Passive Active Investing

I have been developing an idea for a couple of weeks. The idea centers around the concept that no company lasts forever. For every GE, there are at least 1,000,000 companies that don't make it. My all-encompassing hypothesis of "why?" is that companies fail to change. Whether it is in technology, hamburgers, or pencils we are constantly moving forward. If you can not see the future, how can you position your company to do well in the future?

Well there is one way. It goes counter to Buffett's Chicago Rivet and Machine or Coca-Cola.* If you invest in companies that aren't afraid to try new things, they might have a change to position themselves to do well into the future. By creating an atmosphere of constant change, whereby the company and employees of the company are encouraged to try new things and fail, a company might better position itself against a bureaucratic market leader. The first company that comes to mind is Apple. They went from personal computers to mp3 players. It is quite a leap to think of IBM or Dell coming out with a successful mp3 player. But Apple did it, and did it right. Steve Jobs was a change kind of guy, always envisioning a new product no matter how absurd it may seem.

Would it be possible to identify companies that foster change? Could you invest in companies based solely on their corporate culture? It seems like these days every company had a cool corporate culture with mod work spaces and open areas but could you go deeper to see how companies envision changing the future? Citigroup is definitely not going to change the future. Rawporter might.

On another note. I predicted very early on that I thought Facebook would far surpass Myspace. I won't say at this point that Facebook is doomed but I worry they are heading in the wrong direction. Sometimes change can be a bad thing (see: Netflix). Facebook is making it's systems so complicated now that the casual user can't log on and figure it out. Twitter has resisted all the changes and might be better for it. Linkedin is purpose driven - assembling business contacts. I think there is a market for a new social network that goes back to the basics. Google+ appears to have missed the mark because it too is too complicated. Either Facebook comes out with Facebook Lyte or someone is going to come after them.

*Side note - possibly identifying industries or products that will never change and coming up with a list of those companies and just waiting for their pricing to become attractive could also create a new style of investing.