Are You Willing to Create the Future You Want to See?

Jack Welch was the hard-driving CEO of GE between 1981-2001. He relentlessly focused the company on delivering shareholder returns, through mass redundancies, offshoring, and financial engineering. During Welch’s tenure, GE’s market cap grew from $14 billion to $410 billion. He was the poster child for maximising profits to benefit shareholders.

Milton Friedman argued that a company's sole purpose is to generate returns for its shareholders. He dismissed concerns around unethical or predatory business practices by saying the company has no social responsibility - its duty is profits. Friedman provided the intellectual foundation for the doctrine of shareholder primacy.

Together, Welch and Friedman formed the philosophical vanguard of the shareholder value movement. Their attitudes influenced generations of business leaders to see employees, customers, and society as secondary to the goal of maximising shareholder wealth.

On the surface, Welch was a hero for shareholders. GE’s share price rose over 4,000% during his 20 year tenure. Revenues soared from $25 billion to over $130 billion by 2000. His continual cost-cutting and redundancies boosted margins from 10% to nearly 20%. Welch aggressively bought back shares and paid out dividends to return profits to shareholders.

However, beneath the financial engineering and profits, Welch left a wake of destruction in terms of trust, loyalty, and commitment between GE and its employees and customers. His ruthless redundancies and cost-cutting eroded any sense of job security. Workers became numbers on a spreadsheet, entries in an ROI calculation.

GE's revered training and retention programmes were dismantled in the name of efficiency. Employees could be let go at a moment's notice, destroying morale and depriving GE of institutional knowledge.

GE's obsessive focus on its share price created perverse incentive structures. Business leaders made choices to optimise short-term profits rather than create sustainable long-term value.

Contrast this to companies like The Body Shop, which steadfastly prioritised purpose over profits. Founder Anita Roddick fostered a culture of environmental sustainability and social responsibility. Rather than grow endlessly, The Body Shop chose slow, mindful growth.

While The Body Shop could have doubled revenue by offshoring, it kept production local, retraining employees and funding onsite childcare. This decision hurt short-term profits but cemented the brand's values.

In the long-run, The Body Shop’s reputation for authenticity paid off. Profits doubled over the last decade as customers continued flocking to the brand. Unlike GE, The Body Shop's character and ideals remained intact throughout its growth.

Jack Welch delivered big profits but in doing so, GE lost its soul. Its short-term orientation and cost-cutting degraded its culture and public image. GE got financial wealth but The Body Shop earned something more valuable - an ethos of purpose, authenticity and loyalty.

The mania over shareholder primacy continues unabated. The average CEO tenure has dropped to just 5 years as leaders desperately boost short-term profits. An estimated $7 trillion dollars have been spent on share buybacks in the last decade - money that could have invested in R&D, employees, sustainability initiatives.

But the casino of financial engineering only produces fleeting gains, not lasting value. And the costs of this short-term addiction are catching up. Employees have checked out - recent surveys show over 50% are considering quitting their jobs. Customer loyalty has cratered - consumers switch brands at the drop of a hat.

Companies like Unilever, The Body Shop and IKEA will thrive in coming years. Why? Because they recognise that shareholder value is the result, not the objective of operating sustainably and responsibly. As Paul Polman of Unilever said, "Shareholder enrichment is the reward for a job well done."

Leaders who see shareholders as the sole purpose are ensuring their own downfall. Today's consumers, employees and communities have long memories and will not hesitate to punish self-interested brands. The future will be led by value-driven brands like Seventh Generation.

For tech sales professionals today, the landscape has profoundly changed from the boom years. The old playbooks of relentless prospecting, scripted pitches, and manipulative closing techniques no longer work. Customers see right through such calculated tactics.

To thrive, salespeople must embrace a mindset of empathy, insight and shared values. When you make this shift, you gain the power to transform your career and character for the better. Even exploring this path brings hope of positive change. What first step will you take?

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