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In the abstract I agree, where it gets awkward is in what that actually means. In one sense, "maximize shareholder value" can be interpreted to mean simply, "ru

by mwfunk 9y ago

In the abstract I agree, where it gets awkward is in what that actually means. In one sense, "maximize shareholder value" can be interpreted to mean simply, "run this company as well as possible". That's fine, that's basically nothing more than a statement that everyone involved will do the best job they can to support the business. But in practice, "maximize shareholder value" means, whatever metrics are presented as part of quarterly or annual reports must always be larger than the metrics presented as part of the previous quarterly or annual report. That's where it turns into an antipattern, where it gets reduced to "the metrics from this report must have larger numbers than the metrics from the last report". That sort of reductivism is what I was referring to.

rebootthesystem 9y ago
Absolutely. There are plenty of companies out there that fit the profile you described. I guess my point is that this isn't representative of the majority at all. It isn't even representative of the top 500, 1,000 or maybe even 10,000 corporations in the word. There reason, I propose, is the deviant behavior you describe isn't sustainable. If you do not produce real value for customers in the long run you are not going to produce value for shareholders. You can "cook the books" for a little while. Maybe. But not in the long term. The title of the this thread names Apple and Google. Both of those companies have produced a huge amount of value for users and customers as well as shareholders. Maybe I'm being repetitive. If someone invests their money in my business I am going to make it an absolute priority to do well by them. And the only way to do this is to do well by customers. One forces the other. And, BTW, I don't think this is a conscious decision. In other words, I don't think anyone says "Dammit, we need to make shareholder returns a priority...let's focus on customer value". A good company is aware of shareholder value being important yet their focus and driving force is and should be a passion to deliver best in class products and services (understanding that the one will take care of the other). Are there companies out there who behave badly? Of course. Thankfully they are the exception rather than the rule.

by mwfunk 9y ago

rebootthesystem 9y ago

Absolutely. There are plenty of companies out there that fit the profile you described. I guess my point is that this isn't representative of the majority at all. It isn't even representative of the top 500, 1,000 or maybe even 10,000 corporations in the word. There reason, I propose, is the deviant behavior you describe isn't sustainable. If you do not produce real value for customers in the long run you are not going to produce value for shareholders. You can "cook the books" for a little while. Maybe. But not in the long term. The title of the this thread names Apple and Google. Both of those companies have produced a huge amount of value for users and customers as well as shareholders. Maybe I'm being repetitive. If someone invests their money in my business I am going to make it an absolute priority to do well by them. And the only way to do this is to do well by customers. One forces the other. And, BTW, I don't think this is a conscious decision. In other words, I don't think anyone says "Dammit, we need to make shareholder returns a priority...let's focus on customer value". A good company is aware of shareholder value being important yet their focus and driving force is and should be a passion to deliver best in class products and services (understanding that the one will take care of the other). Are there companies out there who behave badly? Of course. Thankfully they are the exception rather than the rule.