Why do giants like $WMT, $COST, $AMZN, and $MSFT consistently excel over time?

The answer lies in their culture.

These companies are engines of continuous innovation.

There are moments when their cultural compass might veer off track, but corrections are eventually made.

If the culture declines, the company’s performance follows suit.

Once the cultural issues are addressed, the company returns to prosperity.

A strong culture stems from a combination of exceptional organizational traits.

In my portfolio, companies with robust cultures — a synthesis of various elements — consistently perform well.

Those lacking in this regard ultimately fall behind.

Consider $Microsoft(MSFT.US)$ as an example.

The stock stagnated from 2000 to 2014.

The reason? Steve Ballmer’s leadership fostered a toxic culture.

It was rife with politics and stifled innovation.

Fear of failure prevailed, stifling the exchange of ideas.

While positive developments circulated rapidly, negative news did not.

Then Satya Nadella stepped in and revolutionized the corporate ethos.

$Microsoft(MSFT.US)$ embraced a culture of low politics and high meritocracy.

It championed individual bravery — the bravery to innovate, propose ideas, and embrace failure until success was achieved.

Operations became decentralized, allowing both good and bad news to circulate freely.

Suddenly, the company transformed into an indomitable force of innovation.

Don’t just take my word for it. Examine Satya Nadella’s letters to shareholders.

Explore the writings of Jeff Bezos and Sam Walton.

They all grasped this principle.

Their thinking aligned, and their companies mirrored this mindset.

They became relentless hubs of innovation, which is why they continue to outperform against all odds.