Great American Companies That Will Never Recover

Many American companies have been lauded for their rapid rise to greatness, a process that sometimes takes less than a decade. These firms become leaders in their industries, are renowned for innovation, phenomenal growth, and, in the case of public corporations, their soaring share prices. Google Inc. is the obvious example of the ascent. But the other end of the arc — the slow, irreversible descent — deserves its own study.

Consider the graveyard of 2012. Kodak, the company that taught the world to take pictures, filed for bankruptcy protection in January — undone not by a lack of technology (Kodak engineers invented the digital camera) but by a leadership that could not bring itself to destroy its own film business. There is no recovery from that kind of institutional blindness.

Consider Research In Motion, the maker of the BlackBerry. It owned the smartphone before the smartphone had a name. By 2012, it was a cautionary tale about what happens when a company confuses its enterprise moat with a strategy, while Apple and Android redefined the market around it.

Consider J.C. Penney, which handed the keys to Apple's retail guru Ron Johnson to reinvent the century-old department store — and watched sales collapse as its own middle-America customers rejected the experiment. Or Best Buy, being showroomed to death by the very internet it once dismissed. Or Dell, the direct-sales pioneer, stuck in a PC market that was shrinking beneath it.

And consider Zynga, which went public in December 2011 on the strength of FarmVille and promptly became the poster child for the social-gaming bubble — its fortunes tied entirely to a single platform, Facebook, that was already moving past it.

What unites these companies is not bad luck. It is a pattern: a dominant business that made disruption unthinkable, a management team that mistook temporary advantages for permanent ones, and a refusal — at the decisive moment — to cannibalize what still worked.

The uncomfortable question for investors, employees, and the towns that grew around these giants: at what point does "turnaround" become a fantasy? History suggests the answer is earlier than anyone inside the building believes.

The rise to greatness sometimes takes less than a decade. The fall, as 2012 is showing us, can take less time still.