Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



How Maximizing Shareholder Value Can Bury Your Business

Roger Martin, co-author of Playing to Win, holds the unexpected view that "setting as your goal the maximization of shareholder value is a bad idea." Why would this be the case, especially when many companies expressly state that one of their major goals is to benefit the stockholders? Because, as Martin explains, "Setting it as your goal makes it less likely that you will maximize shareholder value." This certainly sounds counterintuitive. However, the reasoning behind Martin's statements is that companies need to focus on customer satisfaction first, and they also need to maintain and nurture employee morale. Both of these goals are complicated when customers and/or employees hear how they aren't as important as the shareholders. Furthermore, he says by making the customer "deliriously happy," sales will naturally increase -- and also, inevitably, will share prices.

See more in the following video.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

To watch the full interview with Roger Martin, click here.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2295259, ~/Articles/ArticleHandler.aspx, 9/30/2016 1:19:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,324.52 181.07 1.00%
S&P 500 2,169.65 18.52 0.86%
NASD 5,316.20 47.05 0.89%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 1:03 PM
GOOGL $805.98 Up +3.34 +0.42%
Alphabet (A shares… CAPS Rating: *****
SBUX $54.24 Up +0.79 +1.48%
Starbucks CAPS Rating: ****
WFM $28.44 Up +0.43 +1.54%
Whole Foods Market CAPS Rating: ****