An end to "the tyrany of growth"?

There are a few silver linings to the dark clouds of recession that hang over us. One of them is very early signs of an end to what I call "the tyrany of growth". This is the obsession of companies to deliver quarterly sales results in line with the targets promised to stock market analysyts, in order to prop up their share price and please shareholders, rather than doing the right thing for the business and customers. 

The first sign of change was a gob-smacking comment from none other than Jack Welch, former CEO of General Electric. The guy credited with creating the concept of "managing for shareholder value" back in 1980's recently announced that "Shareholder value is the dumbest idea in the world.” This comment came in an interview with the FT. He went on to say “The idea that shareholder value is a strategy is insane. It is the product of your combined efforts – from the management to the employees (and customers)”.

Well done for spotting this Jack. Shame it took you 20 bloody years to figure it out.

The second sign of change afoot is the refusal of Unilever's new CEO Paul Polman to give any guidance on future revenue and profit targets. In the past, targets such as those Unilever's 5 year "Path to Growth" were a millstone round the company's neck. Polman said to the stunned analysts that he would gladly give guidance on profit if any of them could tell him for sure what was going to happen to the global economy over the next 24-36 months. This challenge was, of course, met with a deafening silence.

The interesting thing is that following this Goldman Sachs actually upgraded Unilever's shares to neutral from sell, saying it saw scrapping its guidance as a prudent decision in light of the current global recession, as reported here.

Let's hope that Polman and Welch can lead a wider spread change, to re-focuson the long-term needs of customer and employees, rather than pandering to the short-term needs of shareholders and stock market analysts.

Comments

[Sindy]

First, thanks for going boyned the press release or headline and giving this piece some relevant context with info from Ben & Jerry's annual report. Second, my two cents: Ben & Jerry's is doing exactly what we all should be doing. That is, voicing our personal moral convictions in a reasonable, responsible way even if it means disagreeing with the umbrella corporation, or one's government. Isn't that how we in these united states are supposed to implement change? I don't expect everyone who works for banking behemoths to up and quit their jobs; that would be stupid. I certainly hope employees on Wall Street (and everywhere) raise their voices and do their best to ensure their employers are behaving morally, responsibly, and yes, profitably. Duh. Capitalism works, but greed is still a sin. Capitalism doesn't require oppression, lying or stealing to work, either. Let's show the world how it's supposed to look!

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[Rackmount Monitor]

Thanks for this incredible post and give chance to say something here.I think,it is high time to search for solutions on how to escape the tyranny of growth.

[David Taylor (brandgym)]

Thanks to the eagle eyed Tania (and Andy) who spotted the error in the original version of this post, and for bothering to let me know!
- Paul Polman is indeed CEO of Unilever, not P&G
David

[Tania Gonzalez]

Paul Polman is Unilever's CEO, not P&G's

[Chris]

Completely agree with you David. I was at Barclaycard between 2000-2003, when Matt Barrett was the Barclays CEO. He instigated the communications platform to The City et al. of 'doubling economic value every 4 years'.

Even basic maths tells you that doubling anything in 4 years means a CONSTANT growth rate of nearly 20%. Which turned us all into craven slaves to the short-term spike, and was part of the environment that led Barclaycard to introduce risk-based / sub-prime lending to new customers and buying up portfolios of customers. And the rest, as they say, is history...