Shareholders or customers?

A Forbes review of the new book “Fixing The Game” eviscerates the idea of setting corporate behavior by the goals of maximizing shareholder value:

“We must shift the focus of companies back to the customer and away from shareholder value,” says Martin. “The shift necessitates a fundamental change in our prevailing theory of the firm… The current theory holds that the singular goal of the corporation should be shareholder value maximization. Instead, companies should place customers at the center of the firm and focus on delighting them, while earning an acceptable return for shareholders.”

You don’t put a dent in the universe by managing market expectations. Great, world-changing businesses are built on conceiving and providing great products and services, and the stock price will follow.

Certainly that’s Jeff Bezos’s philosophy, starting from his first letter to shareholders in 1997, and I think it’s worked out pretty well for them, so far.