Jack Welch says what we all knew

Maybe everyone on this site already knew this because we have eyes and a heart but I was encourgaed to read this article. http://www.ft.com/cms/s/0/294ff1f2-0f27-11de-ba10-0000779fd2...

Basically what the 'father of shareholder value' is saying is that he was wrong (he says he was misunderstood but it took him a long time to correct that misunderstanding). Too much weight put on shareholder needs is tantamount to killing a golden goose and I can personally testify to the total waste of good ideas and disengagement that satisfying shareholder 'needs' can lead to.

Before I left my last business, a decision based almost totally on my frustration with shareholders leading the agenda, I tried to make the management see sense in the following way:

"If you have a compeling agenda and vision and your shareholders don't buy in, screw them. Stick to your agenda and you will eventually attract shareholders who share your vision and their demands will align with your path. By whoring (maybe phases like this, upon reflection were why I never got buy in :)) yourself to visionless analysts and pension funds you completely lose the ability to react and create something of passion and longevity. In the long run the business will rot from inside and shareholders will lose their money."

When I left the shares were at $11 and throwing off a dividend in the 9-10% range - perfect for pension funds whose demands came before our clients. I accept that the economy hit the buffers but a share price of less than $3 and a dividend that now exceeds 40% yield tell a story that this is not a robust business with a great future.

So, when I run my business, I'm going to have stakeholders and shareholders who support my vision and I'll find ways to shed those who don't. There is a business theory that runs along the lines of "find out where your stakeholders (for clarity this is employees, consultants and shareholders, equally) want to go on a personal level and let your business go the way of the momentum". I don't recall what it was called but those who feel that they are significnatly opposed to the direction of the business are allowed to leave with dignity and without judgement, leaving room for the right people to join who want to push in the same direction, driven by shared values and intrinsic-motivation. (IM will be a topic of a future blog I am sure).

So I am hugely relieved that the cat is now out of the bag. I will tattoo the URL to this article to my forearm and smash it right into the teeth of the next corporate exec who tries to tell me that pleasing analysts is a fact of life and the way that businesses run nowadays. There is no substitue to customer value first, customer value second and customer value third.

Maybe when this is generally accepted being in a corporate business will not feel like the materialistic, soulless endeavour that it does today.