I wonder if the amazing idea thatcreating value for the customer creates value for the shareholders will ever catch on? I call it trickle up economics.
There is a line of thought that the more value you give a customer the less your company will keep for itself and the less a shareholder will make. A volunteer gives away all their value to the recipient. An entrepreneur wants to collect money in exchange for value created. Far more money than they spent creating the value for the customer.
man, this made me a little sad to read and think about. and not because of your comment specifically: i know that this must be, generally, how one has to think and talk about economics any sort of academic or abstract sense, but... i guess i just haven't really done that very much
Another thing to think about that is also sad and just sorta becomes part of the background noise of existing in society is exploitation. If you ignore the emotionally charged connotations around the term and focus on its meaning
> make full use of and derive benefit from (a resource).
Capital is in the business of exploiting Labor. It is the only thing that makes sense in our economic system. For anyone doing labor for $X for a company that then sells it to a customer for $Y it must hold that X < Y or else the company will fail. The arrangement most people operate under, myself included, is one where you are willingly underselling yourself. The trade off that most people point to is that the people are willing to do this because the stability of getting $X all the time regardless of this weeks / months / years sales is worth foregoing $Y, essentially you are buying stability with the difference. Although the recent rash of layoffs for companies, regardless of how well they are doing, does offer a counterpoint to that theory.
It's actually a Tragedy of the Commons situation. If very few people think that way, everyone is better off and the society is a better place. But in such a place, the people that have this mindset will absolutely be more successful then if they didn't have it.
At this point we're decades into this flavor of capitalism and the profiteering has long since become the norm, sadly.
And before someone says "it's always been like that"... No, it hasn't. Even in pop culture from a few decades ago you've got the characters taking great pride in providing good products for great prices. Nowadays our culture mostly makes fun of people like that and they're portrayed as targets to be exploited...
I have always found it amusing how much of our modern economic system looks something like this.
- What if everyone shared and cooperated and got along?
- Well then someone that wanted to take advantage of people would come along and make a big mess of it!
- Well what's your proposal then, should we stop those people, outlaw their greed and avarice?
- Hmm... no I think we should reward it and build our entire system around getting greed to produce useful outcomes.
- Ok, so we've been doing that for a while and the people that would have taken advantage of the commons have privatized the commons, taken full advantage of that, purchased the government, and essentially rule over us while we all fight for crumbs...
- But you've got an iPhone, so it's basically working great
How is this creating value for shareholders? They wasted a bunch of engineer and pm salaries building useless products that never made (and now never will make) any significant money.
But that's not how shareholder value is created. Shareholder value is created by press releases and hype, encouraging new people to buy the stock and drive up the price, not by building anything useful to society or long-term profitable.
So if Google Fit drove a hype cycle, it was successful.
That's the great part: creating value for customers can pay out for shareholders as well in the long run. But it's probably not a viable option if you want quick returns.
This is the third case: creating value for employees. Google promotes people for making new things. Thereby guaranteeing product churn.
(edit: the limit case is of course Elon Musk arguing that he should simply be given the entire company treasury as payroll at Tesla, one single employee taking all the value produced)