I've written before about the dangers of an economic system based on shareholder value. Finally this month in the Harvard Business Review, Roger Martin has a piece called "The Age of Consumer Capitalism" where he debunks the idea that businesses are more profitable when run with shareholder value as the top priority. I'm no economist, but this is just common sense.
Here's a quick quote:
"For three decades, executives have made maximizing shareholder value their top priority. But evidence suggests that shareholders actually do better when firms put the customer first."
And one more:
"It's impossible to continually increase shareholder value, because stock prices are driven by shareholders' expectations about the future, which cannot be raised indefinitely."
Here's a link to the article excerpt, if your not a subscriber you can purchase the whole article or better yet just pick up the magazine this month, it's stocked full of great ideas for reinvention and HBR's list of 10 solutions for a better world.
To have your focus on providing customers higher value seems obvious, but if you spend much time in finance, you see that even the accounting principles that run the business focus executives on shareholder value rather than customers. It's time for wholesale change. The focus on the customer is a step in the right direction.
Provide a valuable product or service to a customer at a reasonable price and do the most good in the world you can do. There's a recipe for a business that will likely survive even the biggest economic downturn.
Simply,
Tim
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