As one who has followed the stock market for nearly twenty years, I’ve been unimpressed with the dogma of maximizing shareholder value. With returns as poor as they have been in virtually every sector for years, it seems to me that few shareholders have gotten maximum value out of their investments. But the idea has become a religious dogma of totalitarian proportions, especially among establishment conservatives. So it is good to see that it come under fire from the business press at large.
I believe that the key to happiness is subordinating the ego. In business this would translate into subordinating the profit motive. I have long believed, with Peter Drucker, that the first task of business is to create products that customers value and establish thriving markets for them. Get that right and the rest of it will take care of itself.
My novel, Banana Republican Blues, contains the core of this idea in a passage I wrote long before I encountered the link to this article on The Big Picture blog.
Eddie awoke with a start, alert and determined to remain so, he composed, in his head, the rudiments of his Doctrine of the One True Chili. The titular topic was a very small part of Eddie’s aggrieved philosophy. It repudiated everything he once held true, except for the value a truly good meal cooked with something more in mind than extracting the maximum profit from it. It extended to the value of the well made thing that built his family’s fortune, and from there to the value of labor.
Eddie has learned the hard lesson of putting customer value first by blowing up a hedge fund that put returns to investors first. He is attempting to start over again with the old fashioned ethic of value first, customer second, workers third, and profits last, assuming that returns to investors will, thereby take care of themselves. It becomes a sort of Quixotic crusade, as he keeps coming into conflict with those who see it the other way around.