The Financial Times has criticised the concept of maximising shareholder value, dubbing it “the world’s dumbest idea”. It argues that the notion, originally proposed by economist Milton Friedman, has led to a short-term focus in companies, harming long-term growth and innovation. The critique aligns with a growing body of opinion that the shareholder value theory has contributed to economic problems, including income inequality and decreased job security. The Financial Times suggests that companies should instead prioritise creating customer value, as this approach would naturally lead to shareholder value. It cites the success of firms like Amazon and Salesforce, which have focused on customer value and seen significant growth as a result. The newspaper also indicates that the shift towards customer value is already happening, with more companies adopting this strategy in recent years.
Go to source article: http://www.forbes.com/sites/stevedenning/2014/09/02/the-financial-times-slams-the-worlds-dumbest-idea/