Jack Welch, who is regarded as father of the “shareholder value” movement, has said the obsession with short-term profits and share price gains that has dominated the corporate world for over 20 years was “a dumb idea”.

“On the face of it, shareholder value is the dumbest idea in the world,” he said. “Shareholder value is a result, not a strategy…your main constituencies are your employees, your customers and your products.”

read the entire article Welch condemns share price focus at FT.com of  March 12 2009

the follow up article Jack Welch Elaborates: Shareholder Value BusinessWeek March 16 2009

From Manuel Becerra Theory of the Firm for Strategic Management: Economic Value Analysis:

(page 152)

Firms essentially manage resources to create value for customers in competition with other firms. 

Two basic questions summarize a firm’s market positioning versus its competitors:

1. Which customers does the firm target with its products and services?
2. For the targeted market segment in which the firm competes, how are the firm’s products and services different from those of the competition as perceived by the customers?

The first question is basically an issue of market segmentation while the second one deals with product differentiation. Segmentation and differentiation constitutes the main strategic decisions of the firm with regard to its positioning in the market. They are key elements of marketing strategy, but also have broad implications for the entire organization and its competitiveness.

(page 156)

While market segmentation refers to how the firm deals with customer heterogeneity, product differentiation results from the contrast between the firm’s offering and that of the competitors from the perspective of the customers.

On March 11, Google announced that it will begin to offer more interesting ads,  the term used in the ads industry is behavioral targeting  but Google prefers to use interest-based advertising . Basically, the ads will be tailored to people’s interests and are based on people ‘s online behavior. In the case of Google, the user Web history will be used (you can find it under ” My Account” or under  Web History, after you login). Google is not the first company to use this approach, Yahoo! and other advertising networks like DoubleClick use such approach. The ads will certainly more relavant to users but several concerns arise in terms of user privacy.

some articles from the net:

•  Behavioral Targeting: Google Pulls Out the Stops BusinessWeek
• Google Selling History as Behavior, But I Like The Controls, John Battelle
• Google to match ads with viewing habits FT.com
• Google to Offer Ads Based on Interests, NYT

The term Creative Destruction was created by Joseph A. Schumpeter in Capitalism, Socialism and Democracy (Page 83).

The Schumpeterian process of creative destruction is the innovation that continuously reconfigure industry structure and the role of the different players in the market to create value for customers in new and different ways.

Excerpt from the book:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .