Those who see life, business, and the pursuit of accomplishment as about finding that one big hit—the one big lucky break—fail to grasp how true greatness happens. No great company, no great career, no great body of work comes about by a single event, a single flip of the coin, a single hand played. Of course, persistence doesn’t guarantee success; and the best leaders understand that they may need to change strategies, plans, and methods on the long path to building a great company. But they also understand and live out this simple truth: Luck favors the persistent.

10X MULTIPLIER—RETURN ON LUCK

Finally, there’s an input that amplifies all the other principles in the framework: the principle of return on luck. Throughout all our research, a question gnawed at me: What’s the role of luck? Our research showed that the great companies were not generally luckier than the comparisons—they didn’t get more good luck, less bad luck, bigger spikes of luck, or better timing of luck. Instead, they got a higher return on luck, making more of their luck than others. The critical question is not, “Will you get luck?” but “What will you do with the luck that you get?” If you get a high return on a good-luck event, it can add a big boost of momentum to the flywheel. But if you’re ill-prepared to absorb a bad-luck event and fail to get a high return on your bad luck, it can stall or imperil the flywheel. About 50 percent of great leadership is what you do with the unexpected.

(Again, to review from the previous chapter, a “luck event” meets three tests: First, you didn’t cause it; second, it has a significant potential consequence, good or bad; and third, it has an element of surprise, some aspect of the event is unpredictable before it happens.) Any framework that didn’t account for unpredictable and unforeseen events would be incomplete, and I couldn’t be intellectually satisfied until we wrestled with the question of luck. The concept of return on luck accounts for the undeniable fact that luck happens (a lot) yet captures the essential truth that luck itself cannot cause greatness. Catastrophic bad luck can kill a potentially great company, but good luck cannot make a company great. Luck doesn’t build great companies that last; people do.

This is the puzzle of trying to understand randomness: Real patterns are mixed in with random events, so it is extraordinarily difficult for us to differentiate between chance and skill. Did you arrive early to work because you left on time, planned ahead, and drove carefully? Or were you just in the right place at the right time? Most people would choose the former answer without a second thought - without even acknowledging the latter was an option. As we try to learn from the past, we form patterns of thinking based on our experiences, not realizing that the things that happened have an unfair advantage over the things that didn’t.

I was also told that a brand-new CEO shouldn’t be trying to make huge acquisitions. I was “crazy,” as one of our investment bankers put it, because the numbers would never work out and this was an impossible “sale” to the street.

The banker had a point. It’s true that on paper the deal didn’t make obvious sense. But I felt certain that this level of ingenuity was worth more than any of us understood or could calculate at the time. It’s perhaps not the most responsible advice in a book like this to say that leaders should just go out there and trust their gut, because it might be interpreted as endorsing impulsivity over thoughtfulness, gambling rather than careful study. As with everything, the key is awareness, taking it all in and weighing every factor—your own motivations, what the people you trust are saying, what careful study and analysis tell you, and then what analysis can’t tell you. You carefully consider all of these factors, understanding that no two circumstances are alike, and then, if you’re in charge, it still ultimately comes down to instinct. Is this right or isn’t it? Nothing is a sure thing, but you need at the very least to be willing to take big risks. You can’t have big wins without them.