The stakeholder capitalism movement stalled because it only critiqued shareholder primacy. It offered no practical framework for making decisions when stakeholder interests inevitably conflict, such as employees wanting higher wages while customers demand lower prices.
A noble mission statement, like Johnson & Johnson's famous credo, is powerless against the pressures of shareholder primacy. To be effective, a company's purpose must be structurally embedded in its corporate charter and governance, giving it legal and operational teeth.
Many companies operate like zombies, controlled by external forces like quarterly earnings. Leaders at all levels feel powerless but blame others, failing to see the systemic issue of a weak corporate structure that's susceptible to short-term demands.
Costco intentionally makes short-term, ROI-negative decisions like capping markups at 14%. This 'harder is easier' strategy avoids the addiction to easy profits and instead builds trustworthiness, which it views as its most valuable, though often unaccounted for, financial asset.
Most founders don't realize that boilerplate charter language like 'to pursue any lawful act or activity' legally binds them to shareholder primacy under Delaware law. This creates a critical divergence between a company's stated mission and its actual legal purpose.
Counterintuitively, companies with 'bad' governance ratings have financially outperformed those with 'good' ratings since 2008. This suggests that so-called 'best practices' often enforce short-termism, while 'bad' governance can actually protect a company's long-term, value-creating mission.