Monday, December 26, 2011

Customers before shareholders

One of the long-term problems with our economy is short-term thinking. Too many CEOs are worried about creating shareholder value when they should be creating value for their customers.

When you manage for increased shareholder value, you minimize investments in R&D. You value engineer products and compromise quality. You send your manufacturing to the lowest bidder. You cut your marketing expenses to the bare minimum. You do everything to maximize this quarter's profits regardless of the effects on the long term health of your company.

When you manage for increased customer value, you improve your products on a continuous basis. You ensure your products are built to last for their intended useful life. You make sure people know what you sell and why you're different. You invest in the communities that support your business. You don't let pennies get in the way of a remarkable customer experience.

You can't have happy shareholders if you don't have happy customers.

If you want to be around in 50 years, build your business to satisfy Main Street, not Wall Street.


  1. I've been thinking a lot lately about how good companies have gotten at getting customers and how bad they are at servicing them. Exhibit A is BoA.

  2. Getting customers is easy. Keeping them is hard work especially with so many viable alternatives in every category now.