Although Jack Welch was seen during his tenure as CEO of GE as the heroic exemplar of maximizing shareholder value, he came to be one of its strongest critics. On March 12, 2009, he gave an interview with Francesco Guerrera of the Financial Times and said, “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal. … Short-term profits should be allied with an increase in the long-term value of a company.”Shareholder value is a result, not a strategy. (I'd have said "goal" rather than "strategy", but I imagine that's what Jack Welch meant anyway.)
This is such a simple and obvious idea that I actually waded through all the comments looking for the counterargument I must have missed. No one, including the contemptuous and inappropriately rude Forbes staffer Mike Ozanian, has articulated any.
I've read a lot of good stuff in the last year or so, but very little that immediately struck me as being so important to our society, to our very way of life, as Denning's article and the book to which it refers (which for Denning's sake I'll force you to discover by reading his piece).
By the way, here's how ingrained the idea of making good products (and thus satisfying the customer) is, or at least was, in American pop culture: Warner Brothers was asked to make three educational shorts that doubled as "normal" theatrical cartoon releases, with the goal of educating the public about how corporations and investment work. Friz Freleng helmed all three:
(They're not his best work, but let's be grateful it was Freleng and not Bob McKimson who was tapped for the job.)
Getting back to Denning's piece ... hmm, it seems I have no more to say. Just read it.
(Thanks to Daring Fireball for the link.)
No comments:
Post a Comment