Profit and Maximizing Shareholder Return Fail to Inspire

by Joe on March 27, 2012

Many of us spent 4 years at an undergraduate business school learning the question that we boil business down to is: “What will best maximize shareholder return?“ But over time, I’ve realized that it is a question that fails to inspire and move me, and I’m guessing others, to action. So I’ve spent the last few years exploring how to approach business outside of the uninspiring shareholder-maximization mentality. After years of searching, I stumbled across this:

“Instead of asking…Which choice will maximize my ROI? We ask instead, Given the core competencies of my organization and the assets under it’s control, how can I best direct the organization to serve? Which products or services could we produce that would best enable my community to flourish?”

At first take, I asked how you can ignore profit? Well, you cant. The argument here is that profit is what helps the business attract sufficient capital to continue growing and enabling greater and greater levels of community flourishing and service.

These two compelling questions are inspiring my actions on a daily basis. How would your world change if you focused on these two questions in lieu of maximizing ROI?

One comment

You are certainly right. A business cannot be sustained without profit. I agree.

But what this view states is that profit shouldn’t be the goal – this view contends that profit is only a tool to attract additional capital. Upon attracting additional capital, the business owner/manager/employee can direct the additional capital to continue to produce/deliver more and more products or services that best enable the community to flourish.

by Joe on May 5, 2012 at 8:40 am. Reply #

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