Of hats and cattle. (Tooling Around).

All hat and no cattle.

That's the expression Texans use for folks who are all style and no substance. It's a tart description, usually based on some smart cowpoke's casual observations.

As it turns out, the expression holds up well when serious research numbers are attached to it. So says Jim Collins, a business management expert who has waded through more than his share of corporate herds and certainly more than his share of hat racks.

Collins is the author of Good to Great: Why Some Companies Make the Leap...and Others Don't (HarperBusiness, New York). In essence, the book represents a five-year study of the question: "Can a good company become a great company and if so, how?"

(Let me pause here to point out that, true to his business school roots, Collins has established a tough benchmark for what consititutes great: "cumulative stock returns at least three times better than the general stock market over 15 years." Do the math-that's pretty exclusive company.)

Most intriguing among Collins' discoveries is that each great company has a great leader. Not a flashy one, mind you. Not a Lee Iacocca or a Jack Welsh. Rather, says Collins, a great leader such as Darwin E. Smith, the not-very-flashy CEO who turned around Kimberly-Clark and helped Kleenex cry all the way to the bank.

"It turns out that every good-to-great company in our study had a leader from the Darwin Smith school of management at the helm during the pivotal years," Collins wrote in The Conference Board's annual essay last year. "We eventually came to call these remarkable people 'Level 5 leaders.' Level 1 relates to individual capability, Level 2 to team skills, Level 3 to managerial competence, and Level 4 to leadership as traditionally conceived. Level 5 leaders possess the skills of Levels 14, but also have an extra dimension: a paradoxical blend of personal humility and professional will... .It's not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious--but their ambition is first and foremost for the institution and its greatness, not for themselves."

That said, how have we wound up with so many over-exposed, telegenic mad hatters in business and industry?

Collins blames our People magazine culture. We embrace the "celebrity CEO...charismatic egoists who swoop in to save companies." In his Conference Board essay, Collins explained this flaw in thinking:

"They are more interesting to read and write about than people like Darwin Smith and [Fannie Mae CEO] David Maxwell. This fuels the mistaken belief held by many directors that a high-profile, larger-than-life leader is required to make a company great. We keep putting people into positions of power who lack the inclination to become Level 5 leaders, and that is one reason why so few companies ever make a sustained and verifiable shift from good to great."

Collins, who also co-wrote the 1994 book Built to Last: Successful Habits of Visionary Companies, isn't ready to relinquish the 2lst-century business world to corporate leaders with big hat sizes and little else. To do so, he tells boards of directors, is "tantamount to an act of irresponsibility on behalf of a company's constituents." No, he contends, let's go round up the guys who can round up the cattle.

"Our problem is not a shortage of Level 5 leaders," according to Collins. "They exist all around us. Like the drawing of two faces that transforms itself into a vase depending on how you look at the picture, Level 5 leadership jumps out at us as soon as we change how we look at the world and alter our assumptions about how it best works."

Jim Collins is a pretty savvy guy. My hat's off to him.

Joseph F. McKenna

Editor-in-Chief