WASHINGTON, DC — Shares of Google (NASDAQ: GOOGL.US) , which are up an impressive 1,191% since their trading debut a decade ago, have performed extremely well for investors. According to The Wall Street Journal, the stock was the 11th best performer from the S&P 500 in the 10 years after Google’s IPO in August 2004.

What was the secret of Google’s remarkable success? Eric Schmidt and Jonathan Rosenberg, in their new book How Google Works, argue that it was Google’s ability to attract and empower “smart creatives” that ultimately allowed the company to accomplish amazing things. Smart creatives, according to the Google executives, are those employees who “work hard and are willing to question the status quo and attack things differently.”

It’s difficult to argue with Google’s track record as a public company, and identifying future Googles could be a pretty lucrative pursuit for business-focused investors. How Google Works makes this pursuit much easier for all of us by showing what successful companies of the future might look like. Here are 10 insights from the book that I found to be particularly helpful.

1. “Every company needs a ‘Don’t be evil,’ a cultural lodestar that shines over all management layers, product plans, and office politics.”
The “don’t be evil” slogan was coined by two engineers early in Google’s history. Even today, an engineer can bring a meeting to a halt by declaring a particular product or initiative “evil.” Stakeholders will then be forced to consider if the initiative in question is consistent with the company’s values.

Schmidt and Rosenberg believe that culture “is the most important thing” to consider when forming a company, and that “don’t be evil” is central to Google’s culture. The best cultures, according to the authors, will always be aspirational.

2. “The best products had achieved their success based on technical factors, not business ones, whereas the less stellar ones lacked technical distinction.”
This important insight resulted from a review of Google’s product line in 2009. The company has learned over the years that flatlining products (iGoogle, Desktop, Notebook, Health, Reader, etc.) were the ones that “lacked underlying technical insights from the outset.” In order to avoid that pitfall, the authors write, “Find the geeks, find the stuff, and that’s where you’ll find the technical insights you need to drive success.”

3. “Scaling needs to be a core part of your foundation. Competition is much more intense and competitive advantages don’t last long, so you have to have a ‘grow big fast’ strategy.”
Schmidt and Rosenberg argue that the days of growing big slowly and methodically are over. Instead, they suggest that companies need to grow “very quickly and globally” in the Internet century.

The reason for this is that platforms, not products are the key to success, and the best leaders “will be the ones who know how to create and quickly grow platforms.” Netflix, for movies, and Spotify, for music, are just a couple of the successful platforms the authors note as examples.

4. ” … we focused on search because it was something we felt we were better at than anyone else. So in those early days of the Internet, while these leaders of the industry were busy tending to their business of building Internet portals, Google search got better and better at providing great answers for users.”
Like a lot of business books, the authors make a persuasive case for the power of focus. They point out that Google inadvertently followed the advice of the strategy expert Michael Porter, who writes, “An effective strategy for achieving above-average results can be to specialize on a tightly constrained group of products … “

5. “Smart coaches know that no amount of strategy can substitute for talent, and that is as true in business as it is on the field. Scouting is like shaving: If you don’t do it every day, it shows.”
Hiring is one area in particular in which Google sets itself apart from other companies. Every “Googler” makes it his or her priority to hire the best possible people. And the senior leadership are expected to become more — not less – engaged in the process.

6. “We want to hire the best minds available, because we believe there is a big difference between people who are great and those who are good, and we will do everything we can to separate the two.”
The authors are unapologetic in their intellectual elitism. They want the smartest people possible, and they work hard to attract and retain those people.

7. “If you are the hiring manager or one of the interviewers, it isn’t sufficient to express an opinion; you need to support it with data.”
Google hiring managers are sticklers for data as part of the process. They don’t want interviewers going with “their gut” or “instincts.” Every opinion about a candidate has to be supported with data or empirical observations. And the more details, the better.

This is something Daniel Kahneman, author of Thinking, Fast and Slow, recommends as well. He has found that interviewers are far too confident in their intuition and provide too much weight to their impressions.

8. “Think about your ideal job, not today but five years from now. Where do you want to be? What do you want to do? How much do you want to make? Write down the job description: If you saw this job on a website, what would the posting look like? Now fast forward four or five years and assume you are in that job. What does your five-years-from-now-resume look like? What’s the path you took from now to then to get to your best place?”
A lot of young people ask Schmidt and Rosenberg for career advice, and this is what they tell them. The authors have found that a lot of folks don’t put enough effort into career development, and that all of us need to work harder imagining our future.

9. “One of the most transformative developments of the Internet Century is the ability to quantify almost any aspect of business. Decisions once based on subjective opinion and anecdotal evidence now rely primarily on data.”
Each Google conference room, according to the authors, has two projectors: one for meeting notes and the other for data. Each meeting starts with data, and Googlers try to convince each other by saying “Let me show you.” This emphasis on the importance of data is one of the most distinctive features of the company’s culture.

10. “So the question to ask isn’t what will be true, but what could be true. Asking what will be true entails making a prediction, which is folly in a fast-moving world. Asking what could be true entails imagination: What thing that is unimaginable when abiding by conventional wisdom is in fact imaginable?”
I think this is a very helpful way of thinking about the future. Predicting the future is silly — political pundits and Wall Street analysts show us that every day. Imagining the future, however, seems like a very worthwhile and potentially profitable endeavor.

 Could self-driving vehicles work? Or what about flying people to Mars? The companies that are capable of imagining our future will surely have a huge advantage over their uncreative rivals. And those investors who can identify the smart, creative companies should do very, very well, as Google’s performance has shown over the past decade.

The post How Google Inc Works: 10 Insights From One of the World’s Greatest Companies appeared first on The Motley Fool UK.

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John Reeves owns shares of Google (A shares) and Google (C shares). The Motley Fool UK owns shares of Google.

^{A version of this article originally appeared on Fool.com}

WASHINGTON, DC — On June 28, 1914, Archduke Franz Ferdinand was assassinated by a Bosnian Serb in the city of Sarajevo. The First World War followed thirty-seven days later, resulting in the deaths of 20 million soldiers and civilians. It may not be possible to overstate the impact of this devastating event on world history. 

In The Sleepwalkers: How Europe Went to War in 1914, Christopher Clark shows how European monarchs, politicians, soldiers, and diplomats “walked toward danger in watchful, calculated steps.” This tragic story provides numerous insights for those of us who hope to learn from one of the greatest catastrophes of modern times. As we commemorate the 100^th anniversary of the outbreak of the war, I thought it might be useful to explore four possible lessons for investors.

1. Avoid huge bets where the probabilities of failure are unknown.
After the assassination of Franz Ferdinand, Austria-Hungary’s leaders issued a harsh ultimatum to Serbia, which had to either accept it or face war. Noting that neither side intended to back down, a French diplomat wrote,

On both sides they imagined ‘bluffing’ would suffice to achieve success. None of the players thought that it would be necessary to go all the way. The tragic poker game had begun.

Clark shows how Austria-Hungary was intent on taking a “temperamental, intuitive leap” in order to protect its future as a great power. Its leaders knew this policy risked a wider European war, yet they went ahead anyway, even though the outcome of such a war was unknown. As we now know, the war brought about the utter collapse of Austria-Hungary, as well as the demise of both the German and Russian empires.

We witnessed similarly reckless behavior during the recent financial crisis. Major financial firms like Lehman Brothers and AIG risked everything by taking on huge exposures in mortgage-related securities. As the Financial Crisis Inquiry Commission wrote, “Like Icarus, they never feared flying ever closer to the sun.”

Of course, ordinary Americans also gambled heavily prior to the crisis by taking on more debt than they could possibly handle. As a general rule, individual investors and institutions should avoid making decisions where the probability of a disastrous outcome is real, but unknown. Violating that rule was one of the biggest mistakes made by the decision-makers in the run-up to the First World War in July 1914.

2. Systemic risk is hard to assess and difficult to manage.
Clark makes a persuasive case that war was not inevitable in the summer of 1914. The international diplomatic system had faced similar crises in the past, and it was reasonable to assume that the situation would eventually be resolved peacefully.

In July 1914, the international system ended up failing completely, however, and a horrific war ensued. War actually caught global financial markets by surprise. In the days after Austria’s ultimatum, panic raged throughout the international financial system. By the end of the first week of August 1914, almost all of the world’s securities exchanges were closed. The London Stock Exchange, which had never closed before, remained shuttered until January 1915. The New York Stock Exchange was closed from Aug. 1 until December 1914.

It’s not easy for individual investors to anticipate the collapse of a financial system. Almost overnight, our portfolios can be decimated and our property values can plunge dramatically. The First World War — like Sept. 11 or the financial crisis of 2008 — shows us that “black swan” events are very real and hard to predict. Diversifying across asset classes and having a long-term outlook are two possible approaches to systemic risk. In general, investors must accept the fact that catastrophic events can happen at any time and can wreak havoc on even the most well-planned portfolio.

3. Seemingly rational leaders can make irrational decisions.
Clark provides an odd quote from Winston Churchill that illustrates the madness surrounding the decision to go to war. Just days before Britain’s entry into the conflict, First Sea Lord Churchill wrote to his wife, “Everything tends toward catastrophe & collapse. I am interested, geared-up and happy.”

The decision-makers in 1914 appeared to be responsible, prudent statesmen, but many of them were unable to see the situation clearly. They often perceived their own nation’s security in purely defensive terms, while viewing their rivals as aggressors. This allowed the German military leadership, for example, to think of a preventive war against Russia as a perfectly rational strategy to contain their fast-growing rival. And this led Britain to eventually enter the war on the side of France and Russia, despite not having a clearly defined interest in the Balkans.

This type of “irrational” decision-making by leaders is always a huge risk for investors. The case of GM is a good example. The inability of GM’s leadership to adequately deal with the faulty ignition switch problem led to devastating consequences. A recent internal investigation concluded that, “GM personnel’s inability to address the ignition switch problem for over 11 years is a history of failures.” In the political realm, recent showdowns over the debt limit show how leaders on both sides of the aisle were willing to risk another financial crisis in order to gain short-term political advantage.

4. A catastrophe can have long-term, incalculable effects.
After the decision to go to war with Germany, Britain’s Foreign Secretary Sir Edward Grey famously remarked, “The lamps are going out all over Europe. We shall not see them lit again in our lifetime.”

Grey’s words were prescient. Four years later after the deaths of 20 million people and the collapse of three empires, the world remained a very dangerous place. Eventually, the rise of Stalin in post-tsarist Russia and Hitler in post-imperial Germany resulted in another disastrous catastrophe just over 20 years later. For over three decades, Europe was torn apart by war, revolution, and economic dislocation. A young household in Europe in 1913 would have had a very grim future ahead of it, regardless of how diligent its members worked or saved.

Successful investors tend to be optimistic about the future, and such an attitude has richly rewarded Americans over the past 100 years. The First World War, however, reminds us of how precarious civilization actually is. In 1914, Germany was one of the most advanced societies in the world. Three decades later it was literally a smoking ruin. And just a century ago, Britain was the global financial leader with an empire upon which the sun never set -– the First World War would mark the beginning of Britain’s relative economic decline.

We were extremely lucky recently that our financial crisis did not result in even greater economic and financial hardship. Even with the upturn in the stock market, however, there remains some serious challenges with long-term unemployment and stagnating wage growth. And just because the textbooks say that investors can earn 10% from equities, year in and year out, does not mean that’s a certainty.

Catastrophic events are always possible, and even the wisest investors will struggle to withstand their worst effects. If the First World War teaches us anything, it’s that each of us has a stake in holding our business and political leaders accountable for the quality of their decision-making.

The post 4 Lessons For Investors From The First World War appeared first on The Motley Fool UK.

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John Reeves has no position in any stocks mentioned.