Additional Insight for Myth 4
Management is a profession that relies on the evidence of analysis

Enough of MORE. We need better:
How stock markets kill companies and communities  

(Adapted from mintzberg.org/blog posted on 9 November 2017 and 26 November 2023)

Some companies are inclined to explore—they are ever on the lookout for new products, new processes, new ideas. These are the ones that build our economies. Some others exploit—whoever and whatever they can. These undermine our economies. Here is a little fable, all too common, that explains how an explorer corporation becomes an exploiter after issuing shares on the stock market.

Creating an Enterprise   
You have a compelling idea and lots of energy though not much money. So with the help of an understanding banker, alongside your own sweat capital, you build an enterprise. And you succeed! Your customers are delighted, your employees are committed, you feel great, and the economy benefits. Win-win all around. You have built an engaging enterprise with its own sense of communityship, beyond your own leadership.

As the enterprise grows, however, you want more.  So you do an initial public offering (IPO). Let the stock market fund faster growth. This is the turning point.

Ravaging the Enterprise   
The first sign of trouble is the realization that, while you simply wanted more, the stock market is intent on grabbing MORE. It doesn’t care about your ideas or your ideals, your customers or workers, except as a means to generate insatiable, one-dimensional growth, of Shareholder Value, which has nothing to do with human values, your own included. You are running a publicly traded company now, so you must keep feeding the beast. The market analysts are analyzing, the day traders are trading, and the wolves of Wall Street are demanding a performance report every three months. So much for communityship.

Anyway, you are getting greater growth, albeit accompanied by greater pressure. Eventually, however, you find yourself running out of your usual customers, and it’s tough to get new ones with the old ideas, or to create new ideas with this new Value. How, then,  to get MORE when there is no more to be had, at least not as you have built this company? The answers are all around you, in the exploits of some other publicly traded companies:

• Exploit the existing customers. Bamboozle pricing is a good idea: price so that they can’t figure it out. Or charge excessively for servicing the products that your customers are stuck with.
• Trash the brand. Get more by providing less: for example, less in the same package, or lower quality at the same price.
• If you can’t increase the revenues, you can certainly reduce the costs: cut maintenance, cut research, cut everything out of sight—except the executive bonuses.
• And don’t forget to squeeze the workers by putting them on short-term contracts at lower pay, without benefits, after busting their union. Better still, fire the whole lot of them and move production to some country that cares less about pollution and abuse.
• And when all else fails, diversify. Get into all kinds of new businesses you don’t understand. After all, you’re big now, with lots of money to throw around.

Ravaging Society   
Your enterprise has now become a global corporation, with obligation to no country, least of all your own, where it no longer pays much tax anyway. So why not go whole-hog, so to speak? Do well by doing bad:

• Collude with your competitors to create a cartel, better still, buy them out altogether—in the name of competition.
• And in the name of free enterprise, lobby governments around the globe to grant subsidies to your industry and rid it of annoying regulations.
• If you do face bankruptcy, which happens eventually to companies that exploit, fear not: you have become “too big to fail.” Thanks to your bribes (called political donations), the government you betrayed will bail you out, shifting the costs of your failure to society at large. Economists, right in step with such shenanigans, call this an “externality”.

Ravaging Yourself   
One day you wake up to the realization that you have become the victim too. “I used to love my business. We had a great time serving the customers I worked so hard to get. I had pride in our place, our products, our people. Now the customers write me nasty emails, and the workers glare at me when I see them (which is rarely). Why did I build an engaging enterprise, only to jettison its engagement? I have cashed in my legacy for wealth that I can’t even begin to spend.” 

Imagine a country full of such corporations, indeed, a whole planet of them. We’re getting there. By hogging resources that could be recycled to build vibrant new enterprises that explore, they are distorting our economies, their exploitation is debilitating our societies and diminishing our communities. And by their relentless fostering of production and consumption, they are damaging our planet. Not all corporations do this—just too many of them. How much MORE can we tolerate?

Getting Better  
Let’s take this fable back to another entrepreneur, who also managed to build a great enterprise, but has yet to do that IPO, and ask:

Why become a follower, with yet another IPO? Must you really make yourself beholden to the demands of a mercenary stock market? What kind of legacy do you want to leave, anyway?

You can find better ways to grow your enterprise: (a) Find some patient, decent capital, that will allow it to develop responsibly and sustainably. (b) You can grow qualitatively instead of quantitively—with enhanced quality, more durable products, better service…and better paying jobs—for which you can charge an honest premium? (c) Or else, you can do an IPO that keeps the analysts at bay by issuing two kinds of stock, as did Tata in India and many famous companies in Denmark, with family trusts that control a majority of the voting shares. (d) Or you can convert to B or Benefit Corporation status, with a commitment—legal in one case, voluntary in the other—to respect social and environmental needs. (e) You might even try crowdfunding, where many people each buy a little bit of the ownership.

And if you are starting an enterprise: (f) Consider relying on funding by loans and retained earnings, at least if there is no need for heavy investment. Some great cooperatives have done it. (g) Indeed, how about creating the business as a cooperative, with one share each owned by the customers (as in a credit union bank), or by the suppliers (as in a farmers’ cooperative), or by the workers (as in the Mondragon Federation, with 70,000 employees). By the way, even in free-market America, there are more cooperative memberships than people.

Here’s another idea that may not be as outrageous as it sounds: (h) Give your company away to its employees—you know, those people who actually care about the place, unlike day traders who own it. The John Lewis Partnership in the U.K. did this in 1950. Since then, while so many competing chains of department stores have come and gone, it continues to be the largest in the country. The legacy has lived on. (i) One step farther is to dispense with ownership altogether and create a social enterprise, in the first place— a business set up as a trust that is owned by no-one. Look around—social enterprises are proliferating.

Better Is better than MORE   
Economists insist that MOREis the way forward. No, it is the way backward, socially as well as economically. We don’t have to destroy our progeny and our planet for the sake of some economic dogma. Sure, we need development and employment—but responsible development with robust employment. So enough of MORE, this one-dimensional mercenary cancerous growth, with all its waste and warming. MOREis ravaging our enterprises, our societies, our planet, and ourselves. We can do better.