Philip Fisher part 9, on company visits

 A fifteen-item questionnaire prepared Fisher for the meeting with the company’s management. Without going through them, he would not have been able to ask the right questions. In addition, he would not have been able to ask follow-up questions to the answers he received. He prepared the question lists before the company visits. He wanted to be prepared for the meeting so that he could also provide added value to the respondents. In this way, he improved his chances of meeting the management again.

The company’s management meeting should provide the investor with detailed answers to two general questions. The first is how good the business practices are and the second is how well they are implemented. When answering the first question, the investor should focus on understanding, among other things, how well the company avoids basic mistakes, such as shortcomings that lead to a deterioration in the work atmosphere. The goal of such questions is to ensure that the company is not being managed poorly. Understanding exceptionally good management requires finding answers to more demanding questions, such as how well the employees in the sales organization are trained.

Many people talk better than they do. Good policies are not enough if they are poorly implemented. Understanding this and drawing the right conclusions is vital because managers learn to say the things investors want to hear. Many companies claim to take care of their employees while top management is on the warpath and workers are on strike. All statements by top management should be verified by those who have dealt with them.

According to Fisher, given the size of the investee’s business, an investor should focus on about five members of senior management. The qualifications of one or two members are not enough. The investor will probably not meet more than these members, so he must use his network to determine the quality of management. Adequate background information helps the investor better understand the people he meets and their abilities. It can help the investor confirm the assessments he has made about them before meeting them.

One of the best questions Fisher ever asked management was, “What are you doing now that your competitors aren’t doing yet?” The dynamic of this question centers on the word “yet” because most business leaders can’t answer it. Most companies don’t do anything that others aren’t doing, and most leaders have never asked themselves that question. The question refers to leadership in the business world, whether it’s about improving customer service, employees, products, or investor relations.