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09 April 2010

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"If you concentrate on maximizing value to shareholders over the short term, you put at risk the relationships that will determine your longer-term success."

Just like in 2007 with the executives at Circuit City decided to fire the top earning salespeople to "cut costs". I guess they didn't get the memo either. At least the free market has built-in natural selection when the firm isn't "too big to fail".

I've never understood how managers call themselves professionals. Physicians, attorneys, and engineers are professionals, must be licensed to practice, and can be sued personally when their actions cause damage to lives and property.

You even need a license to cut hair and trim toenails. Perhaps management should also be a licensed profession, given the power they have to affect the lives of many. The entrance exam could be simple. Give the applicant a goose and tell them it lays golden eggs, then count how many minutes before they kill the goose to get all the eggs out.

Nice post Bill. I can't wait till the time when long term is more than a few years. Stop 3-5 yr business plans. Short isn't a year it is 3 years. Since I have kids I always think what kind of business can I leave for them.

It will be a welcome change to see those short term money hungry execs go and take them those diasterous business plans that follow.

Even HBR seems to have got the memo: http://hbr.org/2010/01/the-age-of-customer-capitalism/ar/1

"Shareholder value" is more a legitimizing myth than anything else, anyway. Shareholders have virtually zero real control: most finance is from retained earnings, proxy fights usually fail, and since "poison pills" and other countermeasures thwarted hostile takeovers almost all takeovers are in collusion with the management of the acquired firm. Corporations management is a self-perpetuating oligarchy in control of a mass of unowned capital, running things in its own interest--while using rhetoric about "the shareholders" to protect its power from challenges from other internal stakeholders.

Jack s father had a secure job on the railroad.

He & Bob Nardelli somehow somehow avoided military service, yet they were healthy enough to work 60 to
70 hr weeks. I am an Irish Catholic 28 year military vet who served in Afghanistan ; Jack would not make a patch on a real leader s butt.

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