What the...? It cant be! Did Jack Welch really just say that? The same macho/honcho who led the whole "enhance shareholder value or you're toast!" mantra? Who figured that if all his operating businesses could maximize "externalities" --- in other words get others to pay for expenses that should rightfully be yours (like disposing of incredibly toxic wastes) --- they would also be maximizing corporate profits? The guy who ultimately sat in the seat where the buck stopped when all those PCB's got dumped in the Hudson River, creating the nations largest Super Fund site.
Well, I'll be -- maybe it was his hanging around Cambridge, Mass the last few years breathing all that socially responsible air. Or maybe it was being on the other side of the pond where they sort of get "it" already. Whatever, I'm tickled pink but still can't believe it. Yesterday, the CEO almighty, the one all the financial rags repeatedly declared the greatest living CEO of his time for his ability to crank out quarterly earnings increases with precision.... the poster child for the overriding pursuit of shareholder value above all else.....you know what he said?.......wait for it....I cant contain myself........ he said that focusing solely on quarterly profit increases was “the dumbest idea in the world”. “Shareholder value is a result, not a strategy,” he said in the Financial Times today. “Your main constituencies are your employees, your customers and your products.” Okay, so he missed a few others but that's a big move already...and I'll take it as a great sign of hope that if he's becoming a convert maybe there's hope for the rest of them...and therefore us. That maybe there are way more than we're aware who also get "it" but have been afraid to admit it. Maybe we're further along than we could have imagined that there can be a concept of "just and equitable" capitalism that can truly get behind the biggest issues of our lifetimes (climate change, ecological destruction, inequitable and overuse of scarce resources, poverty, hunger, access to healthcare, etc.) to make our world a sustainable one for ours and future generations. So this is big--maybe really big, but I can't say for sure yet. In the meantime, I'll keep listening..for the sound of more cracks in the armor. And on a Friday night, after this and the little bear market bounce the last few days, I'm having one of whatever Jack is drinking.
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It would be big if he was still CEO of GE. But who listens to ex-CEOs? Even the former superstars, like Iacocca, nobody cares. Okay, they get paid big bucks on the speaking circuit and perhaps they might have some influence there, but I think his enlightenment is 20 years too late.
ReplyDeleteMy company worked for GE for many years. They had a very high bar. They spent a lot of profits from their other businesses dealing with those legacy sites. In the end, the paid. There are many companies who did not and will not pay for ugly pollution. Lucky they had some good businesses to throw off cash to pay for their indiscretions.
ReplyDeleteRedemption is a good thing! Perhaps these mea culpa's will find their way into the "and then what happened" business case studies that are due to be written.
ReplyDeleteReynolds-Anthony
Don't overinterpret what he said. Quarterly earnings only is bad because it might damage higher profits further in the future. He did not say "Oh, companies should be socially responsible.". Companies offer jobs. Politicans should handle externalities after you pressure them.
ReplyDeleteMitch, it's great you're happy but per cameron, it's maybe 20 years too late. I have to add, he married the HBS editor-in-chief after meeting her on business. She seems to be a great no-nonsense lady but i almost wrote them both off about the 25th time I saw her and him lovey-dovey, each with their chin over the other's, and he's what... 75?
ReplyDeleteI used to be a religious "Jack" follower; he writes a heck of a book and is very charming. But the past decade has been a bit embarrassing:)
just imo, -steve