Shareholder versus Stakeholder Value

In a recent FINANCIAL TIMES front page article the issue was raised about who created the Shareholder value concept and its negative impact on US businesses. The author asserted that the concept can be traced to Jack Welch's speech in 1981. Welch asserts that maximizing SHORT TERM profits to enhance Shareholder value, which really means increasing the share price is not a strategy and is not a good thing to do.
I totally agree with JACK that maximizing short term profits to increase the STOCK price is poor management. But in fact, this is what he did and it enhanced the share price.
But this concept of CREATING and MEETING Wall STREET EXPECTATIONS didn't start with JACK, it really started with Fred Borch and enhanced by Reg Jones... Jack two previous predecessors.
It started when GE was involved in PRICE FIXING. Borch took over because GE stock had stopped and Fred recognized it need a jump start. He and Reg, his CFO, decided to create and meet realistic expectations on Wall Street and it was GE that established the now accepted approach of guiding the Street.
GE under Jones mastered this approach and GE stock started to move upward, however Jones also recognized the need to balance all STAKEHOLDER (investors, stockholders, governments, employees, management, unions, communities and others) results, but clearly recognized that it was impossible to satisfy all stakeholders.
Welch elected to focus on shareholders, employees and management and he was successful..but times have changed and these stakeholders are under attack.
The issue facing Immelt and other current CEO's is how to balance the conflicting needs and expectations of all stakeholders and determine which is the right mix and emphasis.

Bill Rothschild, author to the most comprehensive, objective and insightful evaluation of GE's 127 years of successes and failures...THE SECRET TO GE's SUCCESS..