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.