What Makes Companies Successful

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.

Leadership in Tough Times

The burden of the economic recovery extends beyond unemployment statistics, business failures and the erratic financial markets. It forces us to modify our behavior on several fronts, personally and professionally. How it impacts the leadership role was a topic of discussion at a recent industry association meeting. Here are the highlights:

Communicate (more often)

• It’s not enough to simply communicate with your team– for maximum effectiveness it must occur frequently. This goes a long way to curbing speculation and helping team members stay focused.
• Withholding relevant information leads to speculation, rumors and hearsay. If bad news lands on the doorstep, better to share it than not.
• Share only what needs to be shared; don't over-inform. People deserve to hear the truth, but not beyond the facts that pertain to them.
• Take internal audits to gauge team members’ state of mind: what are they feeling, what are their needs, what can you do to support them?
• Tip: It’s perfectly fine to not have answers to every question or comment; listening is the first step to being an effective leader (and probably the most difficult for people in leadership!)

Model the Right Behavior

• You don’t have to be the first to arrive and the last to leave every day, just make sure you’re not a LIFO– Last In, First Out.
• Do more than is required and not just in your area of responsibility. Pitching in to help others– above or below your rank– is the at the heart of servant leadership.
• Remember, nothing kills morale more than a leader labeled as “Do as I say, not as I do.”

Engage the Team

• The ability to adapt to changing environments or market demands is critical to the success of any business. The same is true of the people on your team. Help them break free from the routine by encouraging feedback.
• Step 1: make certain everyone understand the basics well and are pursuing those standards consistently. No need to try building on a weak foundation!
• Step 2 : keep everyone focused daily on the “work at hand” or in Zen terms, “being in the moment”. This helps minimize distractions, gossip and needless speculation.
• Step 3: ask for input, ideas and feedback then, actually try some of them. Celebrate the successes (loudly), no matter how small the impact. In times like these, your team needs every win it can get.