Does Wall Street have to be the enemy of an Alpha?
Privately-held companies have a much greater potential today of becoming an Alpha and maintaining Alpha status than do publicly-owned companies, if they can get the financing needed to drive growth. The reason is fairly simple: CEOs of publicly-owned companies almost always fall into the trap of allowing shareholders and stock analysts to run the strategic decisions of their company.
CEOs of such publicly-owned companies are given incentives to drive up stock price quickly and predictably, which only asks them to drive that growth through cost-side management. And, as was discovered throughout the Alpha Factor Project, using cost-side management to drive strategic decisions is death. It always undermines the very things that created success in the first place.
Sam Walton made no bones about it. He did not want to lose control of Wal-Mart to the stock market. Even after they started selling stock over the counter, Sam’s vision and charisma enabled him to maintain control over the strategic direction of Wal-Mart right up to his death in 1992.
Compare that with the life of most CEOs today: shareholders and stock analysts really run their company, because stock price is the measurement of their success. Their bonuses are based upon it and their future employment is based upon it. CEOs who have to answer to the whims of the stock market cannot be leaders, because they have already defined themselves as followers. Without exception, what killed the great Alphas was that they lost focus upon what really drove their success and instead allowed shareholders and stock analysts (or other outsiders) to drive strategic decisions.
Is it possible for a CEO of a publicly owned company to maintain Alpha leadership? Certainly, but it takes top leadership that is focused upon the Alpha Innovation Pyramid (page 63 of The Alpha Factor) for driving new growth and will not compromise that focus to address the short-term, destructive demands of the stock market.
A leader either innovates to drive long-term sustainable success, or he is just managing the slow death of his company.