Is Wall Street the Enemy of Leadership?
by Miki SaxonBy Wes Ball, author of The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining success. Read all of Wes’ posts here.
Sam Walton made no bones about it. He was not going to lose control of Wal-Mart to the stock market. Even after they started selling stock over the counter, top management at Wal-Mart was able to maintain control over the strategic direction of the company right up to Sam’s death in 1992.
Sam was a leader. He had a clear vision that he would not compromise. He took risks, built a support team to “manage” the company, empowered and nurtured employees, shared profits, and built a company that is still the envy of most retailers. It also became the Alpha in discount retailing due to that leadership.
Compare that with the life of most CEOs today: shareholders and stock analysts really run their companies, 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.
Is it possible for a CEO of a publicly-owned company to maintain leadership?
Certainly, but it takes an extremely charismatic, visionary, focused individual who is willing and capable of bucking stock analyst and shareholder pressure for short-term profit results and instead keep the company focused upon long-term success.
All of the Alpha companies I researched for my book, The Alpha Factor, had such leadership in their early formative years. What killed most of those companies later on was the compromise of allowing stockholders and stock analysts (or other outsiders) to drive the strategic management of the company.
How would you protect your company from this if you had to generate significant financing?
Your comments—priceless
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Image credit: jakoblyng CC license
July 31st, 2008 at 3:30 am
[…] Wes Ball asked if Wall Street’s demands for shot-term performance undercut leadership performance; last November I wrote and When leaders can’t practice leadership and said, “We live in […]
July 31st, 2008 at 5:27 pm
Absolutely! Chasing the quarterly earnings has led to the demise of leadership in corporate America. Or, perhaps, those who get to be the “leaders” in the corporate world get there because they know how to manage to quarterly earnings. When the leader of a start-up company builds his company up to go public it is essentially selling the company’s soul. It will never be what it was that helped it to grow again.
August 1st, 2008 at 5:44 am
da:
It is a sad thing that the very thing that an entrepreneur believes will make his company capable of growing will more likely kill it. Is it possible to stay private and still have a viable company? Certainly, but it takes an owner who is not as interested in filling a bank account as he is in creating good for many people.
Thanks for your post. I’m looking forward to delving into your website on “High Definition Leadership.”
August 1st, 2008 at 10:30 am
But it is possible to do it all—think SAS.