Creating Shareholder Value

We are fascinated with this month’s lead article in Harvard Business Review Ten
Ways to Create Shareholder Value
(subscription required for full article
but you can get the abstract here or contact
for more details.)

In one way, we really wonder how ‘shareholder value’ became such unchallengeable
corporate orthodoxy. We wonder how people working in corpotations can ever
be motivated with the goal of making money for someone else. But that’s what
we expect them to do. We expect them to turn up at work every day and think
to themselves "how can I make more money for shareholders today." We expect
them to be over the moon with this prospect. Everything else they may put their
heart and soul into is expendable in the service to shareholder value. Even
their own jobs are expendable to this purpose. Then we treat them with disdain
because they are lazy and they don’t have any commitment to the corporation.

On the other hand we know how this came to be — see Agency Theory and Shareholder Value.

Given all that at least Harvard Business Review turns the emphasis from short
term to long term value. A small step. A step nevertheless.

Easy Answers

Perhaps the most fundamental quest in human history has been to find ‘the
path to a fulfilled life.’ Throughout time, men and women  have
sought to address this question at various levels of depth. For some it has
been a shallow ‘tell me everything I need to know in five minutes’ while
for others it has truly been a life’s work. For many this search has
been expressed through a religious journey, some through exploration of the
natural universe, some through personal conquest, and increasingly today many
find expression in the world of business. (Indeed we have heard it said that
business has replaced religion as the source for meaning in people’s
lives.) People in this category may attempt to find fulfilment through building
huge organisations, by amassing personal wealth or perhaps creating something
of enduring worth.

Hand in hand with the individual quest, have been those who offer to provide
either “the answer” or guidance along the path. In the field of
religion we have priests, rabbis, mullahs and teachers. We also have heretics.
In personal health we have doctors and medical practitioners of all varieties.
We also have quacks and snake oil salesmen. In business we have consultants
on the one hand and charlatans on the other (See Thomas
). Somewhere in that mix, and across all fields of endeavour we have ‘gurus’.

A few years ago Spiral Path worked for a one of the Big Five professional services
firms in Melbourne. It was an eye opening experience. we could see in the
eyes and hear in the words of our clients two very different perceptions
of us. One the one hand there was a deep distrust. Our fees were higher than
anyone else in town and they knew, or suspected, that we were looking for
ways to broaden the engagement (and hence charge more fees) in almost every
conversation. In short, they felt we were out to ‘screw them’.

On the other hand, they engaged us because our fees were so high. Our fees
must be the highest because we must be the best. When they came to a presentation
in our offices, they met us at the hallowed thirteenth floor. There was a hush
when the lift opened. We did everything we could to make them feel it was their
privilege to be invited to come here. We provided them with a magnificent view
of Melbourne (a metaphor for our omniscience), the meeting was attended by
waiters who would serve tea, coffee and biscuits individually and when they
went to the bathroom they were regaled with marble walls stone floors and gold

Throughout all this, Spiral Path felt they entertained (and we encouraged)
one abiding fantasy about us. Yes they could come to Level 13. But there
were parts of the building only staff were allowed. Surely there was, somewhere
higher in the building that they could only dream of where only the most
devout staff could go. A place where there was a huge book laid out on an
alter. In the book were all the possible scenarios that could face a business.
More importantly, next to each scenario was “the answer” — what
the business needed to do to solve the problems it faced or to obliterate
its competition. In their heart of hearts, Spiral Path believes this is what
they hoped they were paying for.

Spiral Path keeps this experience in mind whenever a new book, article or theory
comes across our desk. When we evaluate any leadership theory, the most fundamental
question we need to address is to what extent it provides practical and useful
direction in the art of leading and to what it extent it feeds our fantasy that
it is a shortcut that will enable us to lead and be successful without doing
the hard work of being a leader.

Fate vs Destiny

We were at the AHRI dinner the other night. A gala event by any standard and
we were delighted to make the acquaintence of Colin and Patrina.

During the course of the conversation we started discussing the difference
between Fate and Destiny.

Just semantics perhaps, but for some reason Spiral Path felt there was a difference.

Fate, we associate with fatalism. A feeling that there are things we can’t
do anything about. We don’t understand them but they happen anyway. We associate
fate with things we don’t want to happen. Of course literature is replete
with counter examples – for example "that fateful moment" may refer to the
one were two lives first intersected and from which a lifelong partenership
arose. Regardless, we feel we had no control over what happened. The meeting
was determined by something outside of us.

Destiny on the other hand Spiral Path believes is something we partner with. In
the strict sense of the word it sounds like, and probably is, from the same
derivation as ‘destination’. Destiny though feels to us as it is something
or some path, that we were designed for. When we spoke about it the other night
we used the expression "you might miss your destiny." Perhaps it is something
we feel in ourselves. It is our path. We of course would say it is our Spiral

Hmmm. We wonder what you think?