Execution
In Part 1 of the Sand Castles, Concrete Walls text we used the “Maginot Line”, the French fortification system bypassed by the German army in the Second World War, to discuss three important questions regarding the decision taking process for investments: the identification of sustainable competitive advantages (“economic moat”), the sense of security embedded in our convictions and risk perception (our “behavioral Maginot Lines”), and finally, the partial antidote for our ignorance – the requirement of a “margin of safety” (quantitative and qualitative). In this Part 2 we reflect on the concept of an “economic moat”, the metaphor immortalized by Buffett to designate a “sustainable competitive advantage” – one of the sacred cows both for the strategy/competition theories and for classical methods for valuing companies.
The question in this article is: “who said that Strategy and Execution must be dealt with separately”? They don’t. It reminded us of the old Value vs. Growth debate, to which Buffett always replied that growth is a component of value. In fact, we probably wouldn’t point readers to this article if it wasn’t for the link to a free, 143-page e-book with a selection of the best Harvard Business Review articles on Strategy and Execution. Enjoy!
Netflix is one of the most admirable cases around on corporate strategy AND execution. It shows how you can make billions out of simple things. That said, they have to kill a lion a year to stay ahead. Investment-wise, we never got to the point where we felt we knew enough to invest in them – and don’t regret not doing it.
Read more about Netflix doing the right things at the right time
