For 2013, the theme of General Electric's recent letter to shareholders was "progress." Jeff Immelt, the CEO and chairman of the board, retold stories of product advancement, of employee growth, and of operational strategies that have pushed the company forward in recent years.

Over a longer timeframe, however, the word "change" more aptly describes GE's formula for success. Immelt summoned a quote from one of the great entrepreneurs of our time, Jeff Bezos of, to illustrate how GE's managed to differentiate itself from the pack for 122 years:

Jeff Bezos is an extraordinary leader and entrepreneur who founded Recently, he made the assertion that most businesses have short life spans. He said: "Companies come and go. And the companies that are the shiniest and most important in any era, you wait a few decades and they are gone." But GE has remained competitive because we learn and change.

GE, in other words, has served as one of those rare examples of resiliency over the years, even during the midst of massive industry upheaval. And that ability to defy the odds, from Immelt's perspective, is due to GE's willingness to embrace change.

Consider, for instance, the businesses that GE called its peers in the first Dow Jones Industrial Average back in 1896:

  • American Cotton Oil Company
  • American Sugar Company
  • American Tobacco Company
  • Chicago Gas Company
  • Distilling & Cattle Feeding Company
  • Laclede Gas Company
  • National Lead Company
  • North American Company
  • Tennessee Coal, Iron, and Railroad Company
  • U.S. Leather Company
  • United States Rubber Company

GE's 2013 Annual Report. Source: General Electric.

Today, not one of those companies remains in the Dow. In fact, none of these businesses from the 19th century still operates on a standalone basis. Of the original 12 stocks, GE is the only one still in existence and the only one that remains a component in the most-followed stock index in the world.

Now, that's a testament to GE's ability to endure, and also a fitting illustration of how different America's largest companies can look from one era to another. In the early 1900s, the commodities and transportation businesses ruled the day. But you'll be hard-pressed to find a "cotton oil" or "lead" company thriving in the 21st-century economy.

In a relatively short timeframe, the production of raw materials gave way to the manufacturing of more complex finished goods and ultimately what we might call "value-added" products.

These goods allowed companies and brands to differentiate from one another, thereby resulting in more attractive profit margins. Companies like GE evolved with the industry in this manner, while the competitors who clung to the pure commodities business fell by the wayside.

And this evolutionary process will continue. The general lifecycle of industrial products can be represented by the following timeline, with data-driven machines eventually replacing the inefficient and disconnected devices of the 20th century:

What's incredible -- and crucial for investors to understand -- is how quickly these trends are now taking shape. If we conclude that it took several decades to usher in a wave of value-added products, then we can cut that timeframe in half for the advent of "smart" machines.

GE predicts the total value creation from data-enhanced products (also known as the "Industrial Internet") will reach $1.3 trillion by 2020. That amount means the equivalent value of today's four largest American companies is going to be created in less than six years' time, solely from the rise of data-driven machines.

Foolish takeaway
More than ever, investors have to identify evolving trends and bet on the companies that are shaping the future of the industry. Likewise, investors need to evolve themselves, as so skillfully described by The Reformed Broker's Josh Brown in a recent post called "Adaptation."

As the Charles Darwin-inspired quote goes: "It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change."

At GE, progress is what inspires product innovation, but change has allowed the company to endure.

Even the railroads are being transformed by the rise of GE's industrial Internet. Source: General Electric. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.