Steven Levitt has an interesting post at the Freakonomics blog about “Good to Great,” the phenomenal best seller by Jim Collins. More generally, he wonders, as we do, about business books that profile successful companies. Levitt points out that several of the “good to great” case studies, Fannie Mae and Circuit City, are down by more than 80% since the publication of the book. He also notes that an investment portfolio of the “good to great” companies would have underperformed the S&P 500. He concludes with several sensible questions:

What does this all mean? In one sense, not much.

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?

We would agree.