I think companies should remain focused on their core product. If you find yourself in a buggy whip industry the best thing to do, IMO, is to reduce expenses as much as possible and return as much profit as possible to the shareholders. When it's not worth bothering with any more the company should be dissolved.
As an investor I'm perfectly capable of taking my dividend and investing in other businesses - I'd rather not have the officers of a company in which I've invested my money taking Hail Mary shots to preserve their jobs.
I think that only makes sense if you have a completely dead-end product. AOL, for example, had a fair bit of experience in content. They had a lot of strength in networking. They had a zillion users, giving them low marketing costs for new products. They had a strong marketing org and a well-known brand.
Reducing expenses to the minimum would basically value all of that at zero, which I think is rarely the right case. Look at the examples in Innovator's Dilemma, for example. The successful companies kept making technology/market transitions, one after the other.
As an investor you are capable of taking the cash and investing elsewhere. But you are also capable of selling the stock if you really think they have no hope of innovating.
As an investor I'm perfectly capable of taking my dividend and investing in other businesses - I'd rather not have the officers of a company in which I've invested my money taking Hail Mary shots to preserve their jobs.