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Balancing Shareholder and Stakeholder Interests: The Key to Long-Term Value Creation
At the heart of the CEO's message should lie a commitment to value creation. The most effective means of achieving this goal is through the integration of hard metrics into business models. It is erroneous to perceive shareholders and stakeholders as competitors in a zero-sum game. In fact, establishing strong connections with a diverse range of social elements can generate significant value. This is particularly important, as it fortifies the resilience of the business model.
It is crucial to recognize that sacrificing relationships with stakeholders to meet profitability targets ultimately destroys value. This shortsighted approach, known as short-termism, is a grave mistake, and will ultimately undermine long-term value creation. On the other hand, prioritizing long-term value creation requires building and maintaining robust relationships with stakeholders.
However, it is worth noting that in certain systems, such as the United States, the maximization of shareholder wealth can have legal force. Despite this fact, CEOs should strive to create value for both shareholders and stakeholders, recognizing that a balance between the two is ultimately necessary for long-term success.
#100daysoflearning Day 036