Is There Anything Bigger Than The Maximisation Of Shareholder Value?
According to Roger Martin, the third most influential business thinker in the world according to Thinkers50, the shareholder value maximisation revolution was triggered in 1976 by Michael Jensen and William Meckling. How? These economists published, what has turned out as the most cited article ever: “Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure”.
In this article, Jensen and Meckling argued that the professional managers (running businesses) were looking after their interests at the expense of the shareholders. Thus began the shareholder maximisation movement that has since then taken over the business world. And in so doing, all other stakeholders (customers, employees, suppliers, partners, society at large ..) have been viewed-treated as mere resources and/or means of creating-maximising shareholder value.
Are You Committed To Something Bigger Than Yourself?
What does Michael Jensen say on the matter today? Let’s listen:
“I have a bad rep on this kind of thing. Because people think that all I want companies to do is to maximise the value of the stock. First of all that is false, it’s not what I ever said. But I guarantee you if you are talking about maximising the right value, which is the total value of the firm, if that is all you’re doing you won’t maximise value!
You’ve got to be committed, the company has to be, the firm has to be, committed to something bigger than itself. That will light people up. And cause them to be attracted to your organisation. Passionate about it! They’ll find something in what you’re committed to, the company is committed to, that satisfies them, lights them up and excites them. And that’s a HUGE missing component of what’s going on out there in the world ….”
– Michael C. Jensen talking on leadership at the Simon School (talk published on Mar 17, 2014)
If you are interested in listening to Michael Jensen and Werner Erhard share their ontological-phenomenological model of leadership at the Simon School then here is the associated YouTube video:
It occurs to me that empowerment matters. It matters enough for me to think about this deeply and search out those who have thought about this deeply. If it matters deeply enough to you then continue reading. If it does not really matter to you then I advise you to go and do something that you care deeply about. With that said, lets start.
What difference does empowerment make?
It really matters if the people in your organisation show up empowered. Empowered to do great work, to create products which show up as ‘magic’, to touch customers in a way that leaves those customers feeling welcomed-understood-validated-helped, to generate an end to end customer experience that simplifies-enriches the lives of your customers.
It really matters, if you, show up as empowered and create a context that allows the people in your business to show up empowered. And allows your customers to show up and experience themselves as empowered. And creates a space for your suppliers to show up empowered – empowered to share their knowledge and expertise in contributing to the performance of your organisation.
It really matters, if as customers, we show up empowered. Empowered to do business with organisations that stand for purposes-values-behaviours that speak to us. And not do business with organisations that do not stand for and embody that which matters to us. Empowered to get together and apply pressure on regulators and those in government to put in place legislation that protects our interests as customers and to enforce the existing legislation. We are also empowered to do nothing. That is our choice; choice is that which comes with empowerment.
In short, empowerment or the lack of it matters. It occurs to me that empowerment is rather like sunshine in the western world (in the depths of winter) or rain in a region of cursed with drought. Empowerment creates possibilities which simply are not open-present without the existence-presence of empowerment.
Perhaps because I am so vividly present to the significance and possibility that inheres in empowerment, I chose to put my children in Montessori School. It occurs to me that it is also the reason that so much of what is written on empowerment (employees, customers) strikes me as shallow and leaves me feeling disappointed-cheated.
Why all the bleating about the lack of empowerment?
There are two particular aspects of the empowerment conversation that I particularly wish to highlight. First, there is the assumption that empowerment is a thing to be gifted from the Tops to the Middles and Bottoms. And from the Middles to the Bottoms. And from the company to customers. Second, is the assumption that empowerment is a blessing and people are yearning to be empowered.
It occurs to me that by virtue of being human you and I are always empowered. You and I are empowered because you and I are free – free to choose. It occurs to me that Sartre spelled this out rather pithily:
“Man is condemned to be free: condemned, because he did not create himself, yet nonetheless free, because once cast into the world, he is responsible for everything he does.”
What shows up for me as being a more interested enquiry is this one, given that you and I are empowered why is it that you and I evade this empowerment? Why all the bleating about empowerment – more precisely the lack of empowerment? What is it that we are evading through this bleating on the lack of empowerment? Why this supplication at the feet of ‘leaders’? And why is it that so few ‘leaders’ actually show us as being empowered to chart their own course, and thus lead?
Werner Erhard’s profound insight on empowerment
I share with you the profound insight and wisdom of Werner Erhard. And I encourage you (and I) to listen, really listen to his speaking:
“If you are empowered, you suddenly have a lot of work to do because you have the power to do it.
If you are unempowered, you are less dominated by the opportunities in front of you. In other words, you have an excuse to not do the work. You have a way out. You have the security of being able to do what you have always done and get away.
If you are empowered, suddenly you must step out, innovate and create.
The cost, however, of being unempowered is people’s self-expression. They always have the feeling that they have something in them that they never really gave, never really expressed.
By simply revealing the payoffs and costs of being unempowered, people have a choice. They can begin to see that it is possible to make the choice to be empowered rather than to function without awareness.
Empowerment requires a breakthrough and in part that breakthrough is a kind of shift from looking for a leader to a sense of personal responsibility.
The problems we now have in communities and societies are going to be resolved only when we are brought together by a common sense that each of us is visionary. Each of us must come to the realization that we can function and live at the level of vision rather than following some great leader’s vision.
Instead of looking for a great leader, we are in an era where each of us needs to find the great leader in ourselves.”
— Werner Erhard
So what does it take for empowerment to show up?
It occurs to me that it takes the following for empowerment to show up in our way of being-in-the-world:
a) Getting that we are always-already empowered as spelled out by Sartre and so vividly illustrated by Viktor Frankl in his recounting of his concentration camp experiences (Man in Search of Meaning);
b) Caring deeply enough about our being-in-the-world to see-invent possibilities. Possibilities for putting our own ‘dent in the universe’.
c) Courage to put ourselves at risk and act – to live from and into the possibilities that speak to us, to give up comfort and embrace work, to let go of our existing identity and invent-create-embrace the identity that is needed to fulfil on the possibility that we have invented.
What do you say?
“We argue here that the four factors we identify as constituting the foundation for being a leader and the effective exercise of leadership can also be seen as the foundations not only for great leadership, but also for a high quality personal life and an extraordinary organization. One can see this as a “value free” approach to values because:
1) integrity as we define it (being whole and complete) is a purely positive proposition;
2) authenticity is also a purely positive proposition (being and acting consistent with who you hold yourself out to be for others and who you hold yourself to be for yourself),;
3) being committed to something bigger than oneself is also a purely positive proposition (that says nothing about what that commitment should be other than it be bigger than oneself); and
4) being cause in the matter as a declaration of the stand you take for yourself regarding everything in your life is also a purely positive proposition”