Michael Mauboussin wrote Measuring the Moat with Dan Callahan. It first appeared in 2002 and was updated in 2013, 2016, and 2024 under Morgan Stanley's Counterpoint Global, and the PDF is free and belongs in your permanent library. It's less a new theory of advantage than an audit protocol, one that makes you run the other three lenses in the right order and on evidence, ending in a number a DCF can use. Greenwald gives you the decisive question and Helmer the claim-by-claim gate. Mauboussin gives you the workflow. His paper is effectively a seventy-question checklist organised into four passes. Learn the passes, because Phase 8's deep-dive Day 2 runs this same audit against a clock.
What are the four passes of the audit?
Pass 1 · Draw the industry map ("what's the lay of the land?"). Diagram the value chain end to end, from suppliers to producers to channels to customers, with every meaningful player named. Onto the map, plot the profit pool you learned with Porter. That's each participant's share of industry economic profit and not its share of revenue, measured as operating profit dollars and ROIC−WACC spreads by segment. Then run the market-share-stability test (Mauboussin cites the same instrument) and classify the industry's clockspeed, meaning how fast products, processes, and org structures turn over. Semiconductors are fast. Paints are slow. Now you know where the money pools and how frozen the league table is, before anyone has told you a story. For sources, try the DRHP or prospectus industry chapters (CRISIL/F&S data), 10-K competition sections, trade-body statistics, Damodaran's industry ROIC tables.
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Pass 2 · Establish profitability: is there anything to defend? Compute incumbent ROIC or ROCE against WACC across the industry, over a full cycle, and look at the distribution. If the industry's economic profit is broadly shared, it's structural, with Greenwald's barriers protecting everyone inside. If it's concentrated in one firm, it's firm-specific: a superior competitor in a possibly weak-barrier market, like early Walmart or IndiGo. Mauboussin adds a sobering decomposition from the literature on industry and firm effects. A substantial share of the variance in firm profitability is explained by which industry you're in, so an "amazing company" pitch in a structurally profitless industry starts the audit two goals down. If nobody earns above WACC across the cycle, stop. Greenwald's no-barrier prescription applies, and the remaining passes would be archaeology.
Pass 3 · Interrogate the structure: five forces, government, disruption. With the map and the money established, run Porter's five forces as an evidence review, weighted Greenwald's way with entry first. Then add two force-multipliers the classic frame underweights. One is government and regulation, a force that can create, destroy, or reprice barriers by circular, as the IRCTC episode showed. The other is disruption and disintermediation, which brings in Christensen's distinction between sustaining and disruptive change. Ask whether anyone is counter-positioned against the incumbents, and whether the channel is being cut out. This pass ends with Greenwald's verdict restated on paper: are there barriers, who is inside, and from which direction is the wall being sapped? The erosion half gets a full method of its own in the capital-cycle work.
Pass 4 · Name the firm-specific sources of added value. Only now, with the structure established, do you grade the individual firm. Mauboussin's taxonomy will feel familiar, because you already own all of it. Production advantages are scale economies and process power, Greenwald's supply side. Consumer advantages are habit, switching costs, search costs, network economies, and branding's reassurance mechanism, which together make Greenwald's demand captivity. External advantages are government and IP, which is the cornered resource. Run each claim through Helmer's gate and check for the king-combination interlock. Then write the verdict sentence the whole audit exists to produce: "[Firm] earns [spread] because [named, gated sources]; the evidence is [share table + ROIC persistence + margin structure]; the threats are [named]; I therefore expect the spread to survive ~[N] years."
That last clause, N years, is the handoff. Everything before it was Phase-4 judgment, and N itself is a Phase-3 input. Estimating N, and reading the N the market has already priced, comes next, in the competitive advantage period.