Customers and Employees First: Not Stockholders
This Time story about two retailers, John Mackey and Kip Tindell, who don't place much stock in worrying about their shareholders, made me wonder if their insight might not apply to the movie biz as well.
Here's a snippet:
"Simultaneously we hit upon the philosophy that I think will be the dominant philosophy in business in the 21st century," Mackey says. "It's this principle that the purpose of business is not primarily to maximize shareholder value." That's a little like saying the purpose of religion isn't to achieve salvation. The idea that corporations exist to please their owners, the shareholders, was supreme during the booming 1990s. It had its roots in scholarly arguments that striving to satisfy multiple constituencies--employees, customers, the community--is a recipe for underperformance.
In these trying economic times, as the entertainment behemoths rejigger their game plans to promote content, not synergy, and try to adapt to the digital era, is playing up to Wall Street really the best way to go? (Some would argue that they don't have much choice.)
For example, Time Warner's recent big moves-- spinning off its cable system, slashing New Line Cinema and shuttering Warner Independent and Picturehouse---were made in part to appease pressure from large stockholders like Carl Icahn and Wall Street analysts. But were they the best moves for Time Warner in the long run? Richard Parsons, chairman of the Time Warner board, used to stand up to Wall Street in the interest of the longer-term needs of the company. And lost the CEO job for it.
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