What a great read, I think about this all the time. Part of the reason we're failing is companies don't think past their next quarterly report and politicians don't think past their next election.
Agreed, I'm not sure how it can be solved—the problem is too entrenched. The focus on shareholder value over customer value has deep roots in economic efficiency and mass production. Take Henry Ford, for instance. When his engineers identified frequently failing parts in the Model T, they didn't improve them. Instead, they aligned the reliability of other components to match the weakest link, focusing on cost savings over quality.
This shift from caring about customers to obsessing over shareholders has really hurt genuine customer value and good design. It's all about short-term profits now, ignoring the long-term benefits of thoughtful design. With today's fast release cycles and massive distribution, this approach is even more damaging.
You touched on this a bit, but I would also like to stress that these are the exact same companies that caused hundreds of thousands of people to lose their jobs just to keep their profit margins intact. They talked about the "economic downturn", claimed they overhired during the pandemic, there was no way to avoid mass layoffs or some other bullshit excuse. We all know that it was because of shareholder pressure, because it was the easiest way to keep making more money in the short term. They proved that they're more than willing to sacrifice anything for their own interests. Not that we didn't know it before.
i.e. Mark Zuckerberg’s “year of efficiency.” Yeah. Gross stuff. Microsoft makes literal billions a year, buys game studios for some $60-odd billion, but still feels shareholder pressure to fire small teams who wages are a drop in the ocean.
It’s sad that quarterly firing has become a strong market sign and something that gets investors wet in the pants.
My day-job is in IT. I've seen this cycle first-hand.
A few years ago, we were all called into a giant meeting to discuss how Blockchain is going to revolutionize how we work. It would cure diseases and allow us to predict the future.
It hasn't even been that long and they've simply done a 'find & replace' of blockchain with AI.
Blockchain is the biggest load of rubbish. I heard everything from medical, to housing, to finance to creator content was going to be on the Blockchain. That was 2022. Still waiting!
Reading this piece has been quite the vent for myself.
It’s unnerving, everything has really gone down in the customer value sense: from flimsy utensils that break in months of use to cars and planes that die mid-use to bridges that collapse.
Let’s not get started on software updates like yet another Teams forced restart with 7 new things that nobody asks for but breaks 4 previous perfectly working ones. Video games anyone? With day-0 patches? Or where the physical box doesn’t have the game but a paper with the redeem code?!
All in the name of squeezing one more cent in cost savings… “it’s all about the process bro”, “it’s all about the bottom line sis” says every MBA dude and dudess bros/sis.
Guess the best we can do is vote with our dollars… just stick to the few free tier services at times and unplug from it all whenever comfortably possible. Lots of potential savings that way if taken large scale (many services, big expenses like a car, etc)… and as a bonus due to not spending said dollars, we also save on 15% sales taxes (as is in most places).
You didn’t even get to my favorite part, layoffs to make it look like more was earned in a quarter. The illusion of infinite growth by masking it behind reduction of force. Fuck your employees for Shareholder Value. Why yes, yes I am a casualty of that trend. I’m a statistic… but I was lucky to have 20 years worth of severance, many aren’t so blessed.
I honestly just forgot this. I’ve written about Meta’s so-called “year of efficiency” before. It’s every from with where we are. Sack 20,000 people, but blow $21 billion and counting on a wasted Metaverse adventure.
Brilliant article. But I think the silicon valley is trying to build the next novel experience and is missing its mark. As Peter Theil says, they’re trying to go from 0 to 1. Trying to create something new and unique out of nothing. Just like FB did back then. Unfortunately the innovations are missing their mark. Yes, you’re absolutely right in suggesting that they’re trying to sell BS ideas using fancy names, thereby raising valuations. But this party’s going to end. It may end up with some execs having fatter wallets, but hey that’s just business. Average people like me will resent them for it, but if the shoe was on the other foot, I too would be justifying my earnings under the same guise of just doing business.
I’m starting to think (was going to write something on this soon), that there might be no more “1’s”?
Like, what if we already reached the peak of consumer tech. If you take America, customers just want bloody decent WiFi — they don’t give a shit (on the whole) about metaverses or blockchains. Yes. Tech will continue to grow/innovate, but perhaps it will be more niche, say medical tech, rather than these huge, consumer-facing services/products?
Part of me thinks that the sort of yearly tweaking that Apple likes to do is down to the fact there is little place else to go. Everything else is going to require such a huge cultural/societal leap, and we just don’t seem that interested in taking it.
And what makes me even MORE angry, is that when I do pay for ads on Facebook they are using their AI to steal my copy, and use it through “AI” to help my direct competition!! I am paying Facebook, and they can just take my data and use it on a competitors ad.
How will businesses even differentiate themselves anymore through marketing if AI can just take it and use it for someone else?
The diagnosis is spot on. Let me give a UK example: water companies, who handle both drinking water and sewage. Back in the 1980s Margaret Thatcher, the Queen of Free Markets, privatised many UK public services (many under direct government control at that time), claiming it would lead to competition and better value for taxpayers (aka consumers). She also cited greater efficiancy, and more investment in infrasctructure, much of which was in need of improvement.
But water is a monopoly service: if I don't like my water supplier I can't just fire them and hire another to lay a pipe to my kitchen. The new setup did ideed lead to competition, but not for customers, for SHAREHOLDERS. The money that should have gone to infrastructure went to dividends. We even had the bizarre situation of water companies borrowing money to pay dividends to shareholders. It's a criminal offence to remain in business if you know your company is failing, by the way. But it gets worse.
Water companies, in time of emergency, such as severe storms, are allowed to discharge untreated sewage into waterways. It's meant to be a last resort, to prevent sewage flooding into homes, etc. But under the present regime it has become so routine to do this that many of our rivers (completely safe a couple of decades ago) are now toxic to both humans and fish. As they flow into the sea, a lot of our coastline isn't too savoury, either. This has happened precisely because companies have paid shareholders instead of financing improvements to the drains. Many of these privatised companies are now foreign-owned, and simply don't care so long as the cash cows keep providing.
The new government may have to renationalise the companies in order to get the powers to put things right. But that's very expensive, and all the indications are that shareholders do not want to pay up to prevent this. At this time, it isn't clear what the solution is, only that there has to be one. Several decades back, the American humorist Tom Lehrer sang of turning on the taps and getting "hot and cold running crud". How right he was.
Similar problems exist in other public utilities. It's the legacy of 14 years of government by free-marketeers.
I’m from Scotland, so agree with the sentiment. The last few years gas and electric price rises have been disgusting — all while the companies rake in billions (and huge payouts for shareholders), not because business is booming but, oh yeah, we’re paying more for it.
Excellent piece and something I have been angry about for a while. It seems to me that shareholders live on a different planet than the rest of us, because none of the changes to increase their value has ever been a real progress. Ads on streaming platforms are a great example, we now have, what we already had: cable TV. We literally went back in time.
I'll never forget a conversation I had with Chuck Miller, CEO of Avery, back in the 1980s. The "shareholder value" concept was relatively new, and that staunchly conservative Republican rejected it completely, calling it immoral as he explained the value contributed by many parties, most especially the employees of the company. He and I were political opposites in most respects, but we shared basic common sense, which has, alas, fallen out of fashion.
What a great read, I think about this all the time. Part of the reason we're failing is companies don't think past their next quarterly report and politicians don't think past their next election.
Yup. And too scared to do any radical - or god forbid, user-friendly - in fear of rocking that boat
Agreed, I'm not sure how it can be solved—the problem is too entrenched. The focus on shareholder value over customer value has deep roots in economic efficiency and mass production. Take Henry Ford, for instance. When his engineers identified frequently failing parts in the Model T, they didn't improve them. Instead, they aligned the reliability of other components to match the weakest link, focusing on cost savings over quality.
This shift from caring about customers to obsessing over shareholders has really hurt genuine customer value and good design. It's all about short-term profits now, ignoring the long-term benefits of thoughtful design. With today's fast release cycles and massive distribution, this approach is even more damaging.
Yeah, the problem is entrenched, but certainly ramped up since Big Tech basically became the foundation of the stock market.
This is a painfully accurate article.
Sorry.
Meant in a good way of course!
You touched on this a bit, but I would also like to stress that these are the exact same companies that caused hundreds of thousands of people to lose their jobs just to keep their profit margins intact. They talked about the "economic downturn", claimed they overhired during the pandemic, there was no way to avoid mass layoffs or some other bullshit excuse. We all know that it was because of shareholder pressure, because it was the easiest way to keep making more money in the short term. They proved that they're more than willing to sacrifice anything for their own interests. Not that we didn't know it before.
i.e. Mark Zuckerberg’s “year of efficiency.” Yeah. Gross stuff. Microsoft makes literal billions a year, buys game studios for some $60-odd billion, but still feels shareholder pressure to fire small teams who wages are a drop in the ocean.
It’s sad that quarterly firing has become a strong market sign and something that gets investors wet in the pants.
My day-job is in IT. I've seen this cycle first-hand.
A few years ago, we were all called into a giant meeting to discuss how Blockchain is going to revolutionize how we work. It would cure diseases and allow us to predict the future.
It hasn't even been that long and they've simply done a 'find & replace' of blockchain with AI.
Blockchain is the biggest load of rubbish. I heard everything from medical, to housing, to finance to creator content was going to be on the Blockchain. That was 2022. Still waiting!
Reading this piece has been quite the vent for myself.
It’s unnerving, everything has really gone down in the customer value sense: from flimsy utensils that break in months of use to cars and planes that die mid-use to bridges that collapse.
Let’s not get started on software updates like yet another Teams forced restart with 7 new things that nobody asks for but breaks 4 previous perfectly working ones. Video games anyone? With day-0 patches? Or where the physical box doesn’t have the game but a paper with the redeem code?!
All in the name of squeezing one more cent in cost savings… “it’s all about the process bro”, “it’s all about the bottom line sis” says every MBA dude and dudess bros/sis.
Guess the best we can do is vote with our dollars… just stick to the few free tier services at times and unplug from it all whenever comfortably possible. Lots of potential savings that way if taken large scale (many services, big expenses like a car, etc)… and as a bonus due to not spending said dollars, we also save on 15% sales taxes (as is in most places).
Money talks. Always will. The unfortunate reality of where we are now, and will likely be trapped in forever.
You didn’t even get to my favorite part, layoffs to make it look like more was earned in a quarter. The illusion of infinite growth by masking it behind reduction of force. Fuck your employees for Shareholder Value. Why yes, yes I am a casualty of that trend. I’m a statistic… but I was lucky to have 20 years worth of severance, many aren’t so blessed.
I honestly just forgot this. I’ve written about Meta’s so-called “year of efficiency” before. It’s every from with where we are. Sack 20,000 people, but blow $21 billion and counting on a wasted Metaverse adventure.
Make it make sense
Brilliant article. But I think the silicon valley is trying to build the next novel experience and is missing its mark. As Peter Theil says, they’re trying to go from 0 to 1. Trying to create something new and unique out of nothing. Just like FB did back then. Unfortunately the innovations are missing their mark. Yes, you’re absolutely right in suggesting that they’re trying to sell BS ideas using fancy names, thereby raising valuations. But this party’s going to end. It may end up with some execs having fatter wallets, but hey that’s just business. Average people like me will resent them for it, but if the shoe was on the other foot, I too would be justifying my earnings under the same guise of just doing business.
I’m starting to think (was going to write something on this soon), that there might be no more “1’s”?
Like, what if we already reached the peak of consumer tech. If you take America, customers just want bloody decent WiFi — they don’t give a shit (on the whole) about metaverses or blockchains. Yes. Tech will continue to grow/innovate, but perhaps it will be more niche, say medical tech, rather than these huge, consumer-facing services/products?
Part of me thinks that the sort of yearly tweaking that Apple likes to do is down to the fact there is little place else to go. Everything else is going to require such a huge cultural/societal leap, and we just don’t seem that interested in taking it.
In summary, while the human evolution continues to to crawl at its usual snail’s pace, the human imagination moves at a much more terrifying pace.
And what makes me even MORE angry, is that when I do pay for ads on Facebook they are using their AI to steal my copy, and use it through “AI” to help my direct competition!! I am paying Facebook, and they can just take my data and use it on a competitors ad.
How will businesses even differentiate themselves anymore through marketing if AI can just take it and use it for someone else?
Burn that platform to the ground.
i’m about ready to. It sucks that my 300+ reviews are on FB or I would have deleted it yesterday
The diagnosis is spot on. Let me give a UK example: water companies, who handle both drinking water and sewage. Back in the 1980s Margaret Thatcher, the Queen of Free Markets, privatised many UK public services (many under direct government control at that time), claiming it would lead to competition and better value for taxpayers (aka consumers). She also cited greater efficiancy, and more investment in infrasctructure, much of which was in need of improvement.
But water is a monopoly service: if I don't like my water supplier I can't just fire them and hire another to lay a pipe to my kitchen. The new setup did ideed lead to competition, but not for customers, for SHAREHOLDERS. The money that should have gone to infrastructure went to dividends. We even had the bizarre situation of water companies borrowing money to pay dividends to shareholders. It's a criminal offence to remain in business if you know your company is failing, by the way. But it gets worse.
Water companies, in time of emergency, such as severe storms, are allowed to discharge untreated sewage into waterways. It's meant to be a last resort, to prevent sewage flooding into homes, etc. But under the present regime it has become so routine to do this that many of our rivers (completely safe a couple of decades ago) are now toxic to both humans and fish. As they flow into the sea, a lot of our coastline isn't too savoury, either. This has happened precisely because companies have paid shareholders instead of financing improvements to the drains. Many of these privatised companies are now foreign-owned, and simply don't care so long as the cash cows keep providing.
The new government may have to renationalise the companies in order to get the powers to put things right. But that's very expensive, and all the indications are that shareholders do not want to pay up to prevent this. At this time, it isn't clear what the solution is, only that there has to be one. Several decades back, the American humorist Tom Lehrer sang of turning on the taps and getting "hot and cold running crud". How right he was.
Similar problems exist in other public utilities. It's the legacy of 14 years of government by free-marketeers.
Raforde.substack.com
I’m from Scotland, so agree with the sentiment. The last few years gas and electric price rises have been disgusting — all while the companies rake in billions (and huge payouts for shareholders), not because business is booming but, oh yeah, we’re paying more for it.
This provide opportunity to customer-centric companies
If only. The problem is everyone wants to make money.
Excellent piece and something I have been angry about for a while. It seems to me that shareholders live on a different planet than the rest of us, because none of the changes to increase their value has ever been a real progress. Ads on streaming platforms are a great example, we now have, what we already had: cable TV. We literally went back in time.
I'll never forget a conversation I had with Chuck Miller, CEO of Avery, back in the 1980s. The "shareholder value" concept was relatively new, and that staunchly conservative Republican rejected it completely, calling it immoral as he explained the value contributed by many parties, most especially the employees of the company. He and I were political opposites in most respects, but we shared basic common sense, which has, alas, fallen out of fashion.
Great read Stephen, I see this shift more and more in user experience