Level 5 leaders who build the greatest and most durable companies think first about “who” and then about “what.” They first get the right people on the bus (and the wrong people off the bus) and then figure out where to drive the bus.

When you’re facing chaos, turbulence, disruption, and uncertainty, and you cannot possibly predict what’s coming around the corner, your best “strategy” is to have a busload of disciplined people who can adapt and perform brilliantly no matter what comes next. Our research supported what we came to call “Packard’s Law” (named in admiration after HP’s co-founder): No company can consistently grow faster than its ability to get enough of the right people and still become a great company. If a company consistently grows faster than its ability to get enough of the right people, it will not simply stagnate, it will fall. The number one metric to track isn’t revenue or profit or return on capital or cash flow; the number one metric is the percentage of key seats on the bus that are filled with right people for those seats. Everything depends on having the right people. (Directed reading: Good to Great, Chapter 3; BE 2.0, Chapter 2.)

Do More Clock Building, Less Time Telling

Leading as a charismatic visionary—a “genius with a thousand helpers” upon whom everything depends—is time telling. Shaping a culture that can thrive far beyond any single leader is clock building. Searching for a single great idea upon which to build success is time telling. Building an organization that can generate many great ideas is clock building. Our research showed that leaders who build enduring great companies make the shift from time telling to clock building. Clock builders create highly replicable recipes, extensive training programs, leadership-development pipelines, and tangible mechanisms to reinforce core values. They get the right people on the bus and then manage the system, not the people. For true clock builders, success comes when the organization proves its greatness not just during one leader’s tenure but also when the next generation of leadership further increases flywheel momentum. To use an analogy, think of writing the U.S. Constitution as a consummate act of clock building, so that the start-up nation might endure beyond the courage and genius of those who won the War of Independence. Similarly, launching a start-up is like winning the War of Independence, but building a company that can last is like writing the Constitution. (Directed reading: Built to Last, Chapter 2; Great by Choice, Chapter 6.)

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.

KEY QUESTION: Do you have consistent sources of cash, ideally generated internally, to fuel the growth of your business?

Growth sucks cash. This is the first law of entrepreneurial gravity.

This can be particularly disorienting if you thought success would make you eternally happy or fill your life with meaning, only to discover that it does neither. Achieving success or accomplishing a huge goal (whether personal or public) does not answer the question of what to make of a life. In fact, it can have the exact opposite effect, forcing the question back to the center of your existence, to be addressed anew.

In my previous research into the question of what makes great companies tick, my colleagues and I observed a prevalent precursor to corporate decline: the post-BHAG stall. BHAG (pronounced “bee-hag”) stands for “Big Hairy Arduous Goal.” In Built to Last, Jerry Porras and I discovered the power of having a BHAG to galvanize an organization, acting as a powerful mechanism to stimulate progress. But we also discovered that companies can become adrift and on the verge of decline after achieving the BHAG. To avoid this trap, a company needs to have an enduring reason for being (its core purpose) that acts like a star on the horizon, forever chased but never reached no matter how many goals the company achieves.