In my soon to be published book, “The Living Organization,” I describe how we have lost sight of what business is really all about.

That every business is about being in-service to a collection of customers we call our market segment.

It is not about making money. It is not about maximizing shareholder values.  Those components of business are the gauges on the system that produces goods and services that have value for customers.

Somewhere along the line we lost sight of that and began to focus on maximizing the reading of the gauge – the return on investment – rather than on the system that was being measured.

Many say it started with Jack Welch’s famous presentation to Shareholders at their 1981 shareholders meeting.  This is where he postulated that the goal of General Electric was to maximize shareholder value.

“An idea he recanted in a 2009 interview we here said,

“On the face of it, shareholder value is the dumbest idea in the world.”  “Shareholder value is a result, not a strategy… Your main constituencies are your employees, your customers and your products.”

But the idea of maximizing shareholder value became the mantra that was picked up by every corporation and created a whole new profession, “the financial engineer” – very smart people like Ivan Bosidy and Michael Milken.

The profession, that brought us leveraged buyouts, Enron’s off-balance-sheet accounting, and Credit Default swaps, which allowed the sub-prime mortgage to drive the housing bubble.

Unless the metrics we rely on actually measure and reflect the real performance of the systems, we are dealing with a hall of mirrors.  Financial engineering can cleverly make the system look like it is performing well, but in the end, it all too often turned out to be nothing but a house of cards that must come tumbling down.  And so it did in 2007.

Now, for the first time, I am seeing indications that we are moving back to basics, so to speak.  In this morning’s New York Times there is an article titled “GE goes with what it knows – Making Stuff.”

Quoting from the article,

“G.E. is going back to basics. The company, Mr. Immelt insists, must rely more on making physical products and less on financial engineering — a path that, he insists, is also necessary for the American economy as a whole.”

“Mr. Immelt candidly admits that G.E. was seduced by GE Capital’s financial promise — the lure of rapid-fire money-making unencumbered by the long-range planning, costs and headaches that go into producing heavy-duty material goods.”

“Many bought into the idea that America could go from a technology-based, export-oriented powerhouse to a services-led, consumption-based economy — and somehow still expect to prosper,” Mr. Immelt said in a typical speech last year before the Detroit Economic Club. “That idea was flat wrong.” He added: “Our economy tilted instead toward the quicker profits of financial services.”

Thank You Jeffrey!  It is good to hear at least one leader of our major corporations finally get the message.

Perhaps what G.E. started G.E. can undo.

Let’s return our business mantra back to what made business the great engine of prosperity, “to serve our customers with valuable goods and services that enhance our lives.”