Tuesday, 24 March 2009

Thus spake Jack Welch

Jack Welch in a recent FT interview was quoted to have said "on the face of it, shareholder value is the dumbest idea in the world".

This has created a storm with many columns, articles, blogs being written about how one of the doyens of capitalism had turned against it.

This is a classic case of sensationalising a quote taken out of context.

He was asked what he thought of "shareholder value as a strategy". His response was "On the face of it, shareholder value is the dumbest idea in the world," Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products."

All he said was that shareholder value, by itself, cannot be a strategy, but is an outcome of a strategy.

The interview with FT is an interesting read. Click here.

In response to the storm, Jack Welch published a question answer session with Suzy Welch. Click here to read this.

They have their own website http://www.welchway.com/ with many excellent articles.

By the way, Jack & Suzy Welch have commented on how important the HR function is and how the process of layoffs could be handled more professionally (my pet peeve at the moment). Coming from "Neutron Jack", this is an excellent read. Click here for this superb view point.

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