Forget the stock market and get down to real business
by Miki Saxon
Post from Leadership Turn Image credit: raajmb CC license
By 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.
To grow a company and make that growth sustainable, top leadership must be focused upon strategic decisions, not short-term tactical ones. That means decisions that further the long-term objective of creating more growth potential for the company, not just satisfying short-term demands—whether those are internal or external.
Too many top executives are among the greatest offenders in this, largely due to the extraordinary pressure created by the stock market. In fact, I believe the stock market and its “gambling mentality” is the greatest threat to American business today—even more of a threat than the U.S. government has tried to make itself.
Unfortunately, I hear CEOs so concerned about their stock performance that this concern starts filtering down to the ranks of staff. This creates a frightening problem. Lower-level staff, where most of the real strategic initiatives can originate, start thinking as the CEO does and slowly stop thinking strategically about initiatives that will sustain growth.
Since the top of the company has become so focused upon tactical response to stock market performance, the company has actually been turned upside-down with mid- and lower-level staff becoming the real source for strategic growth. Can a company actually survive being driven from the bottom up, especially if mid-level staff start thinking about stock price as a real goal for their initiatives? This creates a terrible problem of both how to train these staff to become more effective in a strategic role, how to nurture strategic thinking from lower levels, and how in that environment to still maintain a proper management hierarchy.
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July 8th, 2008 at 6:56 am
This morning, as I was reading what I wrote above, I saw a short article in The Wall Street Journal wondering how companies like Coca-Cola could be affected negatively by the fear of recession that is pervasive in the media right now.
One answer is that consumers are being whipped into a fear frenzy. The other started back in the early 1990s, when the then CEO of Coca-Cola stated that his one and only job was to create greater value for shareholders. That was the moment I wrote off Coke as a long-term Alpha, because to think that making money is what business is all about is to say that satisfying customer needs is only minimally important.
And that company has been managed that way ever since.
It’s only because no one has stepped up to really challenge them with some fresh thinking that they continue to have the share they do. Pepsi got their tails handed to them after the Pepsi challenge almost succeeded in the early 80s, so they have taken a following role ever since.
Please, show me a company that recognizes that customers need to feel good about themselves (“satisfaction”) and to believe that others admire or envy them because of what they do or buy (“significance”). That will be the company to invest in.
July 9th, 2008 at 1:55 pm
In bear market most stock will go down. The economy is going to by weak until the United States takes care of its biggest problem. One billionaire calls our biggest problem the “Largest transfer of wealth in the history of mankind”. Find out who said it and how we correct it @
http://www.theinvestingspeculator.com
July 10th, 2008 at 5:50 am
Investing Speculator:
It doesn’t make much difference who said it, but the truth behind it is the real concern. Actually, I worry less about the transfer of wealth than I do about where that wealth that’s being transferred comes from. The difference between The Alpha Factor model for creating wealth and the “beat the stock market” method is the difference between creating wealth and stealing it.
Transferring wealth is not the same as creating it. That’s why I get so concerned about CEOs and Boards of Directors who work to strip cash from their companies at the expense of the future of the company. The Alpha Factor model, as I have used it to create dramatic growth for companies while also increasing profitability creates wealth for all involved, not just a few at the top.
Thanks for your comment.