Should you be investing with Jeff Bezos? Harvard Business Review says yes. Credit: Doc Searls via Flickr, Creative Commons license.

When Harvard Business Review ranked the world's most effective CEOs, it stripped away the excess and focused on what matters to investors: shareholder returns.

And not just short-term returns, but returns delivered over an entire career at the top. Think about that for a minute. What would it have done had you invested alongside Steve Jobs for the entirety of his career at Apple? A lot, naturally. Identifying top CEOs early in their tenure is a skill worth developing if your aim is long-term financial independence.

In that spirit, I've taken a closer at HBR's top 25 and scanned for patterns in hopes of making it easier to find the next great CEOs worth betting on. Here's what I found.

Tech titans at the top
HBR's list is comprehensive in scope and covers a wide array of industries. Technology company chiefs occupy five of the top 25 spots, including the top spot overall:

CEO / Company
HBR Rank
5-Year Revenue Growth
5-Year Profit Growth
5-Year Cash Flow Growth
5-Year Median ROE / ROC*

Jeff Bezos
Amazon.com (AMZN 2.11%)

1st

31.5%

Not material

20.4%

5.85% / 5.20%

John Chambers
Cisco Systems (CSCO 1.33%)

  3rd  5.5%  5.1%  4.5%  16.55%/10.05%

Marc Benioff
Salesforce.com (CRM 0.70%)

15th

32.1%

Not material

36.7%

(4.75%) / (1.90%)

James Taiclet Jr.
American Tower (AMT -0.24%)

18th

17.9%

21.1%

18%

13.60% / 6.00%

Reed Hastings
Netflix (NFLX 1.35%)

23rd

26.8%

16.6%

(20.9%)

29.10% / 20.45%

Source: S&P Capital IQ.
* Return on Equity / Return on Capital

Before we get into what the numbers mean, it's important to point out that every one of these chiefs has delivered market-crushing returns over the course of their tenures, but some have more staying power than others.

Bezos and Chambers are good examples of divergent stories. The Amazon founder has been involved since the e-tailer's first days in 1994 and CEO since 1996. Chambers joined Cisco in 1991 and has been CEO since 1995. Interestingly, he is the sole standout of the five listed that didn't beat the market in recent years (more on that below). Both Bezos and Chambers have done well over long-periods, though the past five years have been much kinder to Amazon shareholders:

AMZN Chart

AMZN data by YCharts

How to spot a legendary CEO in the making
What can we learn from HBR's findings and the results of the past five years? Three things, I think:

  • Tenure is important. Great leaders tend to take the long view. Each one on the list above has at least a decade of experience executing a multi-year strategy. Look for CEOs who have signed multi-year deals where incentives get bigger as the years pass.

  • Founders beat follow-ons. While both Chambers and Taiclet Jr. are undeniably competent, they didn't found the organizations they lead. They'll never be as emotionally or financially invested as Bezos or Benioff, each of whom still holds well over 5% of the shares of the companies they helped to create. Seek to invest with founder CEOs who have more to lose than you do if their company fails.

  • Accelerating revenue growth is key. Profits matter, of course. But Amazon and Salesforce are two of the best stocks of the past decade because they've focused on sustainable revenue growth via market share gains. Don't be so insistent on GAAP profits that you miss the empire builders in your midst.