"Good To Great" a Big Mistake?

So, are the best business books of all-time worth reading?

Steven "Freakonomics" Levitt says maybe not. In his latest column in the NYT, From Good to Great to Below Average, he talks about finally getting around to reading Jim Collins' "Good to Great."

He notes that two of the eleven companies featured are Fannie Mae and Circuit City, and that even including Nucor, the Good to Great companies have probably underperformed the S&P 500 since Good to Great was published. The problem, he says, is that

These business books are mostly backward-looking: what have companies done that has made them successful? The future is always hard to predict, and understanding the past is valuable; on the other hand, the implicit message of these business books is that the principles that these companies use not only have made them good in the past, but position them for continued success.

To the extent that this doesn't actually turn out to be true, it calls into question the basic premise of these books, doesn't it?

"all of these books are directional [sic] correct. The principles they describe for success are all worth pursuing. We get a little stuck on the empirical side of the debate. It is true that these authors hang their hats on the research to give their findings legitimacy, but we can't completely dismiss everything they have to say every time a highlighted firm falters."

Books remain a remarkably powerful way to spread ideas, as Levitt well knows. As for companies, well, I was talking with a Fortune 500 CEO today, who said that when companies seem strongest is when they're in the most danger. She also said that all companies go through down cycles; it's unavoidable. So it should come as no surprise that some of the Good to Great companies have faltered, and others have underperformed.

There's no reason why it invalidates the ideas presented in the book. Read, and be watchful...