Not necessarily. Companies can be rudderless and have some kind of industry capture or brand recognition and still be doing great. In other words, at one point they had good leadership or built up during times of low regulation or economic prosperity and now are just living off those early successes. A lot of large tech companies are like this.

Yeah. The Google Graveyard really shows how far this can go.

https://killedbygoogle.com

The punchline is that in addition to hundreds of failed hobby projects, their stock is doing great. Monopoly rents are a helluva drug.

I never understood the complaints about this. Why shouldn’t a company try and do new things?

Monopoly rents happen at the expense of other economic participants. For every tombstone on that page, I wonder how many mom & pop diners died due to CAC math.

Yeah, not sure if it would be better if Google put all those people to work on their main products like most other companies. Google maintains their ability to launch new products by those constant launches, they are like constant small exercises, sure they usually aren't new billion dollar products but at least they still know how to launch new products fast unlike many other companies.

A company probably should try new things if they have enough extra money. A company definitely shouldn't develop a reputation for abandoning every new thing they try shortly after launch. Why would any company risk depending on a new Google offering for something they actually care about?

This is essentially assuming that competence translates directly into high monetary value.

That is not true either at the individual level, or at the level of companies. It is particularly untrue with tech behemoths who enjoy near-monopoly status, massive network effects, and/or huge mindshare.

At the very simplest level, it is not at all uncommon for good decisions made previously to allow an organization to "coast" for a significant amount of time after it starts making bad decisions. This is part of why bad CEOs are so frequently not held accountable for their incompetence: they take over, and for 3 years, everything's going great! It's only after the accumulated "soft" resources (customer goodwill, employee loyalty, lack of technical debt, etc) are burned away that the bad decisions actually start being reflected in the balance sheets.