I Am Smarter Than Jack Welch*

I am smarter than Jack Welch.*

Welch told the FT this week that "it was 'a dumb idea' for executives to focus so heavily on quarterly profits and share price gains," and that "the emphasis executives and investors had put on shareholder value--which began gaining popularity after a speech he made in 1981--was misplaced."

According to Welch: ""On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products."

In other words, the stakeholder model of corporate management--rather than the relentless focus on keeping shareholders happy on a quarter-by-quarter basis--was right all along.

Needless to say, I'm not disagreeing with any of that. I am merely pointing out that I was saying all of this 10 years ago, five years ago and last year--all through the period when the "shareholder value" philosophy Welch and other CEOs were espousing and practicing at the time appeared to be working.

(The Welch interview is part of an excellent FT series on The Future of Capitalism.)

* Using a highly selective and issue-specific definition of the word "smarter."