Just ask convicted executives from Adelphia, Cendant, Comverse, Computer Associates, Dynegy, Enron, Enterasys, Homestore, Imclone, Impath, Monster, Network Associates, Prudential Securities, Qwest, Refco, Tyco, and WorldCom, what made them think they could get away with it? And while many are young and stupid, some are narcissists and sociopaths who behave reprehensibly in the name of personal issues that can never be resolved.Ĭonsider the past decade of tech industry scandal and fraud: Trillions of dollars of investment capital down the tubes in the dot-com bust rampant conflict of interest between Wall Street's top investment bankers and telecom research analysts stock-option backdating scandals and a mountain of accounting and trading fraud. Rather, the concept is nothing but an excuse for people to get what they want.
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I know I shouldn't be so hard on myself, but I was indeed full of it back then. At the time, my youthful pursuits included such virtuous goals as completing chip designs on budget and on schedule, achieving personal happiness, and some not-so-virtuous quests we won't discuss here. When I was young and full of myself, among other things, I believed the answer was yes, that the ends can, under certain circumstances, justify the means. It's never acceptable to breach moral, ethical, or legal boundaries to achieve some perceived greater good.
The volume of philosophical discourse that's gone into analyzing the implications of the phrase is staggering.įrankly, I think it's all a bunch of pseudo-academic crap. For example, FT's Management Blog posed the question to Colin Mayer, the business school dean at Oxford, who eagerly replied, "If, as Jack Welch has stated, shareholder value is "the dumbest idea in the world", it is a dumb idea with a remarkably long, approximately 300-year, history." That went on for six long paragraphs.Before I began writing this post, I googled "the ends justify the means" and got 204,000 results. The problem is that, because of our over-reactive, sound-bite culture, folks are debating whether shareholder value is a dumb idea instead of the future of capitalism.
That's on everyone's mind right now, and it's a good debate to have." The context of the FT interview was about the future of capitalism. People are asking what corporations do, how they reward people, and who they're for. Welch went on to say: "As people struggle in the current economic climate, everything is being questioned. I've always felt that way, and I've always said I felt that way. So basically my point is, increasing the value of your company in both the short and long term is an outcome of the implementation of successful strategies.
That's not a strategy that helps you know what to do when you come to work every day. You might, for instance, have a strategy around innovation aimed at producing the leading products in every cycle, or you might have a strategy to become the low-cost global supplier- But you would never tell your employees, "Shareholder value is our strategy." That's not a strategy you can touch. It's obvious that strategies are what drive a business. This surprised a lot of people, since Welch is widely credited with making shareholder value a corporate obsession.īut a few days later in a Business Week interview, while not saying his comments were taken out of context, Welch did elaborate on what he really meant: Your main constituencies are your employees, your customers and your products." "Shareholder value is a result, not a strategy. "On the face of it, shareholder value is the dumbest idea in the world," Welch said. Two weeks ago, a Financial Times article implied that former GE CEO Jack Welch had made the mother of all reversals by denouncing "shareholder value" as a strategy.
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