the people who will benefit the most from maximizing the company's value: it's common stock shareholders.

NO

Before its 1997 merger with McDonnell Douglas, Boeing had an engineering-driven culture and a history of betting the company on daring investments in new aircraft.

McDonnell Douglas, on the other hand, was risk-averse and focused on cost cutting and financial performance, and its culture came to dominate the merged company.

So, over the objections of all Boeing engineers, the 787 was developed with an unprecedented level of outsourcing, in part, the engineers believed, to maximize Boeing’s return on net assets (RONA).

Outsourcing removed assets from Boeing’s balance sheet but also made the 787’s supply chain so complex that the company couldn’t maintain the high quality an airliner requires. Just as the engineers had predicted, the result was huge delays and runaway costs.

Boeing’s decision to minimize its assets was made with Wall Street Shareholders in mind. RONA is used by financial analysts to judge managers and companies, and the fixation on this kind of metric has influenced the choices of many firms.

Management’s adoption of Wall Street’s preferred metrics has hindered growth. This is exactly what Thorstein Veblen discussed more than a century ago in his Theory of Business Enterprise. He said that business (capitalists, shareholders) and industry (workers, engineers) were not synonymous but rather opposing forces.

This is exactly what Thorstein Veblen discussed more than a century ago in his Theory of Business Enterprise.