Voices raised against business as usual

Stephen Denning (Steve Denning Consulting, Washington, DC, USA)

Strategy & Leadership

ISSN: 1087-8572

Article publication date: 16 March 2015


Denning, S. (2015), "Voices raised against business as usual", Strategy & Leadership, Vol. 43 No. 2. https://doi.org/10.1108/SL-01-2015-0006



Emerald Group Publishing Limited

Voices raised against business as usual

Article Type: CEO advisory From: Strategy & Leadership, Volume 43, Issue 2

Stephen Denning

Stephen Denning is the author of a number of books on the principles and best practices of radical management and leadership (steve@stevedenning.com). This “CEO advisory” complements his article in this issue: “Does management innovation need a new change model?” His essays appear at Forbes.com: http://blogs.forbes.com/stevedenning/.[1]

It’s hard to imagine how the established large corporations that religiously observe their bureaucratic orthodoxies and zealously practice the maximization of shareholder value as their paramount creed can’t hear the warning voices of at least a few of their critics. Many observers have pointed to the mismatch between such entrenched 20th Century management practices and the urgent need to continuously revitalize corporations through customer-focused innovation. Many articles have appeared recently in leading pro-business journals such as Harvard Business Review, The Economist, The Financial Times, The New York Times, The Wall Street Journal, The Washington Post and https://Forbes.com, denouncing pervasive and dysfunctional management practices and calling for major change. Phrases like “stock price manipulation” (HBR), “corporate cocaine” (The Economist) and “zombie managers in the grip of management ideas that refuse to die” (Financial Times) are typical.

On the theory that a collection of doomsayers from many prominent media might be harder for the C-suite to ignore, I’ve assembled this chorus of Cassandras.

1. Harvard Business Review

In June 2014, Clayton Christensen and Derek van Bever in Harvard Business Review (HBR) write: “The orthodoxies governing finance are so entrenched that we almost need a modern-day Martin Luther to articulate the need for change.”[2]

Also in June 2014, Gautam Mukunda in “The Price of Wall Street Power” points out “excessive financialization” of the economy and the “unbalanced power” of the financial sector over management mindsets. Executives are “making choices they know are wrong.”[3]

In September 2014, “Profits Without Prosperity,” by William Lazonick, professor of economics at the University of Massachusetts Lowell, noted the massive scale and impact of share buybacks.[4]

In October 2014, the Roger Martin’s classic article, “The Rise and (Likely) Fall of the Talent Economy”, states: “The move from building value to trading value is bad for economic growth and performance. The increased stock market volatility is bad for retirement accounts and pension funds […] talent is being channeled into unproductive activities and egregious behaviors.”[5]

In November 2014, Gary Hamel wrote two articles in https://HBR.com, explaining why bureaucracy must die.[#fn6]

2. The Financial Times

In August 2014, Martin Wolf, warned in the Financial Times: “Almost nothing in economics is more important than thinking through how companies should be managed and for what ends. Unfortunately, we have made a mess of this. That mess has a name: it is ‘shareholder value maximization’.”[7]

In September 2014, Simon Caulkin proclaimed an “Era of management-led growth held hostage by old ideas that refuse to die.”[8]

In September 2014, Andrew Hill reported that “USA chief executives hoard good news for stock sales” with dubious practices that resemble “cookie jar accounting.”[9]

In September 2014, Edward Luce wrote in the Financial Times about “The short-sighted USA buyback boom” and argues that “Unless the roots of the problem are fixed, boardrooms will keep on draining their treasuries.”[10]

3. The Economist

In September 2014, The Economist published two important articles explaining how Blue Chip companies have become addicted to share buybacks, which have come to constitute ‘Corporate Cocaine.’[11]

4. The New York Times

On September 14, 2014, the New York Times featured a whole section with six separate articles on the issue of share buybacks, four of which denounced the practice.[12]

William Lazonick’s article called for “a national debate” as to why these practices are permitted and asked the Securities and Exchange Commission “to rethink the role of the stock market in the economy so that it can distinguish rules that encourage value extraction from those that encourage value creation.”[13]

5. The Wall Street Journal

In January 2014, a Wall Street Journal article commented that “There is a rare type of organism that eats itself alive. One of them is IBM.” The article goes on to show that the practice is widespread in capitalism today.[14]

In February 2014, Peggy Noonan editorialized in the Wall Street Journal about “Our Decadent Elites.” She asks pointedly: “What happens to a nation whose elites laugh at its citizens? What happens to its elites?”[15]

6. The Washington Post

In September 2014, Steven Pearlstein published an article with a self-explanatory title: “How the cult of shareholder value destroyed the American economy.”[16]

In another article in September 2014, Steven Pearlstein bemoaned the damage to the economy caused by hedge funds: “Northwest Biotherapeutics stock woes highlight the harm of short sales.”[17]

In September 2014, Harold Meyerson concluded in the Washington Post that “wealth in the USA today comes chiefly from retarding businesses’ ability to invest in growth-engendering activity. The purpose of the modern USA corporation is to reward large investors and top executives with income that once was spent on expansion, research, training and employees.”[18]

Aspen institute – articulating an alternative approach

In May 2014, Aspen Institute released its study on shareholder value reporting that a majority of respondents strongly agreed that the primary purpose of the corporation is to serve customers’ interests as ultimately the best means to add value for shareholders.[19]


1. This article draws on insights from the author’s blog: http://blogs.forbes.com/stevedenning/

2. Clayton Christensen and Derek van Bever, “The Capitalist’s Dilemma,” Harvard Business Review. June 2014, https://hbr.org/2014/06/the-capitalists-dilemma

3. Mukunda, G. “The Price of Wall Street’s Power.” Harvard Business Review, June 2014, https://hbr.org/2014/06/the-price-of-wall-streets-power/ar/1

4. Lazonick, W. “Profits Without Prosperity,” Harvard Business Review, September 2014, https://hbr.org/2014/09/profits-without-prosperity/ar/1

5. Martin, R. https://hbr.org/2014/10/the-rise-and-likely-fall-of-the-talent-economy

6. http://www.forbes.com/sites/stevedenning/2014/11/07/why-bureaucracy-must-die/

7. http://www.ft.com/intl/cms/s/0/6aa87b9a-2d05-11e4-911b-00144feabdc0.html?siteedition=intl

8. http://www.ft.com/intl/cms/s/2/cc4a40c4-085a-11e4-9afc-00144feab7de.html%23axzz3E508hIo6

9. http://www.ft.com/intl/cms/s/0/7399a1de-3516-11e4-aa47-00144feabdc0.html%23axzz3OPO4xU00

10. http://www.ft.com/intl/cms/s/0/f098df90-3fef-11e4-936b-00144feabdc0.html%23axzz3OPO4xU00

11. http://www.economist.com/news/leaders/21616950-companies-are-spending-record-amounts-buying-back-their-own-shares-investors-should-be

12. http://www.nytimes.com/roomfordebate/2014/09/14/pocketing-profits-or-reinvesting-them

13. http://www.nytimes.com/roomfordebate/2014/09/14/pocketing-profits-or-reinvesting-them

14. http://www.forbes.com/sites/stevedenning/2014/01/23/why-is-corporate-america-eating-itself-alive/

15. http://blogs.wsj.com/peggynoonan/2014/02/18/our-decadent-elites/

16. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/09/how-the-cult-of-shareholder-value-wrecked-american-business/

17. http://www.washingtonpost.com/business/northwest-biotherapeutics-stock-woes-highlight-the-harm-of-short-sales/2014/09/26/78b99b0a-4507-11e4-b47c-f5889e061e5f_story.html

18. http://www.washingtonpost.com/opinions/harold-meyerson-in-corporations-its-owner-take-all/2014/08/26/0c1a002a-2ca7-11e4-bb9b-997ae96fad33_story.html

19. http://www.forbes.com/sites/stevedenning/2014/06/17/why-the-worlds-dumbest-idea-is-finally-dying/