For as long as I can remember the idea that creating great products that people want to buy seemed like an intuitively obvious way for a business to be wildly successful. Along the way, companies also needed to employ people and pay them a wage that would enable them to buy those awesome products.
The short term, bottom line thinking of modern American business just seemed fundamentally flawed but I didn't have the knowledge of business law to provide an explanation of why business played along with it. Apparently the idea of maximizing shareholder value took root with a 1976 paper by Michael Jensen and William Meckling in the Journal of Financial Economics entitled “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.”
Now a new book by Roger Martin explains how we managed to become the pawns of Wall St hedge fund managers and investment bankers.
If our political leaders really want to make a difference that improves our economy and our country as a whole, they will make the changes necessary to enable business to get back to the roots of what they should be doing and ignoring Wall St.
The Dumbest Idea In The World: Maximizing Shareholder Value – Forbes
There is only one valid definition of a business purpose: to create a customer. Peter Drucker, The Practice of Management “Imagine an NFL coach,” writes Roger Martin, Dean of the Rotman School of Mana…
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