At Sarutobi Hiruzen's command, all of Konoha was thrown into chaos.
Konoha had originally been founded by Senju Hashirama and Uchiha Madara. Hashirama, the strongest among them, had served as the First Hokage. There was no question about that.
In the village's early days, Uchiha Madara defected from Konoha. The Senju became the sole dominant clan, while Izuna had been cut down before the village was even founded. The Uchiha Clan lost all of its top-tier powerhouses.
The Senju Clan, meanwhile, still had Senju Tobirama, who had been as famous as Izuna, as well as Uzumaki Mito, the Nine-Tails Jinchuriki. Their strength remained formidable.
Naturally, Senju Tobirama became Konoha's second leader.
After taking office, the Second enacted numerous reforms and promoted various policies, making Konoha look more like a unified whole.
And because the Senju Clan, though its lingering prestige remained, was no longer what it had once been, it ceded much of its authority, offering some consolation to the smaller clans that had followed the two great clans in founding the village.
In truth, the Third was supposed to be elected—at the very least, they had to put on a show of democracy.
The Jonin Council and the major clans would put forward several candidates, after which Senju Tobirama would recommend one of them to the daimyo.
Unfortunately, the Hidden Cloud rebellion at the peace treaty signing ceremony forced Senju Tobirama to personally appoint Sarutobi Hiruzen, skipping even the superficial procedures.
After taking power, Sarutobi Hiruzen followed the Second's established policies and continued building upon them.
At the same time, because his strength and prestige had indeed been insufficient in the beginning, he ceded considerable authority in order to stabilize his rule, establishing positions such as the Hokage's Assistant and advisers.
That formally turned Konoha from a makeshift operation