Why maximizing shareholder wealth ISN'T of most value...

Saying that maximizing shareholder wealth is of most importance, is like saying "the goal is to make a hole in that wall and the way I will do it is to bang my head on the wall repeatedly until a hole appears in the drywall."

The more effective method would be to step back from the wall and use your head to strategize the methods and approaches that could be used to best create the desired hole in the wall.

In business school, when shareholder wealth is presented as the primary importance, we end up discussing things like the value stick.  The idea of the value stick is that a business looks at how they can create value within the industry in which they exist, and then work to capture as much of that created value as possible.

The problem with this attitude towards the value stick is that it makes business and customer into competitors instead of collaborators.

Let me propose a better approach to the value stick.

By all means, a business should think about how they can create the most value, or the biggest value stick.  But here is where things diverge.  What if instead of trying to capture as much value as possible, the business worked to capture enough value?  Enough value to not only keep it's existence, but even to thrive.  But then they simultaneously worked to allow the customer to capture a sizable, maybe even surprising, chunk of the value created.

Why?

Because when a business actively works to give the customer more value than even they deserve, they become fascinated.  And a fascinated customer carries the ultimate value.  They will buy again.  They will tell others.  They will sacrifice for your brand.  They represent Life Time Value.

And when customers truly feel like collaborators, then your true competitors (others operating in your market) have something to fear because the natural result of fascinated collaborators is the capture of an ever-increasing share of the pie.  And when you are capturing larger and larger portions of the pie, you no longer need to obsessive over capturing every last possible bit of created value.

And in the end...shareholders have wealth.