The most dangerous phrase in business

The most dangerous phrase in business

Ask any business founder why they started their company and you’ll hear about a product or service. They will tell you about a moment of inspiration. Or, maybe you’ll hear about a long path of research. If you ask them what the purpose of their business is, you might hear, “To make money.” If pressed further, they may say, “To service clients,” or “To solve a problem.” These are all good motivations for a company. But, there is one phrase that should send a chill down your spine when you hear it.

“maximizing shareholder value”

Now, I’m not suggesting that shareholders shouldn’t get value from their investments. I’m not saying that a business shouldn’t try to be profitable. What I am saying is this. If a business focuses on “maximizing shareholder value”, the business isn’t focusing on why it started in the first place.

Shareholders don’t provide revenue. Customers do. Focusing on the shareholders often comes at the expense of the customers. When a business focuses on shareholders, it has lost its primary purpose.

Consider the case of the Comcast customer who tried to cancel his service only to have the Comcast agent accost him. Search for “rude gate agent” and you will find stories of poor service at airports. In many of these cases, workers are doing what their training tells them. These agents train to keep customers, cut costs, and improve the bottom line for the company. Yet, in the long run, they only succeed in driving a customer away.

What’s the solution?

I think it should be obvious, but the solution is, focus on the customer. Think about the customer’s needs. Put yourself in the customer’s shoes. Don’t worry about paying a dividend or pushing the stock price up. Those things will happen when satisfied customers become return customers. Cutting corners to raise the value of the stock may work in the short run, but it is unsustainable in the long run.

Knowing when to quit and ask for help

Recently, our office phone system had a problem. In the middle of the day, for no explainable reason, we started hearing a popping sound coming from the paging speakers. When we looked at the hardware, we found one beige box clicking, the LEDs on its face blinking with the click, and the popping noise over the speakers. We traced the wires back from this box to our main phone control and to an amplifier for the speakers, but couldn’t really figure out what purpose this box performed.

How hard could this be?

Given a rudimentary understanding of electricity, loudspeaker wiring, and basic phone installation, we figured we could find a way to get our paging system to work without this broken beige box. After all, how hard could it be? Famous last words.

Not ours, but a TF500 like ours found on an old eBay listing
Not ours, but a TF500 like ours found on an old eBay listing

As it turns out, it’s harder than we initially thought. Believe it or not, the phone installer who first set the system up knew what he was doing, and that box served a purpose. After clipping some wires, doing some soldering, plugging and unplugging things multiple times, we decided it’s time to quit and call in a professional.

Quitting doesn’t mean failing

When the repair tech came out, he brought in two different devices to try, plus his test gear. He spent a couple hours making connections, testing for noise, proper audio levels, switching and connecting, and eventually got us hooked up with a new paging amplifier. Considering how long the previous system lasted, what it cost us to have this new one installed seems like a bargain.

Even though we quit working on the phones, we didn’t take it as a failure. After all, telephone installs aren’t what we do. I don’t think trying something new and not accomplishing your end goal really counts as a failure, since you weren’t necessarily equipped to succeed in the first place. If it worked out and we were able to fix the phones, great. If we had to quit and get some help, no big deal. Don’t be afraid to start something because you might have to quit doing it later. There’s value in starting.