By Todd Allen
The increasingly corporate nature of comics has been a continuing topic for the last couple years. Marvel sold to Disney. Warner pulling DC in a bit closer. Trying to maintain quarterly sales figures in a hit-based medium (also known as Events and/or line extension). Forbes has a piece called “The Dumbest Idea In The World: Maximizing Shareholder Value.” It’s partially a review and partially a response to the book “Fixing the Game:Bubbles, Crashes, and What Capitalism Can Learn from the NFL.” This piece (and the book) contrasts the old Peter Drucker maxim “the only valid purpose of a firm is to create a customer” the current credo of “the singular goal of a company should be to maximize the return to shareholders.”
The downfalls of the shareholder side of things are pretty much summed up by former GE CEO Jack Welch. Ironically, Welch was pretty much the poster child of shareholder value for years.
On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal. … Short-term profits should be allied with an increase in the long-term value of a company.
What to do about it?
“We must shift the focus of companies back to the customer and away from shareholder value,” says Martin. “The shift necessitates a fundamental change in our prevailing theory of the firm… The current theory holds that the singular goal of the corporation should be shareholder value maximization. Instead, companies should place customers at the center of the firm and focus on delighting them, while earning an acceptable return for shareholders.”
If you take care of customers, writes Martin, shareholders will be drawn along for a very nice ride. The opposite is simply not true: if you try to take care of shareholders, customers don’t benefit and, ironically, shareholders don’t get very far either. In the real market, there is opportunity to build for the long run rather than to exploit short-term opportunities, so the real market has a chance to produce sustainability. The real market produces meaning and motivation for organizations. The organization can create bonds with customers, imagine great plans, and bring them to fruition.
The premise here being that with executive compensation being increasingly tied to the stock options, and thus the stock price, executives are more concerned with managing the expectations of the stock and it’s price than they are with their customer base or employees. Gee, does this sound familiar at all?
How long have we seen DC and Marvel chasing the Event tail, both of them trying to recreate the lightning in the bottle that was Civil War? How many Green Lantern, Batman, Wolverine, Avengers or X-Men titles do we really need? How long have we heard stories about publishers needing to hit circulation/revenue targets for their quarterly filings, all the time with circulation spiraling down as the prices increase and the Events continue to overflow.
What does the Forbes writer wish to see addressed in a follow up book?
In future writings, he might document more of the economically disastrous practices that enable firms to meet their quarterly targets, such as looting the firm’s pension fund or cutting back on worker benefits or outsourcing production to a foreign country in ways that further destroy the firm’s ability to innovate and compete.
I don’t know about looting the pension fund, but cutting back on benefits and outsourcing production do have a faint ring of familiarity to them.
Forbes is hardly what you’d call a bastion of socialism, so when they start decrying stock market practices and calling for a return to “delighting” customers, it’s worth paying attention to. I also can’t help but think some of their complaints aren’t directly applicable to comics. More time needs to be spent delighting customers and less time creating charts for which 85 comics need to be purchased to be able to read the next Event.
If you wanted to make an argument that the DC relaunch was an attempt to delight the customers, I’d entertain it. (Although, one wonders how much longer before the relaunch dips its toe into Events.)
Todd Allen wears a lot of hats. At various times he’s been (alphabetically), a bouncer, college professor, humor columnist, Internet producer and an NBA/WNBA Beat Writer, among other things. He’s the author of Economics of Digital Comics. You should probably read it.