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People digging into Boeing's specific history are likely doing themselves a huge disservice. It's too easy to say, "Oh well I won't acquire a company like McDon

People digging into Boeing's specific history are likely doing themselves a huge disservice. It's too easy to say, "Oh well I won't acquire a company like McDonnell Douglas!" But that's not the issue. The issue is a culture (nationally/globally) of financialization. You're vulnerable to it even if you don't acquire MDA, or if you don't acquire anyone at all. The fundamental issue is simple: Mistaking side-effects of the system for the goals of the system. The goal of a company shouldn't be to make number-on-spreadsheet go up. The goal is to produce excess value, capture some amount of it, and pass the rest onto your customers. The amount that you capture will affect the spreadsheet, but the real goal of the organization must be to produce that excess value and pass on a meaningful portion of it to your customers! The whole meme that companies exist to maximize shareholder value is just that: a meme, and a recent one at that. Boeing is the natural outcome of believing it like a zealot.

Etheryte 3y ago
In an ideal world, yes, but we live in a world where making the spreadsheet number go up is the ultimate goal for a lot of people, especially if it's your own personal spreadsheet. For these kinds of people, customers with wishes and demands are often an inconvenience that stands in their way.
- ethanbond 3y ago
  Well I hope they kill fewer people en route to their own self-destruction than Boeing has (and likely will).
_heimdall 3y ago
> The whole meme that companies exist to maximize shareholder value is just that: a meme, and a recent one at that. Boeing is the natural outcome of believing it like a zealot. Admittedly I've only been in the workforce for a couple decades, but isn't this precisely what large, or at a minimum publicly traded, companies operate on? I've worked for multiple public companies and this is a universal theme among any I've worked with or for. Legally they're even required to do what is best for shareholders, nothing more.
- galangalalgol 3y ago
  I'm too old to think market forces can solve everything, but I don't understand why shareholders are ok with such things. I don't want my Boeing stock to go up for one quarter or one year so I can sell it and repeat with the next stupid company, I want my great grandchild to get good income on a stock I purchase today. I can see why leadership gets shortsighted, but not shareholders in general. If we take the scotus' view of a corporation as a person, these corporate persons need to figure out how to incentivise their cells not to go cancerous and shorten their lives.
  - decafninja 3y ago
    Everyone’s time window is different. Someone might be in the cusp of retirement and looking to cash in. Someone might not have any children so passing on an inheritance could be moot. At least in this specific company’s case though, if I were a Boeing shareholder, I’d want them to make good planes because I plain and simple fly a lot, and don’t want to end up a casualty.
    - throw0101b 3y ago
      > Someone might be in the cusp of retirement and looking to cash in. If you're on the cusp of retirement (e.g. 65) you probably have another couple of decades to live, so you want companies to keep running things 'properly' for the long(ish)-term. It's not like you retire and you convert your portfolio into a pile of cash: you still need some kind of returns if you want to not run out of money: * https://en.wikipedia.org/wiki/William_Bengen#The_Four_Percent_Drawdown_rule https://en.wikipedia.org/wiki/William_Bengen#The_Four_Percen...
      - deleted 3y ago
        [deleted]
  - _heimdall 3y ago
    I actually can understand why some shareholders see it this way. The stock market today is very much a Ponzi scheme in all but the very specific legal sense. There are more shares owned than actually offered by a company, and investors are taught to treat shares more as a commodity than as an investment of a company, value-based investment, or really anything beyond a gamble that prices go up.
findor0 3y ago
Boeing decided to put in charge the CEO of McDonnel Douglas. Boeing dealt with MDA as if this was a merger. It was a case where the bad leadership was influential in the change of culture.
AdrianB1 3y ago
You are only partly right: if I am an engineer and you are the CEO, my job is to do my engineering part and your job as CEO includes (but not only) to maximize shareholder value. If your job becomes the problem, the focus and the constraint for everyone, including me as an engineer, then you get to Boeing situation. It is nothing wrong for the company leaders to be interested about shareholder values, but it is wrong to make it the only purpose in life for all employees.
eep_social 3y ago
Yet another framing of Goodhart’s Law, “when a metric becomes the target, it ceases to be a good metric.” If the metric is “number on spreadsheet”, you eventually get Boeing.
NotYourLawyer 3y ago
> The whole meme that companies exist to maximize shareholder value is just that: a meme, and a recent one at that. Nah, stakeholder capitalism is a way more recent idea than shareholder primacy.
- deleted 3y ago
  [deleted]
- llamaimperative 3y ago
  Nope. The shareholder obsession can be traced back directly to the 70s/80s. It’s a memetic hiccup. A failed experiment. Immediately preceding that was managerial capitalism which explicitly included employees and local communities in their considerations. Prior to that, most businesses were owned and operated by the same people. Talk to any founder — especially familial legacy businesses - and you know they don’t run it purely to maximize “shareholder” value. Partly because it’s exceptionally hard to do without destroying the real company — the thing behind the spreadsheets.
  - NotYourLawyer 3y ago
    Wrong. For example: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
    - ethanbond 3y ago
      The ideology has existed since shareholders have. Dodge v Ford Motor is the nucleation point for it going mainstream. But it took a generation of lawyers and business leaders getting trained as if a Michigan court decision is gospel for that view to become dogmatic (Milton Friedman’s essay being the nail in the proverbial coffin decades later). And it has never reached actual legal obligation to maximize profits, which is the extreme view you hear a lot of today.
basicallybones 3y ago
Amen.
qrian 3y ago
> Mistaking side-effects of the system for the goals of the system. Reminds me of the saying 'The purpose of a system is what it does'[1], which offers a viewpoint that if the side-effects and the goals conflict often, the side-effect itself should be considered as the goal. [1]: https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_what_it_does https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...
hayst4ck 3y ago
> financialization I think you are totally right, but particularly nationally. Ray Dalio's Principles of a changing world order explains the macro forces around Boeing. He predicts we are headed for civil unrest as the rich get richer and the poor get poorer, and that we are definitely creating the conditions for world war particularly with China. This is Principles in video form (45min): https://www.youtube.com/watch?v=xguam0TKMw8 https://www.youtube.com/watch?v=xguam0TKMw8 I find the video prescient and directly relevant to so many HN posts. I have found no video that better explains the general state of America.
erispoe 3y ago
Boeing is destroying shareholder value.
- ethanbond 3y ago
  Exactly, which is why the whole “fiduciary duty to maximize profits for shareholders” is a totally meaningless/unenforceable/zero-information idea. Shareholders have many many different interests on different time horizons so business operators naturally and necessarily have broad discretion in how they satisfy their fiduciary duties.

Etheryte 3y ago

In an ideal world, yes, but we live in a world where making the spreadsheet number go up is the ultimate goal for a lot of people, especially if it's your own personal spreadsheet. For these kinds of people, customers with wishes and demands are often an inconvenience that stands in their way.

ethanbond 3y ago
Well I hope they kill fewer people en route to their own self-destruction than Boeing has (and likely will).

_heimdall 3y ago

> The whole meme that companies exist to maximize shareholder value is just that: a meme, and a recent one at that. Boeing is the natural outcome of believing it like a zealot. Admittedly I've only been in the workforce for a couple decades, but isn't this precisely what large, or at a minimum publicly traded, companies operate on? I've worked for multiple public companies and this is a universal theme among any I've worked with or for. Legally they're even required to do what is best for shareholders, nothing more.

galangalalgol 3y ago
I'm too old to think market forces can solve everything, but I don't understand why shareholders are ok with such things. I don't want my Boeing stock to go up for one quarter or one year so I can sell it and repeat with the next stupid company, I want my great grandchild to get good income on a stock I purchase today. I can see why leadership gets shortsighted, but not shareholders in general. If we take the scotus' view of a corporation as a person, these corporate persons need to figure out how to incentivise their cells not to go cancerous and shorten their lives.
- decafninja 3y ago
  Everyone’s time window is different. Someone might be in the cusp of retirement and looking to cash in. Someone might not have any children so passing on an inheritance could be moot. At least in this specific company’s case though, if I were a Boeing shareholder, I’d want them to make good planes because I plain and simple fly a lot, and don’t want to end up a casualty.
  - throw0101b 3y ago
    > Someone might be in the cusp of retirement and looking to cash in. If you're on the cusp of retirement (e.g. 65) you probably have another couple of decades to live, so you want companies to keep running things 'properly' for the long(ish)-term. It's not like you retire and you convert your portfolio into a pile of cash: you still need some kind of returns if you want to not run out of money: * https://en.wikipedia.org/wiki/William_Bengen#The_Four_Percent_Drawdown_rule https://en.wikipedia.org/wiki/William_Bengen#The_Four_Percen...
    - deleted 3y ago
      [deleted]
- _heimdall 3y ago
  I actually can understand why some shareholders see it this way. The stock market today is very much a Ponzi scheme in all but the very specific legal sense. There are more shares owned than actually offered by a company, and investors are taught to treat shares more as a commodity than as an investment of a company, value-based investment, or really anything beyond a gamble that prices go up.

findor0 3y ago

Boeing decided to put in charge the CEO of McDonnel Douglas. Boeing dealt with MDA as if this was a merger. It was a case where the bad leadership was influential in the change of culture.

AdrianB1 3y ago

You are only partly right: if I am an engineer and you are the CEO, my job is to do my engineering part and your job as CEO includes (but not only) to maximize shareholder value. If your job becomes the problem, the focus and the constraint for everyone, including me as an engineer, then you get to Boeing situation. It is nothing wrong for the company leaders to be interested about shareholder values, but it is wrong to make it the only purpose in life for all employees.

eep_social 3y ago

Yet another framing of Goodhart’s Law, “when a metric becomes the target, it ceases to be a good metric.” If the metric is “number on spreadsheet”, you eventually get Boeing.

NotYourLawyer 3y ago

> The whole meme that companies exist to maximize shareholder value is just that: a meme, and a recent one at that. Nah, stakeholder capitalism is a way more recent idea than shareholder primacy.

deleted 3y ago
[deleted]
llamaimperative 3y ago
Nope. The shareholder obsession can be traced back directly to the 70s/80s. It’s a memetic hiccup. A failed experiment. Immediately preceding that was managerial capitalism which explicitly included employees and local communities in their considerations. Prior to that, most businesses were owned and operated by the same people. Talk to any founder — especially familial legacy businesses - and you know they don’t run it purely to maximize “shareholder” value. Partly because it’s exceptionally hard to do without destroying the real company — the thing behind the spreadsheets.
- NotYourLawyer 3y ago
  Wrong. For example: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
  - ethanbond 3y ago
    The ideology has existed since shareholders have. Dodge v Ford Motor is the nucleation point for it going mainstream. But it took a generation of lawyers and business leaders getting trained as if a Michigan court decision is gospel for that view to become dogmatic (Milton Friedman’s essay being the nail in the proverbial coffin decades later). And it has never reached actual legal obligation to maximize profits, which is the extreme view you hear a lot of today.

basicallybones 3y ago

Amen.

qrian 3y ago

> Mistaking side-effects of the system for the goals of the system. Reminds me of the saying 'The purpose of a system is what it does'[1], which offers a viewpoint that if the side-effects and the goals conflict often, the side-effect itself should be considered as the goal. [1]: https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_what_it_does https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...

hayst4ck 3y ago

> financialization I think you are totally right, but particularly nationally. Ray Dalio's Principles of a changing world order explains the macro forces around Boeing. He predicts we are headed for civil unrest as the rich get richer and the poor get poorer, and that we are definitely creating the conditions for world war particularly with China. This is Principles in video form (45min): https://www.youtube.com/watch?v=xguam0TKMw8 https://www.youtube.com/watch?v=xguam0TKMw8 I find the video prescient and directly relevant to so many HN posts. I have found no video that better explains the general state of America.

erispoe 3y ago

Boeing is destroying shareholder value.

ethanbond 3y ago
Exactly, which is why the whole “fiduciary duty to maximize profits for shareholders” is a totally meaningless/unenforceable/zero-information idea. Shareholders have many many different interests on different time horizons so business operators naturally and necessarily have broad discretion in how they satisfy their fiduciary duties.