Companies serve customers, not the other way around

business roundtable

On 19 Aug 2019 Business Roundtable has announced a new prioritization of the purpose of a company. Their updated list of priorities is:

1) Delivering value to our customers,
2) Investing in our employees,
3) Dealing fairly and ethically with our suppliers,
4) Supporting the communities in which we work,
5) Generating long-term value for shareholders (owners).
The statement was signed by CEOs of major USA companies.

This is an important public display which contradicts the previous belief that companies serve owners first, established by Friedman Doctrine.

The prioritization of owners over everyone else has been one of the most destructive ideologies. It offered incentives to a myriad of destructive projects and has damaged the public trust in free trade and capitalism. Customers and employees were treated as if they serve the owners, and this resulted in narrow goals and short term planning. Company growth was fueled by this ideology, but company life has been reduced and centralization of wealth has increased. Brands were built over quarters and not over decades. Poor product quality was compensated with marketing and sales brute-force.

However, companies could have grown much more if they focused on everyone else but owners. Offering more value to customers, employees, suppliers, and communities would indirectly benefit owners much more. Only problem is that it would take more time and require more of their patience.

I am a strong believer in focusing on customers first and I am happy that organizations like Business Roundtable are starting to publicly support this. While this is a change for some of the big public businesses, most family SMBs and startups always knew that companies serve customers, not the other way around.

Written by: Nikola Tosic
Publishing date: 23 Aug 2019