President George W. Bush greets Milton Friedman, recipient of the 1976 Nobel Prize for economic science, May 9, 2002 . (Photo by Alex Wong/Getty Images)Getty ImagesWhen the obituary of traditional management is eventually written, an article tucked inside the current issue of Harvard Business Review will earn a dishonorable mention. Titled “Bring Back Managing for Value,” the piece by Bain consultants Michael Mankins and Matthew Crupi argues that businesses should once again make maximizing shareholder value (MSV) their overriding goal and restore finance to the driver’s seat. Stakeholder concerns are now mere “constraints.” Customers aren’t human beings to delight—they’re simply metrics like Net Promoter Score that must be kept from dropping too low.This isn’t progress. It’s a dangerous regression. Business newcomers deserve to know why MSV was tried—and failed spectacularly--over 50 painful years, and still lives on, albeit in the shadows.1970s: Milton Friedman And Michael JensenMilton Friedman launched MSV in 1970 with his ferocious New York Times article. Managers who considered anything beyond profits were “spending someone else’s money.” Executives must focus solely on making money for shareholders. In 1976, finance professors William Meckling and Michael Jensen supplied a supposed rationale in their often-cited but seldom-read article in the Journal of Financial Economics article. Stock-based compensation would align executives with owners, solving the “agency problem” of wasteful executive perks. Managers would now act like owners and get rich doing “the right thing.” The best measure of long-term gains was the current stock price. The lure proved irresistible. Reagan and Thatcher gave MSV political cover. Corporate raiders became the enforcers. A 1990 HBR article by Jensen and Kevin Murphy further sweetened the deal for the C-suite by pushing stock-based pay raises for CEOs to induce them to act more like entrepreneurs. CEOs accepted the bait with little sign of actual entrepreneurship. Wall Street went along. MSV became gospel. Finance took over the boardroom and the C-suite.MORE FOR YOUGrains Of Truth, Fatal FlawMSV contained grains of truth: yes, long-term shareholder value is good, clear focus beats bureaucratic drift, and protecting owners from waste matters. But Meckling/Jensen’s idea that the current stock price reflected long-term value caused firms to concentrate all their efforts on short-term value extraction. As the focus on the current stock price was wrong, negative outcomes were inevitable.Why MSV Failed Even On Its Own TermsThe impact was soon apparent. Manufacturing jobs fled overseas. Older firms became net job destroyers. Between 1988 and 2011, companies more than five years old destroyed more jobs than they created in most years (Kauffman Foundation). Public corporations that once claimed to be job creators turned into job destroyers. Stock compensation made executives even more risk-averse and short-term focused, not entrepreneurial. Public companies invested far less than private firms—4% of assets vs. 7%—according to a Stern/Harvard Business School studyProductivity gains that once flowed to workers now went almost entirely to shareholders and executives. Pre-1980, compensation and productivity rose in lockstep. Afterward, shareholders captured nearly all the gains—a conscious reallocation, not market destiny. The Financial Times called it “an overwhelming conflict of interest.”Productivity and hourly compensation 1950-2010Economic Policy InstituteWorkforce engagement collapsed. Only one in five workers was fully engaged; one in seven actively undermined the firm. Non-compete agreements bound 30 million Americans, including even low-wage fast-food workers and dog sitters. In 2019, BRT ‘Killed’ MSV But It Survived UndercoverBy 2019, the growing political backlash led several hundred CEOs in the Business Roundtable to issue a statement rejecting MSV. Yet since the 2019 renunciation was issued, Harvard Law Professor Lucian Bebchuk and colleagues have shown that few firms have made significant changes in what they did. As a result, MSV now lives on in the shadows. The same goal, mindset, policies and practices that governed the firm’s operations are still in place but conducted undercover. The 2019 announcement was a political head fake. Public firms that still openly embrace MSV (around 10% of the S&P500) can be called Value Extractors, while those who do so privately (around 60% of the S&P500) can be called Self-Dealers. Most management writers tip-toe around the subject as if it is too sensitive to mention. Incorruptibie by Eric RiesAuthors EquityEric Ries is a striking exception in his recent book Incorruptible, where he labels the phenomenon “financial gravity” — the relentless pressure of short-term shareholder value — continues to shift organizations away from their stated intentions of stakeholder concerns towards MSV, with the same disastrous impact as when MSV’s adoption was open and public.Should The World’s Dumbest Idea Be Openly Revived?Yet here we are again, being told that Michael Jensen and other scholars argued, correctly, that MSV was the only coherent governing objective for large organizations. Bain, via HBR, maintains that every firm should openly commit to MSV and pursue what even Jack Welch in 2009 called “the dumbest idea in the world.” The same playbook that hollowed out innovation, crushed workers, corrupted finance, and weakened U.S. competitiveness is being repackaged—without fresh data—as universal wisdom.Whether openly or undercover, MSV doesn’t just fail shareholders. In 70% of public firms it continues to undermine the entire economy’s productive capacity, diverting resources from real investment, encouraging predatory behavior, and leaving us with a disengaged workforce and ethically compromised institutions. Better Simpler Strategy by Felix Oberholzer-GeeHBRPThe pendulum never really swung away from MSV. It simply hid behind a superficially more attractive rhetoric.The result is that the majority — roughly 70% of public firms — of Self-Dealers and Value-Extractors still practicing MSV undercover are enjoying below-average as shown by the data in Figure 2 from Professor Felix Oberholzer’s book Better Simpler Strategy.ROIC s&p 500 2015-2025 HBRP Yet a better path is already proving itself. Around 30% of public firms (and perhaps 70% of small private firms) are successfully prioritizing value for stakeholders, particularly customers. Firms led by Satya Nadella (Microsoft), Jensen Huang (Nvidia), and Reed Hastings (Netflix), show how this approach doesn’t just feel better: it delivers superior TSR and ROIC. A Better Path: Creating Value WinsThese firms prioritized customer value while sustaining their own viability by truly increasing long-term value for all the stakeholders and the economy as a whole. They can be called the genuine Value Creators. In an era of AI and rapid change, treating customers as mere constraints is a recipe for irrelevance. The winners are those organizations that obsess over customer value, empower employees, and resist financial gravity through strong mission lock and ethical governance.This is not a time to revive MSV. It is time to shed bright light on the fatal flaws of MSV and urge all firms to join the genuine Value Creators.