The End of Shareholder Value: Corporations at the Crossroads

The End of Shareholder Value: Corporations at the Crossroads

The End of Shareholder Value: Corporations at the Crossroads

The End of Shareholder Value: Corporations at the Crossroads

Synopsis

In The End of Shareholder Value, Allan Kennedy calls for a revolution in business -- for customers, employees, political and social leaders, and governing boards to challenge the cozy relationship between executives and investors that has crippled companies in the name of maximizing shareholder value. From GE to the hottest new Web-based start-up, those companies that subscribe to the shareholder value ethic cannot be sustained and will, inevitably, be replaced by those who figure out how to create and share wealth among all stake-holders. Provocative and wide-ranging, The End of Shareholder Value challenges everyone to rethink the purpose of business in the new millennium.

Excerpt

The end of the era of shareholder value is drawing near.

The only thing that is constant about business is change. Products are invented, launched on the market, and made obsolete by later developments. Marketing techniques are imagined, brought to fruition, and subsequently discarded as still more efficient methods are found. Manufacturing operations are started in garages and sheds, grown into massive plant sites, abandoned for more economical plants in far distant venues, or shut down because the goods they produce are no longer needed or wanted. Accounting systems that started with quill pens scratching away at ledgers are automated and moved onto mainframe computers, networked away from the mainframes onto PCs distributed across the enterprise, and decentralized to enable real-time updating over the Internet by willing suppliers and customers. Given enough time, every aspect of a business will change if the venture is to survive and prosper.

Despite all the change swirling around any successful business, some things appear to remain constant for relatively long periods of time. Foremost is that business needs people to make it function, and people inevitably leave their mark upon it. Terry Deal and I have written about the nature of "corporate cultures" in all business organizations-as archaic and enduring a human construct as anyone will ever find. People populate their world with values and beliefs; heroes and heroines who (in the eyes of their beholders) epitomize these beliefs; behavioral rituals and celebrations that define membership in the culture; and priests, priestesses, and storytellers who keep alive the message (legend, if you will) of the culture. Cultures in companies endure because people need them to find comfort and meaning in their lives at work. No matter how much change occurs around them, cultures will strive to assimilate these changes and reinterpret them for the benefit of the members of the culture's closed society. People are social animals; as long as business needs people to function, people will build cultures to make themselves comfortable as they share their lives with the business.

Also displaying surprising tenacity in the world of business are ideas, particularly ideas about why the business exists in the first place. Alfred P. Sloan first commented in 1964 that "every business needs a concept" -- that is, a driving rationale for its existence. Decades later, Jim Collins and Jerry Porras . . .

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