It is easy to identify successful companies, but hard to pin down the characteristics that make them successful. Why do some companies grow and prosper while others languish and fail? Why are some companies great while others are merely good, mediocre, or bad? These questions are asked and answered over and over again by business executives, management consultants, financial analysts, and investors, but their answers are usually wrong.

For example, in his best-selling 2001 book, “Good to Great: Why Some Companies Make the Leap and Others Don’t,”^[1] Jim Collins’ boasted that, “We believe that almost any organization can substantially improve its stature and performance, perhaps even become great, if it conscientiously applies the framework of ideas we’ve uncovered.”

Bold claims — if indeed they were true, as research paper I co-authored points out. The paper, “Great Companies: Looking for Success Secrets in All the Wrong Places,”^[2] published in the Fall 2015 Journal of Investing, shows the problem with “Good to Great” is that it relies on a backward-looking study, undermined by data mining.

Collins and his research team spent five years looking at the 40-year stock market history of 1,435 companies and identified 11 stocks that outperformed the overall market and were still improving 15 years after they made the leap from good to great: Abbott Laboratories ABT, -0.46%^[3]  ; Kimberly-Clark KMB, -0.62%^[4]  ; Pitney Bowes PBI, -1.25%^[5]  ; Circuit City; Kroger KR, +1.25%^[6]  ; Walgreens (now Walgreens Boots Alliance) WBA, +0.33%^[7]  ; Fannie Mae; Nucor NUE, -0.45%^[8]  ; Wells Fargo WFC, -0.40%^[9]  ; Gillette (since  acquired by Procter & Gamble PG, -1.00%^[10]   ), and Philip Morris ...