A article in the January/February Harvard Business Review makes the argument that the corporate strategy of maximizing shareholder value, championed prominently by former General Electric CEO Jack Welch, has failed as a driver of sound long-term business practices. But author Roger Martin does not shed a tear bemoaning this failure. Instead he heralds a coming era when corporations increasingly will place maximizing customer value at the top of their priority lists. This will be the age of customer capitalism.  In the 1970’s and early 1980’s as corporate executives and boards of directors began to name maxed-out shareholder value  as their number one goal, Mr. Welch became arguably the most celebrated businessman in history for championing this approach. But after 30 years, the companies that emphasized maximizing shareholder value (Coca-Cola and General Electric) fared no better than companies that clearly put customer value ahead of shareholder value (Procter & Gamble, Johnson & Johnson), Martin writes.  And ironically 2008-2009 saw a historically unprecedented plunge in shareholder value (and after all those years of executives and their boards “putting shareholders first”!) We hope Martin’s article is just the beginning of a discussion on better business practices in the 21st century. Highly recommended! 

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