The greatest companies in lousy industries share certain characteristics. They are low-cost operators and penny-pinchers in the executive suite. They avoid going into debt. They reject the corporate caste system… Their workers are well paid and have a stake in the companies’ future. They find niches, part of the market that bigger companies have overlooked. They grow fast – faster than many companies in fashionable fast-growth industries…
Pompous boardrooms, overblown executive salaries, demoralized rank & file, excessive indebtedness, and mediocre performance go hand in hand. This also works in reverse. Modest boardrooms, reasonable executive salaries, a motivated rank and file, and small debts equal superior performance most of the time.
– Peter Lynch, “Beating the Street”
