"Boards are invested in their C.E.O.s until they're not." [Boeing]
leehamnews.com
leehamnews.com
Valuation and stock price used to be a metric effected by how well a company was managed, how good their products were and how well they sold in a market. Since this whole bullshit of shareholder value being the utmost objective of corporations; gamed, and optimised for; when it became the mantra of what defines "good management", not only incentivised but almost religiously followed it simply ceased to be a good metric.
The results are what we see, flailing (and failing) corporations that keep entering into death spirals by pursuing the highest share price possible, not as a side-effect of being a good company but by gaming it in the most absolutely ludicrous ways to pump the stock price, number goes up, it's all good, execs get their bonuses.
Unfortunately I don't see this culture changing without really bad stuff happening, it's so entrenched in corporate executive culture for the past 40 years that only a bloodbath of companies going under after many crisis brought by these same managers will create some will to change this absurd system. The side-effects onto common people would be dire considering that many are also invested in the stock market which these companies carry most of the weight. We're all hostages to this bullshit now.
His management ethos was sadly hailed in business schools for it's genius (for facilitating higher than average returns at a time when most companies operating sanely could only offer modest returns) even as it's fruits began to slowly poison the entire vineyard.
What it effectively was was the solidification of short-term gains at all costs in the business zeitgeist for the next 4 decades.
Before Welch corporate had first a duty to its workers, providing good pension systems, training on (and for) the job, loyalty to employees by avoiding mass firing/layoffs even if it meant cutting other expenses and management salaries (or negotiating pay cuts across the board to whether a storm), taking good care of their workers as a principle; secondly a duty to society by providing and/or producing services and products that benefitted society, funding education to train a new batch of workers but also as a return to the society that created the foundations where the corporation sprung from; and thirdly to shareholders and investors.
Welch took over GE and implemented his vision of what we now see as a corporation: trim the "fat" by cutting whatever is considered a cost at the moment, inverted the duties of corporate to prioritise shareholder value above workers and society, what we now see repeated ad nauseum as the only true responsibility of corporations (here on HN is a consistent mantra of the business types), and so on.
GE is far away from the powerhouse of R&D from before mostly due to Welch's changes, those have trickled into becoming the zeitgeist of corporate thinking over time when many MBA programs simply adopted his methods as the right way to do business. In my opinion this thinking is what makes almost every contemporary corporation rotten in their cores.