I was reading this post by Steve Deming in his blog at Forbes.com: The Dumbest Idea In The World: Maximizing Shareholder Value. Both Steve Deming and Roger Martin are two of my favorite management thinkers.
A snippet from that article:
“Although Jack Welch was seen during his tenure as CEO of GE as the heroic exemplar of maximizing shareholder value, he came to be one of its strongest critics. On March 12, 2009, he gave an interview with Francesco Guerrera of the Financial Times and said, “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal”
So what we are seeing in recent times is not just a failure of the value creation models of the past that executives live by, but even celebrated theorists and practitioners alike are now admitting they were wrong – some openly like Jack Welch.
This is again beautifully told by Taleb in Black Swan.What we call here a Black Swan is an event with the following three attributes. First, it is an Outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.
What does all this mean to a Marketing manager? Make products customers would use, you would use and let the market decide. Don’t waste your energy in things like managing analyst expectations – not just financial analysts, but also “industry analysts” and looking at the fancy market prediction reports. There are far more powerful mediums where you could get social worth for your products and services by going directly to the users – that is where and for whom, value is created. So talk to them directly
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