shareholders

Shareholders, should they always come first? Often you will hear that the main goal for business is to increase shareholder value. Should increasing shareholder value really be the primary goal of business? What about providing a quality product or service? What about adding value to the world?

Increasing shareholder value is important, but I think we sometimes lose focus of the big picture. We put the cart before the horse. When Steve Jobs and Steve Wozniak were creating Apple in a garage, I doubt stock price was on their mind. Their vision was to create technology that changed the world.

Dr Edwards Deming believed that too much focus on short-term gains and stock price is harmful. He argued that quality, a definite purpose, and pride of workmanship should be top priorities.

By focusing on quality and a long-term strategy, shareholder value will increase. But there are no short cuts. Short term investors or hedge funds looking to make a quick profit should not be a priority. In fact they may be harmful. Great companies are in business to improve quality of life.

If your leadership is only focused on short-term gains, you may be in for trouble down the line. What’s your long-term strategy? Is quality a top priority? What is the mission of your organization? Why are you in business? If you’re unclear, mission, vision and strategy should be a priority.

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