Bertrand Duperrin's Library tagged shareholdervalue → View Popular, Search in Google

Apr

2012

Is Continuous Innovation Too Risky?

"An idea that is pervasive in corporations in both America and Europe and prevalent in business schools, management journals and textbooks is that the goal of a firm is to maximize shareholder value. It’s prevalent even though leads to unsound management practices. Jack Welch, considered by many to be a leading practitioner of the idea, recognized in 2009 that shareholder value is a result, not a strategy. Worst of all, maximizing shareholder value creates the risk of disruptive innovation."

www.forbes.com/...s-radical-management-too-risky

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value shareholders shareholdervalue profit innovation continuousinnovation management organization changemanagement casestudies salesforce

They [Apple] can do it because Apple hasn’t optimized its organization to maximize profit. Instead, it has made the creation of value for customers its priority.
As a result, the transition from shareholder value to customer delight, as well as to the radical management principles needed to support the transition, is now inevitable.
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- Some of the company principles currently being written (including shareholder profit and customer delight) that I advocate, is very management 2.0. But the executive team say “I hear what you say – and in principle, I agree, but…”. This is perceived to be way too risky to communicate to the investor.”
- With energetic implementation, with very strong support from the top, as at Salesforce, it would take a medium-sized firm at least a year to get through the transition. With less energetic implementation, the transition might take a number of years.
- This open communication feedback loop allowed a large number of people to participate in the design of the new process and engage actively in the solution.
- The management instead opted for a “big-bang” rollout, moving all teams to the new process at the same time. It was a difficult decision. The key factor driving it was a wish to avoid organizational dissonance and a desire for decisive action.
- The cross-functional team did its work in an iterative fashion and focused daily on whatever was needed to make the implementation successful. It created a global schedule for the entire process, provided coaching and guidance, identified and removed systemic impediments to change, monitored success, and evangelized the new way of working throughout the organization.

Dec

2011

New York Becomes Fifth State to Pass Law Authorizing For-Profit Public Benefit Corporations

"Under the bill, a private, for-profit business would be permitted to incorporate as a “Benefit Corporation,” with the stated corporate purpose of serving a general or specific public benefit (as defined in the bill). The Benefit Corporation is essentially a hybrid form which permits a for-profit corporation to exist for primarily public or social benefit corporate purposes (previously reserved to non-profit entities), rather than exclusively for the purpose of maximizing shareholder profit. "

www.barnhartlawplc.com/...it-public-benefit-corporations

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socialenterprise socialbusiness newyork bill entrepreneurship benefits for-profit shareholdervalue

Under current corporate laws and judicial precedents in all fifty states, directors and officers of a for-profit corporation have a primary fiduciary duty to maximize profit for shareholders. After signature of the new Benefit Corporation law by Governor Cuomo, this will change for those New York businesses that organize as “Benefit Corporations” and meet the requirements of the law
“Benefit Corporations require companies to have a legal responsibility to stakeholders as well as shareholders so they can have a positive impact on their surrounding communities
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- the purpose to create general public benefit shall be a limitation on the other purposes of the benefit corporation, and shall control over any inconsistent purpose of the benefit corporation.”
- “Specific public benefit,” as defined in the bill, includes:
  
  (1) “providing low-income or underserved individuals or communities with beneficial products or services;
  (2) promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
  (3) preserving the environment;
  (4) improving human health;
  (5) promoting the arts, sciences or advancement of knowledge;
  (6) increasing the flow of capital to entities with a public benefit purpose; and
  (7) the accomplishment of any other particular benefit for society or the environment.”

Sep

2011

CEOs Need a New Set of Beliefs

"In the past 25 years, CEOs of many major corporations have relied on a flawed set of beliefs to lead their organizations. This set has influenced them to place way too much emphasis on maximizing shareholder value and not enough on generating value for society. Today we are mired in the Great Recession, which was brought about by the near collapse of the financial system. This environment and the behavior produced by the prevailing set of beliefs to which CEOs subscribe have deepened a widespread public distrust of corporations and capitalism.

In this blog post, I will offer a new set of beliefs, which can renew and restore faith in corporations and capitalism. "

blogs.hbr.org/...need-a-new-set-of-beliefs.html

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CEO shareholdervalue value society strategy

Shareholders benefit most when CEOs and boards maximize value for society and act as agents of society rather than shareholders.
The market favorably receives projects with long-term payoffs, particularly those in research and development.
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- Purpose, meaning, and recognition are more powerful motivators than economic self-interest, and large external rewards can reduce intrinsic motivation.
- Actions to address societal issues should be an integral part of strategy, and operations and should not be isolated as a separate activity under the heading of corporate social responsibility.
- The most successful CEOs, on balance, are those who are developed inside the company but manage to retain an outside perspective