Management incentivised to grow stock market value. look, if the incentives are wrong then you get distortions. A good example with "founders" is wework.
Wework's innovation was two fold:
zeroth) vast funding
one) run the company like a mystery cult
two) Have beer in a shared office
Everything else is exactly what a shared office company does. WeWork's entire incentive was to grow as fast as possible and get as many customers as possible. No one cared about business fundamentals, because WeWork wasn't a buisness. It was a commodity to be traded by softbank.
Buisness fundamentals have been royally fucked by changes in finance. Stock buybacks, limp monopoly actions, toothless market regulation, have all meant that profit is one thing, but share price is everything.
The capitalism that made boeing et al is not the capitalism that we live in now.
Regarding Boeing, it's true that the principal-agent problem and misaligned incentives are issues. However, you must also consider the impact of promoting business school graduates and McKinsey-type consultants—who often believe they are the smartest people in the room, despite lacking operational expertise beyond making slides—to leadership positions in a company driven by engineering. Naturally, these business types will focus on short-term revenue and stock prices, as they have been trained their entire lives to optimize for vanity metrics like GPA, company prestige, and strategy over operations. This mindset is ingrained in their identity, leading them to undermine the engineering culture. For instance, Boeing's CEOs reportedly referred to engineering leaders as "retards" and "losers." Now, we are witnessing the consequences of these actions.
WeWork was a finance concept. Lease commercial real estate in bulk long term, subdivide and sublease it short term, and borrow medium term to finance it.
That's a speculation on interest rates and short-term commercial real estate rents.
The CEO got a really good exit package from Softbank.[1]
Management incentivised to grow stock market value. look, if the incentives are wrong then you get distortions. A good example with "founders" is wework.
Wework's innovation was two fold:
zeroth) vast funding
one) run the company like a mystery cult
two) Have beer in a shared office
Everything else is exactly what a shared office company does. WeWork's entire incentive was to grow as fast as possible and get as many customers as possible. No one cared about business fundamentals, because WeWork wasn't a buisness. It was a commodity to be traded by softbank.
Buisness fundamentals have been royally fucked by changes in finance. Stock buybacks, limp monopoly actions, toothless market regulation, have all meant that profit is one thing, but share price is everything.
The capitalism that made boeing et al is not the capitalism that we live in now.