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Strategy & Leadership contributing editors interviewed researcher Jim Collins. Collins is author of two influential books: Built to Last: Successful Habits of Visionary Companies co‐authored with Jerry Porras, and Good to Great: Why Some Companies Make the Leap … and Others Don’t. Some key points Collins makes are: The transition from good to great all began with a Level 5 leader. The essence of Level 5 leadership is having an ambition for the cause of the work‐the outcome, the company, the organization‐above the self; also, at the same time, having the ferocious, frightening, terrifying willfulness to act upon that ambition. Most Level 5 leaders understand that their report card only comes in when their successor succeeds. In most cases, but not all, their successors were even more successful than they were. That’s different from the comparison cases, where a number of the executives defined their success in terms of their successor failing. All the good‐to‐great CEOs said “I am not going to answer the ‘What to do’ question until I’ve got the right people. And we will not determine where to drive this bus until we decide who should be on the bus, who should be off the bus, and who should be in what seat.” In the comparison companies, you have leaders who often came in with “the what” and then tried to get everybody to go there, whereas the good‐to‐great companies had leaders who began with the “who” and then figured it out from there. The idea that you first get the right team and only later figure out where to drive the bus is absolutely contrary to what everyone learned in business school. The great companies understood what they could absolutely be the best in the world at. And also, “If we can’t be the best in the world at it then we shouldn’t be doing it.” They wanted to have a profound understanding of their economics and how to fundamentally change them. And they put a high premium on things that they were very passionate about.

Business leaders can add to their bottom line by being more attentive to “soft” organization factors, such as the commitment level of employees, the quality of leaders, and the linkage of both to obtaining results. Such “intangible” factors account for 50 percent of a company’s market value. Results‐based leadership is the key source of increasing this intangible value. The selection and development of leaders in the organization should begin with the question, “What is it we need to deliver for the company?” Next determine the behaviors the leaders need to deliver those results. Too many companies do the reverse. For example, a firm wants leaders who have a vision “so that” the company will be able to innovate products faster than competitors. Or, the business wants leaders who can build teams quickly “so that” the time from concept to commercialization of a product is 20 percent faster in two years. Four attributes of leadership are suggested: setting direction for where the organization is headed; demonstrating personal character; mobilizing individual employee commitment; engendering the organization’s capability (building systems). Linking these attributes to results, there are four steps offered that will help build results‐based leaders: believe that leadership matters; develop a leadership brand; assess leaders and find their gaps; invest in leadership. A four by four matrix tool is offered as an aid to promote the linkage between capabilities and results. Empowerment becomes easy when the four levers (information, competence, authority, and rewards) are taken across the four boundaries of every company (vertical, horizontal, external and global). A succinct example: most firms move authority vertically from top to bottom but fail when they keep information, competence and rewards at the top.

An interview with Thomas A. Stewart, recently appointed editor of the Harvard Business Review and formerly Editorial Director of Business 2.0 and a member of the Board of Editors of Fortune. His latest book is The Wealth of Knowledge: Intellectual Capital and the Twenty‐first Century Organization (2002). Stewart’s message: Knowledge is the most important factor of production in the modern economy and a key to achieving competitive advantage. Investment in intellectual capital almost invariably provokes further complementary investments, producing a self‐feeding circle of investment and value creation. If you don’t know why you’re doing knowledge management, you shouldn’t be doing it. To apply knowledge management ideas and tools to solve business problems, you have to first identify the business problems. More companies are now operating in real time. In these companies, management can see their companies running almost the way an open‐heart surgeon can see the heart beating. That is going to change the art of management in a lot of ways. One effect will be to increase the visibility of the importance of knowledge and information. The response to 9/11 has made people much more aware of the value of their knowledge and much more aware of how to manage, collect, and protect both that knowledge and the people who create and embody it. As we move forward, I think we will be seeing an explicit recognition that deploying and redeploying people and knowledge leads to the fastest growth.

Loyalty in the workplace has become a radically misunderstood concept. In this interview, Frederick Reichheld argues that loyalty drives financial success ‐ especially, in today’s volatile economy. As companies face the harsh realities of an economic downturn, holding onto their customers must be a priority for growth. Reichheld believes companies must focus on building a loyal customer base by forming strong relationships with front line employees. By keeping profitable customers and growing relationships with them, the “loyalty leader” companies identified by Reichheld out‐performed their competitors in the stock market by a factor of 2.2 on average during the 1990s. Bain research shows that a mere 5 percent increase in customer retention generates 30 percent to 40 percent increases in a customer’s lifetime profitability in industries like software and building management, and as much as 90 percent gains in financial services and advertising. Reichheld concludes that companies can only build a sustainable competitive edge by creating enduring, mutually beneficial relationships built on trust with employees, customers and suppliers. The ability to build and nurture loyalty over time has become an invaluable differentiator for successful organizations.

Effective strategy development and planning is an organization's most powerful means of controlling its destiny. Strategy is simply the management of change—the intelligent adaptation to external circumstances and the conscious creation of a desired future. Without a systematic, formal strategy development process, the quality of strategy is likely to be hit or miss. Only with a good long‐term strategy—and consistent implementation—will a company be able to beat competitors in meeting customer wants and needs.

In this interview, international strategy guru Gary Hamel explains the thinking behind his new book, Leading the Revolution. He believes that the impetus for radical change in a business must come from the ideas and energies of the people within the company, not from consultants or external advisors. He also believes that innovation and radical change will be necessary for wealth creation in the coming years – change not only in products and processes, but change in entire business models as well. The interview includes Hamel’s guidelines for those at any level of an organization who may have ideas about new opportunities that can revolutionize the company or the industry.

In today's closely connected global environment, international companies often wield more power and influence than any other social, political, or economic entity. As we move into the twenty‐first century, investment in technology and global communication networks will only increase the interconnectedness of organizations, financial markets, and individuals around the world. These events combine to raise a number of questions:Wltat role should business play in the twenty‐first century? Are companies economic actors alone? What responsibilities accompany the growing power and influence of business? Is it all about increasing wealth, or are there humanitarian and social issues that must be considered as well? This article contains the thoughts and proposals of a select group of business leaders from a cross‐section of industries.