Andrew Hill is an associate editor and the management editor of the FT. He is a former City editor, financial editor and comment and analysis editor. He joined the FT in 1988 and has also worked as New York bureau chief, foreign news editor and correspondent in Brussels and Milan. Andrew was named Commentator of the Year at the 2009 Business Journalist of the Year Awards, where he also received a Decade of Excellence award. This blogpost is adapted from his speech to the seventh William Pitt Seminar - “What’s so good about growth?” – organised by Pembroke College, Cambridge.
Earlier this year I visited Patagonia, the American outerwear manufacturer, headquartered just north of Los Angeles.
Patagonia has a perverse dislike of selling more products. When at a recent strategy meeting, his executives asked founder Yvon Chouinard what he thought about their plans, he responded – according to his lieutenant Rick Ridgeway – “I’m kinda worried that you’re training all those consumers out there to buy a bunch of shit they don’t need.”
At the other extreme is Jack Welch, ex-CEO of General Electric, whose tenure was marked by GE’s uncanny ability to hit year-on-year growth targets. GE’s mantra was shareholder value: to keep investors happy, it did everything possible to meet their expectations for consistent growth.
Then, in 2009, less than two years into the credit crunch and the worst financial crisis for generations, Welch recanted. He told the Financial Times: “On the face of it, shareholder value is the dumbest idea in the world.”
Chouinard and Welch could not be more different – one, a laid-back hippyish adventurer and the other, a turbo-charged golfing super-executive.
Their companies look pretty different, too. Patagonia has just become a “benefit corporation”. This is a new corporate form, available in California and a growing number of other US states, that obliges companies to take account of non-financial interests, such as social, environmental or community objectives, as well as shareholder demands. GE was and is a stock market bellwether...