It's been an unprecedented 18 months in the markets and economy. It's impacted just about every company and caused leadership to rethink current business models.
Some companies will continue to do business as usual and stagnate, some will take action.
General Electric is an example of a company making changes based on a dramatic shift in the environment.
That says something about the company's leadership culture and gives hope that they will exit this downturn ready to capture share in the new economic world. And it's a lesson to investors about modifying investment strategies. You must adjust when the environment changes. You must.
GE Chief Executive Officer Jeff Immelt has been very focused on repositioning the company for the new economic environment. Despite the company's size, action has been taken to shed non-core businesses and to focus on segments that will participate in the global recovery (and that will occur).
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The recent press reports about possible moves related options for NBC Universal continue to show a willingness to take action. They are adjusting to the environment. And as you invest your portfolio you should also embrace change when needed. (CNBC is part of NBC Universal)
It's not easy for a large company to take substantial action that can affect the bottom line and overall nature of the business. Change is hard. But as Chrysler and the auto industry showed, not adapting to the shifting environment can have significant negative consequences.
Look at Google . They took advantage of Microsoft's complacency and are now a dominant player in the technology space. Change is required to stay competitive as the status quo eventually fades away. And your investment strategy must change as well to embrace the shifting future. Don't continue to cling to an irrelevant strategy.
To be sure, GE made its share of mistakes. But to let these missteps overshadow the dramatic action occurring would be ignoring positive progress. In the future, being global, focusing on core competencies, having lots of cash for strategic acquisitions, and taking decisive action will be the hallmarks of winning global powerhouses. GE is moving in this direction. Watch for other companies that embrace this corporate proactive perspective.
They could be wise additions to your portfolio.
I don't work for General Electric. YCMNET is an investment manager looking for companies with leadership that are willing to take smart action in changing circumstances. And GE is doing a lot of things right in a difficult environment.
Look at your portfolio and ask if the companies you hold embrace a proactive philosophy. Those businesses will be the winners over the next 10 years. And importantly, be like visionary companies; make changes as needed in your portfolio.
Don't be afraid to admit mistakes and correct them. That's the strategy that is necessary for the new time that has already arrived.
Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). He oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. Michael and YCMNET were ranked as one of the top investment 100 advisors in the United States for 2009 by Barrons. He appears regularly on CNBC and CNBC Asia and can be reached directly at firstname.lastname@example.org.