Please ensure Javascript is enabled for purposes of website accessibility

9 "Self-Evident" Foolish Truths, No. 2: The Best Businesses Can Evolve

By Motley Fool Staff - Oct 30, 2017 at 6:58PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Change is hard, but the companies that are willing to constantly adjust are the ones that can keep growing long term.

This week is the 120th Rule Breakers podcast, and as Motley Fool co-founder David Gardner looked back, he realized he's covered a whole lot of subjects in those shows. More to the point, with all those episodes behind him, there are some areas he may not have covered in detail in a while. So he's getting back to basics with a set of ideas he thinks any Foolish investor ought to take for granted -- because he's not taking it for granted that everyone knows them.

In this segment, he discusses the power of optionality, or when a company has multiple possible routes into a successful future.

A full transcript follows the video.

This video was recorded on Oct. 11, 2017.

David Gardner: No. 2: I'll just call it by the watchword we often use which is "optionality." Principle No. 2 is basically that the best businesses are able to evolve. Why does that matter? Well, just like in biological evolution, changes in external circumstances happen and your organization needs to both be aware of those things and be adjusting itself to be relevant, and or successful, and or just survive into the next era by evolving. And one of the best ways that innovative companies manage to do this is often they have a second or third trick, and we call that, again, optionality. It means you have multiple possible futures.

The strongest business of our time, I think, is probably Alphabet (GOOG -3.47%) (GOOGL -3.30%). Looking across all of Alphabet's different businesses starting with Google -- and then looking across the globe and seeing all the different places that it is doing its Googly things -- that is incredibly strong and the optionality, there, is enviable. I hold that up even over something like Amazon or Apple, because I just believe that Alphabet is operating across more fronts and doing more interesting stuff than any other company in the world.

Now, very few organizations are going to be like that, and very few stocks that you and I will pick have that kind of resilience. As long as you understand the concept that just like in biological evolution it's going to be really important when external circumstances change -- the Ice Age hits -- it's going to be really important for companies to recognize that it's getting cold, let's say, and they need to stop doing this and start doing this other thing.

And the ones that can actually do that -- that have the leadership, that have the vision, that have the strength to actually be able to implement those changes [and permission from the markets, and customers, and partners to evolve] -- those are the companies that you and I want to own.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,240.15 (-3.30%) $-76.52
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,251.43 (-3.47%) $-81.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.