By Alan Murray and Geoffrey Smith
October 20, 2017

Good morning.

Software maker Intuit is number 8 on Fortune’s new list, The Future 50 – which identifies the companies that are best prepared to thrive in the future. At age 34, the company is a model of constant reinvention.

What’s the secret to its success? Well, there is a commitment to transparency – CEO Brad Smith keeps his unedited performance review taped to the wall by his office door. There’s also the decision to turn its software into a platform, on which other companies and developers can build apps that work with Intuit’s. And then there is this credo: “savor the surprise” – which means focus on the research finding that makes no sense. Most organizations do the opposite – ignore information that doesn’t fit preconceived notions. At Intuit, they look for evidence that disproves preconceived notions. You can read more about the Intuit way in Geoff Colvin’s piece for the November issue of Fortune magazine, which we are releasing online this morning.

And some Friday feedback: One CEO Daily reader – initials FM – questioned our methodology for The Future 50, saying our use of the share of a company’s market cap that isn’t justified by current earnings “sounds like bubble-onomics to me.” That, of course, depends on your view of the efficiency of markets. But I’d note the market signal provides only half a company’s total score; the other half comes from a detailed analysis of non-market measures. (More detail on the methodology here.)

And FT raised a rhetorical eyebrow over my comment yesterday that CEO John Donahoe plans to turn ServeNow into a “purpose-driven company.” He asked: “What does it mean, exactly?” Rather than define the term myself, I asked Donahoe for his definition. His answer:

“I believe that great, enduring companies are almost always driven by a clear sense of purpose. My simple model is that each company must answer the ‘what, how and why’ question. A sharp strategy addresses what customers we serve, what products we sell, and what business model we embrace. Execution plans address how we will deliver for our customers and shareholders. Purpose answers the ‘why’ question: why do we exist, why do we care, why should I work here? The most talented people want to work for a company with a clear sense of purpose. And companies that combine clarity of purpose with strong strategy and execution are able to win over time and have the biggest positive impact in the world.”

Sounds right to me.

News below, and enjoy the weekend.

 

Alan Murray
@alansmurray
alan.murray@fortune.com

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