When the Shareholder Becomes the Customer

“Our job is to maximize shareholder return,” I am told at a recent management meeting. This message has been gaining in prominence and momentum within internal corporate communications since the mid-90s. Have you noticed how these words have become management’s manta in the corporate world? Somewhere along the way, publicly traded companies began selling financial returns as their product and forgot the real customers who exchange money for products and services. Daily decisions are no longer driven by increasing customer value, but rather shareholder value. Value-based engineering becomes focused on cost-reduction to improve margins rather than product features to improve customer satisfaction. Cost of poor quality becomes a conversation about earnings lost rather than customers lost. Lean material flow becomes about balance sheet improvements instead of customer lead-time improvements. The business has become the classic model of “tailgate” inspection focusing on managing to the earnings instead of using a process control model managing all the inputs to a satisfied customer. Just imagine if we had customer meetings with the same focus, technology and intent of shareholder meetings. Instead of the Annual Shareholder Report how about the Annual Customer Report discussing all the improvements in customer service and product quality? So much of what we do is determined by how we see ourselves. Are we in the business of selling goods and services or financial instruments? Take stock and get organizational priorities straight and make your language match. Trust that shareholders are best served by organizations that sell products and services to a growing base of revenue generating customers.

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Alden B.
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