Is Preaching Social Purposes the Second Dumbest Idea in the World?

Among business stakeholders, customers must be the absolute №1?

For the past few years, we have finally observed with great pleasure some progress in organization fundamentals across the world, in terms of what purposes a business serves.

Most agile pioneers, public and private sector leaders, and economists agree that a business needs to create values for all stakeholders — not just shareholders! Maximizing shareholders’ value is neither the only, nor the most important purpose of a business, not anymore. It has been a wrong idea since its emergence and its decades’ prevalence has led to large scale stock manipulations typically in the form of corporate share buybacks, which only enriched corrupted senior executives (whose exorbitant bonus is directly linked to stock price) and their accomplices at the grim cost of the corporates’ long-term development capability and the society’s economic well-being. As declared by Jack Welch in as early as 2009 — deeming maximizing shareholder value as the highest purpose of a company is “the dumbest idea in the world.”

The contentious part, however, of the business purpose discussion is: whom — first and foremost — among all the stakeholders should an organization create value for?