March 16, 2009

Jack Welch: "Shareholder value is the dumbest idea in the world"

Faithful readers of this blog know that I am one of those who detest Shareholder Value maximization as a management mantra; not only because it has corrupted corporate ethics and contributed to the short- termism characterizing the modern “Strategic” management but has even lead to the relentless hunt for share valuation in bubble stock markets that have lead to the current economic crisis. In that respect I was glad to read in the Financial Times about the interview of the former CEO of General Electric Jack Welch who “ushered in the reign of shareholder value maximization a quarter-century ago” to say that “shareholder value is the dumbest idea in the world”. Good that Welch woke up almost 28 years after his 1981 speech and I sincerely hope that some people will take notice of this statement. Enjoy the FT article