August 2013 – And Now for the World’s Dumbest Idea

And Now for the World’s Dumbest Idea

“Maximize shareholder value”?  According to Forbes, forgetaboutit! (click here to read more)

Jack Welch believes that “Shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy”. And Peter Drucker wrote that “There is only one valid definition of business purpose: to create a customer”.

In PriSim’s classes, participants often struggle as they define a mission and goals for their company. Some start with a strong inclination that it should be “to maximize shareholder value”.  But they usually find that this short-term focus leads to sub-optimal long-term results. It looks like they’re on to something, according to Forbes.

As always, we welcome your ideas and comments.

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Finance