We defined a “luck event” as one that 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. Using this definition, the evidence showed a lot of luck in the history of these companies. But— and this is the crucial point—we also found comparable amounts of luck in the control set of comparison cases we studied! The big winners did not generally get more good luck, less bad luck, bigger spikes of luck, or better-timed luck than their comparisons. What the best achieved, instead, was a higher return on luck. Hansen and I learned that the question is not whether you’ll get luck along the way—you certainly will get luck, both good luck and bad. The critical question is what you do with the luck that you get. I’ve come to believe that about 50 percent of great leadership is what you do with the unexpected.

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.

(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.

Your company is a maximization machine—it wants to make the best use of its finite resources—so it is greatly interested in identifying precisely who to invest in, and how.

The problem with this stems from the way your company executes on these good intentions. Why, for example, does it assume that it will net a good return only from certain people? Surely, the cliché that “Our people are our greatest asset” applies to all of the people in the company. As we’ve seen, every human brain retains its ability to learn and grow throughout adulthood. For sure, each brain grows at a different speed and in a different way, but this implies only that each person learns differently, not that—categorically—some people do and some don’t. Therefore, the best course of action for any maximization machine worth its salt would be to figure out where and how each brain can grow the most, rather than zeroing in on only a select few brains and casting aside the others.

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.