Last week, a well-known writer wrote an article where he basically said, “businesses are in the business of maximizing shareholder value and just that.” Oh, really? What about customers? Businesses are not in the business of producing products or services that customers will buy? What about your communities and the surrounding environment? Maybe you don’t believe it, but there is a business ecological system whereby if it is not healthy, you really can’t have a healthy business. You are dependent on the customers and communities for your ongoing survival.
That road system that feeds employees to your company? Built by community taxes. The police that provides security. Again, sustained by the tax system. The employees themselves are your customers: stiff enough of them and they may not earn enough to buy your products. The world of business is an interconnected system, just like ecology is an interconnected system.
Markets grew out of servicing customers, not out of maximizing shareholder values. Shareholder value is just an outcome of servicing your customers and communities.
Just out of curiosity, I googled for some quotes. The picture contains a few:
Ben Stein: “A corporation’s responsibility is to the shareholders, not to the retirees or employees. Corporations are doing everything they can to get rid of pension plans.” (“And they will win.” – not in the picture due to lack of room).
John Maynard Keynes: “Capitalism is the astounding belief that the most wickedest of men will do the wickedest of things for the greatest good of everyone.”
Herb Kelleher: “Your employees come first. And if you treat your employees right, guess what? Your customers come back and that makes shareholders happy. Start with the employees and the rest follows from that.”
We need to change our value system to move away from Ben Stein’s belief and the aforementioned writer’s belief to something that will strengthen the business ecosystem. All the winnings can’t go to just the shareholders; otherwise, we will have a very unstable world with few people holding all of the money and the rest stuck with crumbs.
As an aside, today I read an article about a company producing robots that will serve hamburgers. The inventor’s goal is to replace the humans making the hamburger. Yesterday, it was Amazon’s warehouse being staffed with robots, today it’s fast food chains, and tomorrow it will be….? Yep, we do need to change our value system to embrace the greater good for all.