Weekend Leadership Reading: 9/6/19

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Weekends are time when things slow down a little. Your weekend shouldn’t be two more regular work days. That’s a sure road to burnout. Take time to refresh yourself. Take time for something different. Take time for some of that reading you can’t find time for during the week.

Here are choice articles on hot leadership topics culled from the business schools, the business press and major consulting firms. This week there are articles about shareholders, stakeholders, and the purpose of a corporation.

From Greg Satell: The Myth Of Shareholder Value

“The Business Roundtable, an influential group of almost 200 CEOs of America’s largest companies, recently issued a statement that discarded the old notion that the sole purpose of a business is to provide value to shareholders. Instead, it advocated serving a diverse group of stakeholders including customers, employees, suppliers and communities.”

From Sean Silverthorne: Has the Corporate Mission Just Been Disrupted?

“In a recent statement from the Business Roundtable, 200 powerful CEOs said corporations should widen their missions beyond just maximizing profits for shareholders.”

From the Economist: What companies are for

“Ever since businesses were granted limited liability in Britain and France in the 19th century, there have been arguments about what society can expect in return. In the 1950s and 1960s America and Europe experimented with managerial capitalism, in which giant firms worked with the government and unions and offered workers job security and perks. But after the stagnation of the 1970s shareholder value took hold, as firms sought to maximise the wealth of their owners and, in theory, thereby maximised efficiency. Unions declined, and shareholder value conquered America, then Europe and Japan, where it is still gaining ground. Judged by profits, it has triumphed: in America they have risen from 5% of GDP in 1989 to 8% now. It is this framework that is under assault.”

From Alan Murray: America’s CEOs Seek a New Purpose for the Corporation

“For more than two decades, the influential Business Roundtable has explicitly put shareholders first. In an atmosphere of widening economic inequality and deepening distrust of business, the powerful group has redefined its mission.”

From James Pethokoukis: Don’t forget the many virtues of shareholder capitalism

“Do critics of ‘shareholder capitalism’ — capitalism of the sort currently practiced by all those CEOs who are now promising to focus more on ‘essential stakeholders’ — have a problem with the shareholder part or the capitalism part? Their core critique is based on a cynical and wrongheaded view about how market economies work. They seemingly see the world of business as a fundamentally grubby one where greedy corporate executives crush workers, mislead consumers, cheat suppliers, and devastate communities in pursuit of maximizing the company’s share price.”

From Irving Wladawsky-Berger: The (Updated) Purpose of the US Corporation

“I applaud the BRT statement. ‘This is great,’ I thought when first reading it, followed by ‘what took you so long?’ Given the suffering brought upon so many Americans by the 2008 global financial crisis, – the worst since the Great Depression, – restoring trust in business and in our capitalist economic system should have been a top priority for corporate leaders. To help appreciate why it’s taken the BRT over a decade to affirm that companies have obligations to society, let’s take a look at the prevalent economic and political context of the past 50 years.”

From UVA Darden: Principles and Purpose: A Statement on Stakeholders

“Apple, Amazon and Bank of America are among the group of prominent companies whose chief executives this week asserted that companies should commit to create value for all stakeholders, not just the shareholder. The statement was issued by the Business Roundtable and reflects the seminal work on stakeholder management led by Darden Professor Ed Freeman and colleagues.”

Book Suggestion: The Company: A Short History of a Revolutionary Idea by John Micklethwait and Adrian Wooldridge

I bet you didn’t know that Gilbert and Sullivan wrote an operetta about the limited-liability joint stock company.

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