.). The same people in a different context or similar people in the same context might not have made it.

    In summary, we don’t know exactly what combination of which element make this happen, and that’s why evolution of leadership cannot be engineered. But that’s the beauty and randomness of nature. Otherwise, the evolution would be monopolized and engineered by powerful few and human society would be ruled by droids!

    So we don’t (and better not) know exactly what lies ahead of Apple after Jobs has completed his part. May be an unknown kid from somewhere will come up with brilliant ideas and surprise us. May be that will replace Apple. For example, look at Nokia today.

    Off course it makes sense for Apple to try and plan for the succession of Jobs. Apple university may help churn out some operational leaders who can run for a while with the roadmap that Jobs will leave (B-schools are churning out such leaders for decades).

    But a complex leader like Jobs knows that another Steve Jobs cannot be engineered in Apple labs. The best he can do is to create the conditions. After that, if such a leader emerges from within Apple, that’s great. But if it doesn’t, then he as well as Apple has to take the chance, and be ready for the next surprise wherever it comes from.

  • Report this Comment On June 15, 2011, at 1:57 AM, ericwater wrote:

    Steve Jobs could be a level 5 leader if the end result is a companies failure. Historically when a leader such as Jobs is belligerent to workers, unconcerned with improvement of the customers lifestyle by its product which by the way has an influential base in Californias schools and abroad says volumes about Jobs himself. Selfish, abusive, self destructive and canniballistic Steve Jobs legacy will end with all those who wanted to be Mr or Mrs Tyrant, "Im going be the most important thing on the planet, huh everything died." Is anybody trying to save Jobs life. The man is dying and his followers are as dismissive to his health as he is to there existence. When Apple is completely gone from the market the world will have something better suited for lifestyle improvements and well being. Goodbye Mr Tyrant.

  • Report this Comment On June 18, 2011, at 2:47 PM, thewesleyanu wrote:

    Check this blog out, it's a leadership forum from Wesleyan University, the school that New England Patriots Head Coach Bill Belichick graduated from. It's from the class where we discussed level 5 leadership:

  • Report this Comment On June 19, 2011, at 10:37 AM, LevonTostig wrote:

    I've worked for many institutions with so-called, "{company name} University," programs.

    They were all farces and every employee knew it.

    I'm not saying this about Apple, full disclosure would be in order here: I learned to program on IBM mainframes when I was 12-years old. I've been a PC/DOS/Windows user most of my professional life. Only a couple of years ago, after losing my job, did I decide to get into iOS (iPhone) programming, which meant I had to get a Mac.

    Since then, I was hooked.

    Back to my point: Apple's culture and its University are different and will succeed because Apple hires people who not only want to make a difference (every company starts out hiring people with that enthusiasm), but who are also AFFORDED the opportunity to MAKE THE DIFFERENCE. Jobs does one thing: he holds you to your own ability because Apple only hires, "A's." If that makes him a pain in the butt to work for, then you're being lazy.

    Can other companies say that? Not really. They will hire you with the preachy line, "we want people who'll challenge, 'that's not the way we do things around here,'" and turn right around and fire you with, "that's not the way we do things around here."

    That's what makes the various University programs laughable, totally unbelievable and more of a time waster than a productivity booster.

    Here's a hint to CEOs and Directors of HR:

    The staff would be willing to go along with the new ideas, the new ways of doing things... but not when they see the leadership retaining *their old habits* too. Put another way: you talk the talk, you had better walk the walk.

    My experience has been that most companies don't do this and wouldn't know an agent of change - someone who has already embraced the ideals they wish to instill - if that person came up and kicked them in the shins. In fact, change of this kind FEELS like being KICKED IN THE SHINS! And, most companies react to change the same way anyone else would after being kicked: they try to control or eliminate the very characteristics in that person that made them hirable in the first place!

    So... Apple - good luck. If you stay true to your vision and don't go back down the John Sculley path, you'll be in good shape. Remember: it's the user experience that matters, not getting more units on more shelves. Everyone else - learn or perish.

  • Report this Comment On June 19, 2011, at 6:26 PM, ECF1 wrote:

    An organism with two heads is slow and paralyzed.

    People with a very strong vision often have trouble accepting perturbations, or adjustments, to that vision.

    I am not sure the next leader can come from inside Apple, but have trouble thinking of another American company that has the same commitment to excellence in customer experience that Apple has.

    So the problem is not that Apple has not trained a successor to Steve Jobs, it is that America, or even our global structure, has not trained even 1 of the expected 10 other leaders with the same obsessive focus on excellence in customer experience.

    Hey guys, take a look in the mirror.

  • Report this Comment On June 24, 2011, at 7:51 PM, fredwlangjr wrote:

    I’ve been mesmerized by Steve Jobs since reading about him and his vision in Time magazine circa February 1982. However, I can’t get over the sense now, 30 years later, that this has been one big self promoted PR campaign and that the media was complicit in creating a “demigod”. I don’t necessarily see great leadership; I see great management of an image. I would rate him as a Level 4 Leader.

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