“None other than Jack Welch, former chairman and CEO of General Electric,
has called shareholder-value ideology ” the dumbest idea in the world.”
Yet business executives still pretend that maximizing shareholder value
is their primary fiduciary obligation,
which is nonsense except in few restricted cases,
such as when a company is going to be sold.“
Value… What is that?!?
Does it exist on its own?
Something must exist if anybody is to extract it, right?
If that something may be created, then it would be a no brainer to make some before attempting to extract it… if you want to be involved in a sustainable process, right?
How do you make value?
How does anybody establish that something is valuable in the first place?
– I declare this to be valuable.
– Who owns it?
– I do.
– How much do you want for it?
– xxx
– OK
That ‘this’ had became ‘valuable’ only when ‘OK’.
Before its value had been agreed upon, it being valuable was on the declarative level only.
‘Virtual’ versus ‘real’.
Only after two interested parties had negotiated about and agreed upon the value of something the value of that something has become established.
Jack Welch again:
“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.”
As an engineer, as down to Earth as it gets, I tend to agree with Jack Welch. A company should be managed as a long term project. It needs to satisfy the natural interests of the investors – profit – in a sustainable manner. Providing something useful to both parties involved. A useful ‘thing’ to the buyers and a satisfying profit to the investors. While creating little to no damage to the ‘environment’ in order to remain acceptable to those living on the same planet…
But who am I to judge… even if I have the blessing of Jack Welch…
Who am I to tell anybody – any investor and/or any manager – how to run their business?!?
– Are they blind? Don’t they see this economic model doesn’t work?
“Inequality holds back the growth of the entire economy,
as research supported by INET has shown.
Even today’s business elites are worried about its impact:
In a 2015 poll of over 2,700 Harvard Business School alumni,
respondents said that they were more concerned about growing inequality than ever before.“
Hm…
“Share holder value is a result, not a strategy”, remember?
Same with ‘inequality’.
Let’s focus on sustainability. On the process.
And notice that the process sputters!
As a consequence of our own decisions!
We have told/allowed the investors and the managers to run the business – not their businesses, the entire business environment – in the current manner.
And we are the ones bearing the brunt. Having to deal with, among other things, the current level of inequality.
We, our decisions, have produced the current situation. Inequality is but one of the consequences.
One, among many, of the consequences engendered by our own weltanschauung.
nicichiarasa 