Trizle

All products, no matter how innovate they seem, eventually become obsolete. Or even worse to some, it becomes a commodity. It's happened to the mighty railroad that our great grandfathers believed couldn't be overtaken. It's happened to television, with the arrival of the internet. It'll happen to the iPod, Google's PageRank, and your everyday car. No matter how big your million dollar invention, that idea probably won't produce 20% of that amount in five years. To prevent your company from being disrupted, don't rest on your laurels. Somewhere, someone is improving on your million dollar idea. The best sustainable advantage then, does not lie on product features, but on your ability to constantly improve your product line and flow.

The recent blip on Google's (GOOG) amazing stock trend shouldn't worry you. Real investors consider the long-term potential of the company. Here are the typical responses haters espouse, and the flawed reasoning behind them:

Myth: "Google is way overpriced."

Truth: To gauge a company's value, consider potential (potential, potential, potential!). Google is a textbook company run by the brightest minds in the world. In the end, it's not about your strategy, it's about your people. Comprehensive studies have proven this point -- including the latest one by Jim Collins's six-year study on great companies. I challenge you to find one study that disputes this reasoning. The only clear way to grow is through great people, whose values fit the company to a T. Google's potential is astronomical.

Myth: "Google only does advertising. This will not sustain."

Truth: Companies thrive on simple revenue models. The greatest companies in the world have them (e.g. Wells Fargo, Gillette, Altria, and Kroger). The ones who haven't have built complex systems with no clear solution to grow. Challenge: find a great company with without a simple revenue model. You can't.

Myth: "Google is just a search engine. Its employees aren't doing anything else."

Truth: Check out labs.google.com, and tell me if Google is just a search engine. Truth is, Google is not bogged down by bureaucracy. People succeed when given freedom. Douglas McGregor asserted this in his heralded study: The Human Side of Enterprise. Google grants its employees "20% time" to do whatever they wish. This encourages innovation. That's why you've seen Froogle, Gmail, Google Maps, Google Video, Google Local. All originated from "20% time." Google has built an innovation factory. This, in turn, has and will increase profits.

Myth: "Google needs to build different businesses like Yahoo and Microsoft."

Truth: Google is guided by a clear vision. They resist opportunities that don't fit them. Instead, they know their strengths--repeatedly augmenting it. Wal-mart did it. So did Wells Fargo, and Disney, and 3M. By sticking to what they know and where they can use their strengths, this practice will ensure Google more opportunities in the future. You can't find a better company out there than Google. Long-term investors know why this company is so valuable.

You heard it here first: Google will reach $3000.

Short term traders jump from opportunity to opportunity, never understanding why a company's potential is vital to long-term success. That's probably why most of them live with their mommas. [Author's note: I posted this on a bulletin board recently around Silicon Valley, received a myriad of responses, and am glad to share it with you on our blog.]

Bestselling author Jim Collins shows how to find your company's core values with a concise set of questions: "What core values do you bring to your work-values you hold to be so fundamental that you would hold them regardless of whether or not they are rewarded? How would you describe to your loved ones the core values you stand for in your work and that you hope they stand for in their working lives? "If you awoke tomorrow morning with enough money to retire for the rest of your life, would you continue to hold on to these core values? And perhaps most important: can you envision these values being as valid 100 years from now as they are today? Would you want the organization to continue to hold these values, even if at some point one or more of them became a competitive disadvantage? If you were to start a new organization tomorrow in a different line of work, what core values would you build into the new organization regardless of its activities?"

Sure, your customers might ask you to load on the features of your product. They might say, for example, they'll need an increase in storage space, or wider handle bars, or different flavors of your peanut butter. Yet, what customers say they want, doesn't always translate to what they need -- and more importantly, what they'll buy. Ian Horsfall and collaborators from Cranfield University's Royal Military College of Science in England recounted this in "The Effect of Knife Handle Shape on Stabbing Performance." Most who needed knives said the kife's handling was as important as the blade itself. Yet, when Horsfall and the Cranfield team experimented with several cases, they came to the conclusion that the handle doesn't matter. "The bottom line is that stabbing performance is almost wholly dependent on the person, and is not a function of the knife handle," according to the study. Concludes Harvard's Marc Abrahams: Don't focus your dollars on R&D when you could probably use it to fund your marketing programs.

If you're company is riding a successful product innovation, just know that someone is trying to cut through your market share. You probably won't see it until that competitor obliterates you -- and when that happens, it might be too late to pick up the pieces. Clayton Christensen puts it best, when describing how companies had to stay competitive in the hard drive industry: "Coping with the relentless onslaught of technology change was akin to trying to climb a mudslide raging down a hill. You have to scramble with everything you've got to stay on top of it, and if you ever once stop to catch your breath, you get buried." All products become obsolete. It's happened to the 8-track. Then the Walkman. Then the CD player. Now, the MP3 players rules them all. If Apple doesn't keep innovating, and has the "We've arrived" syndrome with its iPod, your kids will be singing tunes to a different company.

As Jim Collins points out, the best leaders display a compelling sense of modesty and fierce resolve to do whatever it takes to build a great company. Read the Leadership Blueprint to learn how and where to take your company.

If you knew you had five years left on this planet, and someone gave you $20,000,000, what would you do? Read the blueprint as a guide to live your life.

Building a Web 2.0 company? Start with our blueprint to building your internet startup.

Most companies jump on the bandwagon when trying to fund their IT. Don't do it. Instead, try to go forward without technology. You'll understand precisely what technology you'll need when you're on your way. Read the blueprint on using technology to improve your business.

People can't be managed. If you try to do it, you'll get marginal results. Don't focus on managing people; manage the business systems instead. Read the overview on managing your business.