Google (NASD:GOOG), as everyone knows, is a company with unlimited resources, vision, and technological prowess. By establishing a relationship with every human being on the planet inclined to inquire through its Search engine, Google will eventually capture every last heart, mind and wallet.

If there are grounds to doubt the above, they may lie in the words of Ira Goldman, an executive formerly with Kodak since 1969. Writing to the editor of the Financial Times (13 April),  Mr. Goldman shares what he believes led to the downfall of one of the most innovative firms of the prior century. “…it was a history of being able to afford multiple investments in new technologies without fully understanding the market needs, and then failing to make careful choices about which investments the company could afford.”

Google invests lavishly, to be sure. And based on recent controversial governance-related changes in the way Google allows its shareholders to influence management, it appears Google wishes to shield itself from the outside and continue to do what most investors agree they do best. Not that everyone agrees.

Nevertheless, right now, the reputational metrics support management. Google's metrics could hardly be better. The firm ranks #1 among the 133 peers in the Internet Software Services sector. The Vital Signs report a historical reputational volatility that is below the median and dropping; a return on equity for the trailing twelve months that is 43% higher than the median return (88th percentile), and a near certain future of reputational stability.


So why worry? Because, to paraphrase Herbert (Pug) Winoker who spoke this past Friday 13 April at the Mission Intangible Monthly Briefing, a firm’s success breeds its next crisis. Investor expectations outgrow a company’s ability to meet them. The data show that expectations could not be much higher.

Back to Kodak, whose obituary Huygens scribed earlier this year. “If the current management team and board of directors had managed the investments to match the cash flow available under realistic business conditions, they would not have proceeded with three large investments simultaneously (in digital printing, only one of which turned profitable after 10 years) and then accepted high cost overruns and failure to meet schedule,” added Mr. Goldman. One can only hope that having isolated its decision-making bodies from outside opinions, Google will nevertheless heed this excellent advice.