The Feedback

Do shareholders still come first? Last week, in a blog post addressing the maximization-of-shareholder-value model, we noted that Peter Drucker preferred an approach that places the “wealth-producing capacity” of a business first. So, was he right—and is the shareholder-über–alles doctrine really on the decline?

Our readers, by and large, said yes and yes.

Reader Jack Bergstrand said we shouldn’t be fooled into thinking shareholders are really “owners” of an enterprise in any way that we normally think of the term:

Today’s transactions, by and large, have little to do with thinking like owners. And that’s the problem. Shareholder value isn’t shareholder value at all in today’s Wall Street/E*Trade world. It’s more like playing roulette in Las Vegas than it is like owning a company. As a result, those stakeholders who are most important get hurt the most. Once again, Peter Drucker got it right.

Agreeing with him was reader Greg Zerovnik:

The whole transactional, speculative nature of investing these days is the rot at the core of our system. . . . The Confucian ideal . . . makes for a longer-term view. Naturally, this comes with its own set of problems, including a lack of responsiveness to employee and customer interests. Somewhere, somehow, a balance needs to be struck.

And when we cited Drucker’s stress on social innovation in our lighthearted nod to DOGTV, a new San Diego-based cable channel aimed at pet owners who want something comforting to be playing on the screen for Fido while they’re gone, reader Ashok Vaishnav was right with us.

Social Innovation is more likely to intrinsically satisfy a need than a technological innovation. In fact, history is replete with examples of . . . excellent technology innovations which could nod find sustained success when they could not pass the test of social acceptance.

Indeed. We still mourn the dearth of enthusiasm for the Bird Trap and Cat Feeder.