What are corporations for?

The purpose of a company is to serve its customers.

Its obligation is to not harm everyone else.

And its opportunity is to enrich the lives of its employees.

Somewhere along the way, people got the idea that maximizing investor return was the point. It shouldn’t be. That’s not what democracies ought to seek in chartering corporations to participate in our society.

The great corporations of a generation ago, the ones that built key elements of our culture, were run by individuals who had more on their mind than driving the value of their options up.

The problem with short-term stock price maximization is that it’s not particularly difficult. If you have market power, if the cost of switching is high or consumer knowledge is low, there are all sorts of ways that a well-motivated management team can hurt its customers, its community and its employees on the way to boosting what the investors say they want.

It’s not difficult for Dell to squeeze a little more junkware into a laptop, or Fedex to lower its customer service standards, or Verizon to deliver less bandwidth than they promised. But just because it works doesn’t mean that they’re doing their jobs, or keeping their promise, or doing work that they can be proud of.

Profits and stock price aren’t the point (with customers as a side project). It’s the other way around.

Reblogged from: here

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About janaknmistry

Janak is a 1984 born, MSc and MBA educated from Mumbai, India. He is an avid traveller by choice and a solopreneur by luck. He has clocked many thousands of kilometres on a motorcycle. It was his journey to the Leh-Ladakh, which motivated him to write about his experiences throughout the journey in enjoying the beauty, pain and hardships. He has successful authored and published his book called “Journey in Time with Timeless Memories” which is released and published in Germany and available all over the world besides Asia and the Middle East. Apart from being an author he is an active book reviewer too and have reviewed books by some of the established authors in USA. Janak runs a motorcycle expedition co. called Jack n Jill-The Moto Expedition Co. He is passionate about travelling and photography, which helps him find a beauty and meaning in this wide busy world. It was his journey to the Leh-Ladakh which motivated him to write about his experiences throughout the journey in enjoying the beauty, pain and hardships. He is passionate about travelling and photography which helps him find a beauty and meaning in this wide busy world.
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One Response to What are corporations for?

  1. arv! says:

    Unfortunately it’s all about profit maximization now. Anything else?

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