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On The Table Read, “The Best Book Reader Magazine in the UK“, Veteran CEO Ed Chambliss shows how catering to shareholders drains companies and communities, then lays out a path to more human-focused organizations.
Fifty years of putting shareholder value first has weakened business and society, but there are concrete ways to restore the balance, says veteran CEO Ed Chambliss.
A One-Legged Stool: How Shareholder Primacy Has Broken Business (And What We Can Do About It)
In his new book, A One-Legged Stool: How Shareholder Primacy Has Broken Business (And What We Can Do About It), Chambliss leans on 35 years of business experience and several years of intensive corporate research to detail how shareholder value overtook business, what it’s costing us, and how we can get back to balance. His main point is that only business has the power and resources to solve society’s biggest problems, but it can’t do so if it is consumed by “maximizing shareholder value.”
“Since Milton Friedman [the Nobel Prize winning economist] first proposed the idea that the sole purpose of any publicly traded business was to ‘make as much money as possible’ for its shareholders, the markets have seen explosive growth,” said Chambliss. “The problem is over time companies that have practiced this approach have also eroded their abilities to attract talent, properly care for customers and innovate products – the very things that help a company stay profitable. Instead, they find themselves continually slashing budgets and workforce to satisfy market demands, all with little reinvestment in the long-term health of their businesses.”
Business And Societal Health
Chambliss details the negative effects on business and societal health and presents a sophisticated economic analysis in terms that any reader can appreciate. He shows why investors can’t create value for the entirety of a business enterprise, and how putting them first increases the wealth gap, workplace dissatisfaction, and environmental erosion.
“Making shareholder value your prime objective in business is inherently discriminatory,” said Chambliss. “It disproportionately benefits those who are arguably the most well off, while decimating the middle class. But more than this, it assumes that shareholders’ only desire is for money when, in reality, shareholders play many other roles in life, and have many other needs. Unfortunately, the things that can satisfy these non-monetary needs are often destroyed so they can be converted into shareholder value.”
Sustainable Growth
The book strikes a hopeful tone in contemplating the future. Chambliss lays out a clear set of positive steps businesses can take to create sustainable growth. By adopting a broader vision of purpose and profit, he demonstrates how businesses can create new opportunities for growth and enrich the full ecosystem that supports them. Specifically, he details six steps for retooling companies to inspire talent, innovation, marketing, customer service, and environmental sustainability. These include organizing perpendicular to industry categories, orchestrating product offerings around human needs, and using artificial intelligence and machine learning to uncover hidden costs.
“Business needs to satisfy a wide variety of human needs, not just shareholder value,” said Chambliss. “Only when we serve the whole person can we ensure that we have healthy markets filled with people who can afford our products, living in communities that are safe from environmental hazards.”
A One-Legged Stool: How Shareholder Primacy Has Broken Business (And What We Can Do About It) is now available. For more on the book, visit https://aoneleggedstool.com/.
Ed Chambliss
For more than 35 years, Ed Chambliss helped build many kinds of brands and businesses, from electronics to food to tourism, based on what they meant to people. Over his career, he’s seen many otherwise smart clients damage the foundations of their companies by always putting shareholders first. In 2018, he walked away from being a CEO to research why business was on such a destructive path and what could be done to change it. The result is the book, A One-Legged Stool: How Shareholder Primacy Has Broken Business (And What We Can Do About It).
Ed currently lives in Los Angeles with his wife and two daughters.
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