Lean Enterprise: How High Performance Organizations Innovate at Scale (Lean (O'Reilly))

by Jez Humble

For many years, the conventional wisdom held that corporate executives should focus on maximizing shareholder value, and this goal was reinforced by compensating executives with stocks.4 However, these strategies have a number of flaws. They create a bias towards short-term results (such as quarterly earnings) at the expense of longer-term priorities such as developing the capabilities of employees and the relationships with customers. They also tend to stifle innovation by focusing on tactical actions to reduce costs in the short term at the expense of riskier strategies that have the potential to provide a higher payoff over the lifetime of the organization, such as research and development or creating disruptive new products and services. Finally, they often ignore the value of intangibles, such as the capabilities of employees and intellectual property, and externalities such as the impact on the environment.