At the heart of good stocks are good companies, and in their latest Kiplinger’s column Whitney Tilson and John Heins offer their perspective on what causes some companies to falter.

Tilson and Heins do so in discussing the new book from Jim Collins, How the Mighty Fall. “Investors can gain a lot of insight from Collins’s new book,” they write. “He finds, for example, that failure is much more likely to result from corporate overreaching than from complacency.” Executives confuse “big” with “great”, according to Collins’s book, and overdiversify, move into businesses in which they can’t be leaders, and grow too big for management to be effective.

Another problem to which executives fall prey: denial. “Executives discount negative results and blame setbacks on external factors,” Tilson and Heins write.

Tilson and Heins also explain why they think Warren Buffett’s Berkshire Hathaway is the “antithesis of Collins’s well-described disaster-in-waiting scenario”, and they offer a stock pick involving a company that “has reversed what Collins describes as the difficult-to-stop death spiral that many failing companies enter.”