Awkward Reality #9
“Maximize shareholder value” is the pledge of allegiance recited in board rooms. It is a poor goal.
This mantra guides the decisions of the business masses. But is it right? Peter Drucker didn’t think so. He said the primary purpose of a business is to acquire and keep customers. I believe increased shareholder value is a good result, but a lousy goal. You’ll have better results if your goal becomes: “Understand and meet the needs of our customers.”
More in newsletter, Why Maximizing Shareholder Value is a Flawed Goal (Jan-Feb, 2012)