Greatness is not permanent: Investment strategies must shift with realities

When we talk about permanent greatness, we talk about books from management gurus such as Jim Collin that wrote "Build to Last" or Good to Great", or Michael Treacy who wrote "Double-Digit Growth."

We think about the Dell's, Amazon.com, Microsoft, Merck, Wal-Marts and others, right? According to such authors, it seems that those companies should be able to keep growing. But there is something that might make them fall, just like other companies do - disruptive technology, a concept pretty nicely outlined by Prof Christensen in his books on the "Innovator's Dilemma" and "Innovator's Solution".

Before the world changed, it seemed like a nice system to have. You have great employees that create happy customers, that lead investors to invest in your stock, and in turn creates happy shareholders. Somewhere along the line, the function was broken.

The Boston.com outlines the case of a couple of companies that failed to deliver on the promise:

Lucent Technology, Fannie Mae, Coke, Merck and Microsoft - all companies that were blockbusters a while back, but where the stock is down dramatically.

The columnist writes that "Greatness is not permanent. It can disappear as easily as it can appear. Changing tastes, fashions, and technology can knock the legs out from under even the best companies. This process of creative destruction isn't new."

Thanks Tom, for pointing to this article in the first place (www.tompeters.com). Doesn't make me feel much better about the stocks I hold, so I only have a few shares in some (other) companies.