It is a very old saying in the business world and if you look at any of the leading brand names in any field. You will find that all the companies that are the leaders in their niche have adhered to this formula almost religiously. Unfortunately, if you study the recent trends, you will find out that people have started paying more attention to the stock market performance of the company rather than its actual performance.
Ok let me ask you a question. What do you think is the purpose of a company? According to the conventional wisdom, a company should have a product or service to sell to its customer. According to the honest business practices, your company should have a product or service good enough that client or customer should come back to your company for more services or products of similar kind whenever he or she requires similar service or product in the future.
Then walked in the phenomena of share trading or the stock market, in the stock market you can earn or lose money that was never there in the first place. For example, American economy received a huge boost in mid and late 90s due to stock market invested hugely in technology stocks. Most of these technology stocks belonged to the baby boomers that were going to solve the issue of Millennium bug. When no millennium bug materialized at the end of 20th century, it caused a huge disappointment and massive losses to the investors.
This is how the people are doing business now and that is one of the major causes of downfall of businesses in America. You have CEOs and other business managers who spend all their time trying to improve the stock portfolio of the companies instead of running the company. All of their attention is on increasing the profit for the shareholders. This trend has really gained momentum in past thirty or so years.
What happens is that managers do not worry about the product or its quality. They worry about how they can cut the corners to show more profit in the next stockholders meeting. It means that company suffers in the end and when that happens, their solution is to take the production to a third world country to cut the cost. It ends up costing local market jobs and recession. Companies need to get their focus back on satisfying their customers and stop worrying about the stock market.