Let’s turn first to the inputs, beginning with the role of discipline. An overarching theme across our research findings is the role of discipline in separating the great from the mediocre. True discipline requires the independence of mind to reject pressures to conform in ways incompatible with values, performance standards, and long-term aspirations. The only legitimate form of discipline is self-discipline, having the inner will to do whatever it takes to create a great outcome, no matter how difficult. When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls. When you combine a culture of discipline with an ethic of entrepreneurship, you create a powerful mixture that drives great performance.

To build an enduring great organization—whether in business or the social sectors—you need disciplined people who engage in disciplined thought and take disciplined action. Then you need the discipline to sustain momentum over a long period of time. This forms the backbone of the framework, laid out in four basic stages:

Stage 1: Disciplined People

Stage 2: Disciplined Thought

Stage 3: Disciplined Action

Stage 4: Building to Last

With the right people in place, you turn to Stage 2, disciplined thought. There are three key principles in Stage 2:

• Embrace the Genius of the AND.

• Confront the brutal facts (live the Stockdale Paradox).

• Clarify a Hedgehog Concept.

2. Demands: Leaders have to balance two often competing demands on the business — People and Process. This requires simultaneously maintaining a great reputation with the employees, customers, and shareholders (the People side of the business); and improving the productivity of how the firm makes/buys, sells, and tracks these transactions (the Process side of the business).

3. Disciplines: To effectively execute, there are three fundamental disciplines (routines): Set Priorities; gather quantitative and qualitative Data; and establish an effective meeting Rhythm. It’s in these meetings, debating the data (the brutal facts!), where the priorities emerge.

4. Decisions: Ultimately, all of the above require some decisions. To scale the business requires getting four key decision sets — People, Strategy, Execution, and Cash — absolutely right, and there are right and wrong answers. Shortchange any one element and you’re not maximizing your opportunity.

The first step toward effective strategy is diagnosing the specific structure of the challenge rather than simply naming performance goals. The second step is choosing an overall guiding policy for dealing with the situation that builds on or creates some type of leverage or advantage. The third step is the design of a configuration of actions and resource allocations that implement the chosen guiding policy.

Once leaders realize the necessity of change, they can begin to explore the possibilities of change. The second phase involves considerable discomfort and a good deal of frustration because new skills take more work to build than anticipated. Falling back into old habits is common, especially when dealing with high-pressure situations. Backsliding should be expected and not taken as an indication of failure. Progress unfolds through an iterative process of steps forward, lapses backward, and then steps forward again.

With perseverance, positive reinforcement kicks in, which provides sustaining fuel for continued effort through the third phase of leader evolution.