Home > Strategy Shift, Unlearning > The End of Shareholder Value

The End of Shareholder Value

This is an older article from Financial Times“Welch condemns share price focus”

I thought it was such a monumental article, I bookmarked it and go back to read it now and again.  Well, I just read it again and it had no less of an impact on my outlook.  I still find it shocking how under-reported this announcement  was when it hit the internet.  A couple of brave souls in the MSM tried.  I saw them try, but no one wanted to pick this story up.  Talk about putting your fingers in your ears and saying, “lalalalalala!”.

Dr. John Francis Jack Welch, Jr., PhD (born November 19, 1935(1935-11-19)) is the former Chairman and CEO of General Electric between 1981 and 2001. Welch gained a solid reputation for uncanny business acumen and unique leadership strategies at GE. He remains a highly regarded figure in business circles due to his innovative management strategies and leadership style. - via Wikipedia

Dr. John Francis "Jack" Welch, Jr., PhD is the former Chairman and CEO of General Electric between 1981 and 2001. Welch gained a solid reputation for uncanny business acumen and unique leadership strategies at GE. He remains a highly regarded figure in business circles due to his innovative management strategies and leadership style. - via Wikipedia

Could this be denial or something deeper?  I like to give people the benefit of the doubt.  Sometimes I see things that seem to defy reason and  I tell myself, “Oh, they didn’t mean to…”.  Then sometimes I think it may in fact me living in denial for thinking such a thing.

This is the best line in the article:

“Jack Welch, who is regarded as the father of the “shareholder value” movement that has dominated the corporate world for more than 20 years, has said it was “a dumb idea” for executives to focus so heavily on quarterly profits and share price gains.”

Many large scale consulting firms made TONS of money from the “Shareholder Value” movement.  They made posters of the models they developed, splashed some blue and red on it for creativity’s sake, and hung them on walls as big as a movie screen .  They sold it as an innovative strategic framework on the word of what one dude said in passing.  Now, what did they do when Jack said:

“Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

Nothing…Or at least nothing I could see.  I watched the posters stay up at the consulting firms and the world march ahead as if Jack never said anything.  As time progressed, my amazement turned to sorrow.  The hypocrisy was staggering…And I was a part of it.  What could they say?  Maybe: “Oops!  Looks like a lot of the last 20 years was built on fantasy and trickery, but its our money now so too bad, so sad.”

The positive spin and the learning opportunity I received was just as profound as my realization of hypocrisy.  What I learned from Jack is that he is reinforcing something that I recently discovered on my own in the face of all this craziness:  Be passionate about what you love, may be it a product, your service, or your people.  The money will follow as a result of the intrinsic beauty of your art.

Mainly, because the intent of your actions will be  infused with your creativity and flowing joy.

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