Philip Fisher on Management Quality

Fisher's research method, which he called scuttlebutt, treated formal filings as only a starting point. He sought out competitors, customers, suppliers, former employees, and industry researchers to triangulate how good a company really was. In his telling, a competitor's grudging respect often revealed more about management quality than any annual report, and the willingness of talented people to join a firm was among the strongest signals available.

Fisher laid out fifteen points to check before buying a growth stock, centered on whether a company's products had the potential to grow sales for years, whether it was investing in research to keep that potential alive, whether its sales organization was outstanding, whether profit margins were healthy and defensible, and whether management maintained the disciplines needed to keep improving. He emphasized that few companies would pass every test — the goal was excellence on the ones that mattered most for that business.

On management character, Fisher insisted that a truly worthwhile chief executive cultivated honesty and candor with owners, ran the business with a long view rather than for the next quarter's optics, and was willing to accept near-term pain — including Wall Street criticism — to protect long-term shareholder value. He openly preferred owner-managers with skin in the game and warned that size and fame were no substitute for integrity.

Fisher described what he looked for in the people running technical companies: executives who understood engineering well enough to choose the right projects, a research organization with genuine freedom to look years ahead, and a sales force able to explain complex products to customers. He judged that in technical businesses, the gap between the best-run and average firms compounds just as powerfully as the financial results.