Maximizing Shareholder Value Is Killing Innovation

Call it the Buffet curse. Ever wonder how Coke got caught by Pepsi? Berkshire squeezed too much juice from it and did not leave enough room for R&D and M&A.

Tough Girls Read

          I often hear CEOs talk about how their companies were working on ideas/products years before everyone else. Yeah, but what’s the point – you didn’t take it to market!
          In some business schools they teach you that the ultimate goal of every company is to maximize shareholder value. Other business schools challenge this approach. But at the end of the day we keep hearing company leaders put return on equity (which is in essence return on shareholder value) above everything else.
          Let’s take banks as an example – shareholders contribute only a small portion of a bank’s funding, most of it comes from consumer deposits. And yet, last year when Jamie Dimon was asked how JP Morgan Chase was going to deal with their trading losses, he proudly stated that they “are going to manage…

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