Many investors focus on the current size of a company's competitive advantage. A better indicator of future success is the direction of that moat—is it growing or shrinking? Focusing on the trajectory helps avoid value traps like Nokia in 2007, which had a wide but deteriorating moat.

Some companies execute a 3-5 year plan and then revert to average returns. Others 'win by winning'—their success creates new opportunities and network effects, turning them into decade-long compounders that investors often sell too early.

Startups often fail by making a slightly better version of an incumbent's product. This is a losing strategy because the incumbent can easily adapt. The key is to build something so fundamentally different in structure that competitors have a very hard time copying it, ensuring a durable advantage.

The fundamental goal is to become a "better competitive alternative" for a specific customer—being so superior that they bypass competitors to choose you. Achieving this state is the business equivalent of the house advantage in a casino (“the house vig”) and the only reliable way to build a lasting enterprise.

Pricing power allows a brand to raise prices without losing customers, effectively fighting the economic principle that demand falls as price rises. This is achieved by creating a brand perception so strong that consumers believe there is no viable substitute.

Gardner’s "Cola Test" is a simple heuristic to identify unique market leaders. Ask yourself if a company is the "Coca-Cola" of its industry. Then, try to name its "Pepsi." If you can't find a clear, direct competitor, you've likely found a business with a powerful, defensible moat.

Stocks with the strongest fundamentals (top dog, sustainable advantage, great management) are often labeled "overvalued" by commentators. Gardner argues this perception is actually the ultimate buy signal, as the market consistently underestimates the long-term potential of true greatness.

David Aaker identifies a simple, powerful tactic: ask your team what makes the company special—its "secret sauce"—and turn that into a formal brand asset. He argues even abstract concepts, like a unique way of treating people, can be branded (e.g., "the HP way") to create a potent, ownable differentiator.

Sustainable scale isn't just about a better product; it's about defensibility. The three key moats are brand (a trusted reputation that makes you the default choice), network (leveraged relationships for partnerships and talent), and data (an information advantage that competitors can't easily replicate).