Ever wonder what makes some companies more successful than others? Some insights were offered by David Gardner (cofounder of the Motley Fool) in an interview with business writer Will Deener. Gardner's stock picking strategy includes more than just what's on an income statement or balance sheet. The financial data has relevance, but he places as much or more emphasis on the following: what really makes a company tick... - What is the company’s culture?
- What is the value of its brand?
- What is the personality of the management team? Does the CEO embrace a sense of humor? Tip: people perform better when they work with people they like.
- Is the company innovative and creative?
Gardner: “It may be hard to express those things as a number, but they’re a lot more tangible and real than a lot of things on an income statement. If you can’t make people smile or laugh, it doesn’t mean you’re a bad person, I’m just not interested in your company."
Regarding the ability to innovate or be creative: Gardner likes to invest in companies that have the ability to disrupt competitors through innovation. Example: Netflix, which blindsided its main competitor (Blockbuster) with a different delivery model of the same product. Since entering the movie rental arena in 2004, Netflix share have risen from $17 to $220 while Blockbuster struggles to reinvent itself and simply survive.
PS: if innovation is something you thrive on, check out Different by Youngme Moon. It's chocked full of case studies similar to the Netflix example.
Had an interesting discussion with a survivor from the RTC days. In the late ‘80’s, this gentleman was laid off from a civil engineering firm he’d worked with for the past ten years. Full time jobs in his field were in short supply and when they did surface, the competition was fierce due to the oversupply of candidates. He landed a few consulting assignments here and there while he continued his search for a full time position, but nothing of a consistent nature. He desired a more certain future... if not a full time job, then at least some type of recurring work he knew he could count on and look forward to. Any of this sound familiar?
Well, the solution he came up with proved to be unique, timely and cost efficient. Rather than pursue piece-meal assignments on a scattered schedule, he “sold” his services for one day a week to four companies, none of which needed a full time employee but all needing extra help. Just as today’s companies are doing more with less people, these companies could easily justify this arrangement to avoid overloading their regular staff. Plus, they knew what they were getting in terms of expertise each week and tailored the workload according to this person’s skill sets.
Our friend didn’t replace his income 100% nor did he reap the benefits of a full time employee, but the fractional strategy helped him survive the recession of the late ‘80’s. He also expanded his sphere of influence by working with four companies vs. one and was able to use them as references when the need arose. Best of all, he no longer faced the uncertainty of what lied ahead in the weeks to come.
There’s something for companies to learn from this story, too. We’ve made this case before: there is an amazing wealth of talent sitting on the sidelines, just waiting to be tapped– if not permanently, then part time. Not just line staff, but senior level executives from companies known for best practices. What would your company gain by hiring the former Corporate Controller from a national real estate developer for one day/week for a few months? Or, the former VP of Customer Service from an award winning home builder? Tap into the brain trust while it’s available.
How to do that? Well, we’ve got some ideas on that which we’ll be sharing soon. Stay tuned.
