Beyond Shareholder Value: The Future of Business in the Hands of Gen Z

In the last 20+ years there has been a trend, the corporate world has increasingly fixated on shareholder value, which has led to poor product quality and customer experience. Shareholder value has changed the core mission of a business – delivering value to customers. Growing up in Eastern Europe, I learned that a successful business revolves around satisfying customers, building trust, and nurturing long-term relationships. Even during my college years in the United States, I believed that anyone could build a successful business by ensuring customer satisfaction and making a positive impact on people’s lives.

However, upon graduation, I had another reality check moment and realized that most of the businesses now operate with the primary goal of maximizing shareholder value, which usually leads to cost-cutting measures, reduced product quality and deteriorating customer service, ultimately undermining the foundation of successful enterprises.

The Consequences of Short-Term Profits

Shareholder value means prioritizing short-term profits at the expense of long-term sustainability. When a company is pressured to meet quarterly earnings target, that company frequently resorts to cost-cutting measures that compromise product quality. This can be seen in every industry, for a deeper dive into these issues I highly recommend “When McKinsey Comes to Town” by Walt Bogdanich and Michael Forsythe .

One recent cost-cutting trend involves companies that once prided themselves on exceptional customer support now implementing AI and offshoring call centers to reduce operational cost. This has led to significant layoffs and frustrating customer experience, as impersonal and inefficient support channels replace personalized service. As a result, consumers struggle to find durable, reliable, and safe products. The consolidation of industries through M&A, along with companies going public often results in decreased competition and lower quality. This shift is driven by the need to meet shareholder expectations for profits. Sweetgreen is a great example, a company once known for its high-quality salads. Sweetgreen went public in September of 2021, and since then the quality has noticeably deteriorated. 

How Can You Profit from This Situation?

Unlike the profit-centric approach of previous generations, a new wave of businesses led by Gen Z entrepreneurs is emerging with a renewed focus on delivering value to customers. Those businesses are built on principles that prioritize customer experience, quality of products, and meaningful impact over mere profit generation.

Gen Z understands that in a market with many options, emphasizing quality and experience builds strong, loyal customer base. Companies like Gymshark and Away have disrupted their respective industries by prioritizing quality, sustainability, and customer engagement. These companies invest in high-quality materials, innovative design, and transparent business practices, creating products that resonate with their audience.

The Success of Gen Z Entrepreneurs

The success of businesses started by Gen Z is rooted in their commitment to making a positive impact. Gen Z entrepreneurs recognize that consumers today prioritize ethical practices, social responsibility, and environmental sustainability. By aligning their business goals with the values of their customers, they create authentic connections and foster brand loyalty. 

This is Your Opportunity

The current market environment presents a unique opportunity for new entrepreneurs willing to embrace traditional business values of delivering value to customers. The older generation’s obsession with shareholder value has left a gap in the market for businesses that prioritize quality and customer satisfaction. Understanding and meeting customer needs, rather than solely chasing profit, positions new businesses for success. 

Sum Up

The relentless pursuit of shareholder value has eroded product quality and customer experience, undermining the core purpose of businesses. However, this challenge presents a significant opportunity for a new generation of entrepreneurs to reclaim the essence of business-delivering value to customers. By prioritizing quality, customer satisfaction, and meaningful impact, these businesses not only stand out in the market but also build lasting, successful enterprises. The success of Gen Z-led businesses serves as a testament to the viability and potential of this customer-centric approach. This is your time to seize this opportunity and deliver exceptional value and pave the way for a new era of business success.