Tuesday, June 06, 2006
Shareholders and innovation
Shareholders and innovation: "... that shareholders have no function in human capital-intensive firms.
But innovation can't be managed from top-down. It relies upon communication, inspiration and dedication. These spring from a sense of fraternity and vocation, not from hierarchy and class conflict. However, shareholders exacerbate the latter - especially if the flotation gave big windfalls to bosses - without contributing any great function. Innovation-intensive companies, then, shouldn't have external, passive shareholders.
Shareholders seem to share this view. In the last 20 years, human capital-intensive innovative sectors - meeja, electronics and software - have under-performed the All-share. By contrast, the three best-performing sectors have been tobacco, banks and miners - industries with big physical capital requirements but little innovation.And since floating in February, Qinetiq's price has dropped 18%, hugely under-performing the market."
But innovation can't be managed from top-down. It relies upon communication, inspiration and dedication. These spring from a sense of fraternity and vocation, not from hierarchy and class conflict. However, shareholders exacerbate the latter - especially if the flotation gave big windfalls to bosses - without contributing any great function. Innovation-intensive companies, then, shouldn't have external, passive shareholders.
Shareholders seem to share this view. In the last 20 years, human capital-intensive innovative sectors - meeja, electronics and software - have under-performed the All-share. By contrast, the three best-performing sectors have been tobacco, banks and miners - industries with big physical capital requirements but little innovation.And since floating in February, Qinetiq's price has dropped 18%, hugely under-performing the market."
